HB5001 103RD GENERAL ASSEMBLY

LRB103 37631 SPS 67758 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5001

Introduced 2/8/2024, by Rep. Steven Reick

SYNOPSIS AS INTRODUCED:

805 ILCS 5/15.35

from Ch. 32, par. 15.35

Amends the Business Corporation Act of 1983. Provides that, on or after January 1, 2025 and prior to January 1, 2026, the first $10,000 in liability is exempt from the franchise tax payable by domestic corporations. On or after January 1, 2026 and prior to January 1, 2027, the first $100,000 in liability is exempt from the franchise tax payable by domestic corporations. Provides that, in the case of a domestic corporation, no payment is required for a franchise tax that would have been due and payable on or after January 1, 2027. Repeals the provision concerning franchise taxes payable by domestic corporations on January 1, 2028. Effective immediately.

A BILL FOR

AN ACT concerning business.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Business Corporation Act of 1983 is amended by changing Section 15.35 as follows:

(805 ILCS 5/15.35) (from Ch. 32, par. 15.35)

(Text of Section from P.A. 102-16 and 103-8)

Sec. 15.35. Franchise taxes payable by domestic corporations. For the privilege of exercising its franchises in this State, each domestic corporation shall pay to the Secretary of State the following franchise taxes, computed on the basis, at the rates and for the periods prescribed in this Act:

(a) An initial franchise tax at the time of filing its first report of issuance of shares.

(b) An additional franchise tax at the time of filing (1) a report of the issuance of additional shares, or (2) a report of an increase in paid-in capital without the issuance of shares, or (3) an amendment to the articles of incorporation or a report of cumulative changes in paid-in capital, whenever any amendment or such report discloses an increase in its paid-in capital over the amount thereof last reported in any document, other than an annual report, interim annual report or final transition annual report required by this Act to be filed in the office of the Secretary of State.

(c) An additional franchise tax at the time of filing a report of paid-in capital following a statutory merger or consolidation, which discloses that the paid-in capital of the surviving or new corporation immediately after the merger or consolidation is greater than the sum of the paid-in capital of all of the merged or consolidated corporations as last reported by them in any documents, other than annual reports, required by this Act to be filed in the office of the Secretary of State; and in addition, the surviving or new corporation shall be liable for a further additional franchise tax on the paid-in capital of each of the merged or consolidated corporations as last reported by them in any document, other than an annual report, required by this Act to be filed with the Secretary of State from their taxable year end to the next succeeding anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving or new corporation; however if the taxable year ends within the 2-month period immediately preceding the anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving or new corporation the tax will be computed to the anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving or new corporation in the next succeeding calendar year.

(d) An annual franchise tax payable each year with the annual report which the corporation is required by this Act to file.

On or after January 1, 2020 and prior to January 1, 2021, the first $30 in liability is exempt from the tax imposed under this Section. On or after January 1, 2021, and prior to January 1, 2024, the first $1,000 in liability is exempt from the tax imposed under this Section. On or after January 1, 2024 and prior to January 1, 2025, the first $5,000 in liability is exempt from the tax imposed under this Section. On or after January 1, 2025 and prior to January 1, 2026, the first $10,000 in liability is exempt from the tax imposed under this Section. On or after January 1, 2026 and prior to January 1, 2027, the first $100,000 in liability is exempt from the tax imposed under this Section. The provisions of this Section shall not require the payment of any franchise tax that would otherwise have been due and payable on or after January 1, 2027. There shall be no refunds or proration of franchise tax for any taxes due and payable on or after January 1, 2027 on the basis that a portion of the corporation's taxable year extends beyond January 1, 2027.

This Section is repealed on January 1, 2028.

(Source: P.A. 102-16, eff. 6-17-21; 103-8, eff. 6-7-23.)

(Text of Section from P.A. 102-282, 102-558, and 103-8)

Sec. 15.35. Franchise taxes payable by domestic corporations. For the privilege of exercising its franchises in this State, each domestic corporation shall pay to the Secretary of State the following franchise taxes, computed on the basis, at the rates and for the periods prescribed in this Act:

(a) An initial franchise tax at the time of filing its first report of issuance of shares.

(b) An additional franchise tax at the time of filing (1) a report of the issuance of additional shares, or (2) a report of an increase in paid-in capital without the issuance of shares, or (3) an amendment to the articles of incorporation or a report of cumulative changes in paid-in capital, whenever any amendment or such report discloses an increase in its paid-in capital over the amount thereof last reported in any document, other than an annual report, interim annual report or final transition annual report required by this Act to be filed in the office of the Secretary of State.

(c) An additional franchise tax at the time of filing a report of paid-in capital following a statutory merger or consolidation, which discloses that the paid-in capital of the surviving or new corporation immediately after the merger or consolidation is greater than the sum of the paid-in capital of all of the merged or consolidated corporations as last reported by them in any documents, other than annual reports, required by this Act to be filed in the office of the Secretary of State; and in addition, the surviving or new corporation shall be liable for a further additional franchise tax on the paid-in capital of each of the merged or consolidated corporations as last reported by them in any document, other than an annual report, required by this Act to be filed with the Secretary of State from their taxable year end to the next succeeding anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving or new corporation; however if the taxable year ends within the 2-month period immediately preceding the anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving or new corporation the tax will be computed to the anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving or new corporation in the next succeeding calendar year.

(d) An annual franchise tax payable each year with the annual report which the corporation is required by this Act to file.

On or after January 1, 2020 and prior to January 1, 2021, the first $30 in liability is exempt from the tax imposed under this Section. On or after January 1, 2021 and prior to January 1, 2024, the first $1,000 in liability is exempt from the tax imposed under this Section. On or after January 1, 2024 and prior to January 1, 2025, the first $5,000 in liability is exempt from the tax imposed under this Section. On or after January 1, 2025 and prior to January 1, 2026, the first $10,000 in liability is exempt from the tax imposed under this Section. On or after January 1, 2026 and prior to January 1, 2027, the first $100,000 in liability is exempt from the tax imposed under this Section. The provisions of this Section shall not require the payment of any franchise tax that would otherwise have been due and payable on or after January 1, 2027. There shall be no refunds or proration of franchise tax for any taxes due and payable on or after January 1, 2027 on the basis that a portion of the corporation's taxable year extends beyond January 1, 2027.

This Section is repealed on January 1, 2028.

(Source: P.A. 102-282, eff. 1-1-22; 102-558, eff. 8-20-21; 103-8, eff. 6-7-23.)

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