SB2325 104TH GENERAL ASSEMBLY

LRB104 10384 SPS 20459 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB2325

Introduced 2/7/2025, by Sen. Robert F. Martwick

SYNOPSIS AS INTRODUCED:

805 ILCS 5/14.35	from Ch. 32, par. 14.35
805 ILCS 5/15.90	from Ch. 32, par. 15.90
805 ILCS 5/16.05	from Ch. 32, par. 16.05

Amends the Business Corporation Act of 1983. In provisions concerning the franchise tax, provides that the rate of penalties and interest on any franchise tax or fee, for which the Secretary of State provides written notice of the amount of penalties and interest owed to a corporation on or after January 1, 2026, shall be the rate of interest established under specified provisions of the Illinois Income Tax Act, and no other penalties or interest shall be imposed or charged to a corporation. Makes changes in provisions concerning the statute of limitations. Makes changes that are declaratory of existing law. 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 Sections 14.35, 15.90, and 16.05 as follows:

(805 ILCS 5/14.35) (from Ch. 32, par. 14.35)

Sec. 14.35. Report following merger or consolidation.

(a) Whenever a domestic corporation or a foreign corporation authorized to transact business in this State is the surviving corporation in a statutory merger or whenever a domestic corporation is the new corporation in a consolidation, it shall, within 60 days after the effective date of the event, if the effective date occurs after both December 31, 1990 and the last day of the third month immediately preceding its anniversary month in 1991, execute and file in accordance with Section 1.10 of this Act, a report setting forth:

(1) The name of the corporation and the state or country under the laws of which it is organized.

(2) A description of the merger or consolidation.

(3) A statement itemized by classes and series, if any, within a class of the aggregate number of issued shares of the corporation as last reported to the Secretary of State in any document required to be filed by this Act, other than an annual report, interim annual report, or final transition annual report.

(4) A statement itemized by classes and series, if any, within a class of the aggregate number of issued shares of the corporation after giving effect to the change.

(5) A statement, expressed in dollars, of the amount of paid-in capital of the corporation as last reported to the Secretary of State in any document required to be filed by this Act, other than an annual report, interim annual report, or final transition annual report.

(6) A statement, expressed in dollars, of the amount of paid-in capital of the corporation after giving effect to the merger or consolidation, which amount, except as provided in subsection (f) of Section 9.20 of this Act: (1) , must be at least equal to the sum of the paid-in capital amounts of the merged or consolidated corporations before the event; or (2) in the case of a statutory merger, must be calculated using the aggregation rule method.

The changes in this paragraph made by this amendatory Act of the 104th are declarative of existing law.

(7) Additional information concerning each of the constituent corporations that was a party to a merger or consolidation as may be necessary or appropriate to verify the proper amount of fees and franchise taxes payable by the corporation.

(b) The report shall be made on forms prescribed and furnished by the Secretary of State.

(Source: P.A. 91-464, eff. 1-1-00; 92-33, eff. 7-1-01.)

(805 ILCS 5/15.90) (from Ch. 32, par. 15.90)

Sec. 15.90. Statute of limitations.

(a) Except as otherwise provided in this Section and notwithstanding anything to the contrary contained in any other Section of this Act, no domestic corporation or foreign corporation shall be obligated to pay any annual franchise tax, fee, or penalty or interest thereon imposed under this Act, nor shall any administrative or judicial sanction (including dissolution) be imposed or enforced nor access to the courts of this State be denied based upon nonpayment thereof more than 7 years after the date of filing the annual report with respect to the period during which the obligation for the tax, fee, penalty or interest arose, unless:

(1) within that 7 year period the Secretary of State sends a written notice to the corporation to the effect that:

(A) administrative or judicial action to dissolve the corporation or revoke its authority for nonpayment of a tax, fee, penalty or interest has been commenced; or

(B) the corporation has submitted a report but has failed to pay a tax, fee, penalty or interest required to be paid therewith; or (C) a report with respect to an event or action giving rise to an obligation to pay a tax, fee, penalty or interest is required but has not been filed, or has been filed and is in error or incomplete; or

(2) the annual report by the corporation was filed with fraudulent intent to evade taxes payable under this Act.

A corporation nonetheless shall be required to pay the annual franchise all taxes that would have been payable during the most recent 7 year period due to a previously unreported increase in paid-in capital that occurred prior to that 7 year period and interest and penalties thereon for that period, except that, from February 1, 2008 through March 15, 2008, with respect to any corporation that participates in the Franchise Tax and License Fee Amnesty Act of 2007, the corporation shall be only required to pay all taxes that would have been payable during the most recent 4 year period due to a previously unreported increase in paid-in capital that occurred prior to that 7 year period.

(b) If within 2 years following a change in control of a corporation the corporation voluntarily pays in good faith all known obligations of the corporation imposed by this Article 15 with respect to reports that were required to have been filed since the beginning of the 7 year period ending on the effective date of the change in control, no action shall be taken to enforce or collect obligations of that corporation imposed by this Article 15 with respect to reports that were required to have been filed prior to that 7 year period regardless of whether the limitation period set forth in subsection (a) is otherwise applicable. For purposes of this subsection (b), a change in control means a transaction, or a series of transactions consummated within a period of 180 consecutive days, as a result of which a person which owned less than 10% of the shares having the power to elect directors of the corporation acquires shares such that the person becomes the holder of 80% or more of the shares having such power. For purposes of this subsection (b) a person means any natural person, corporation, partnership, trust or other entity together with all other persons controlled by, controlling or under common control with such person.

(c) Except as otherwise provided in this Section and notwithstanding anything to the contrary contained in any other Section of this Act, no foreign corporation that has not previously obtained authority under this Act shall, upon voluntary application for authority filed with the Secretary of State prior to January 1, 2001, be obligated to pay any tax, fee, penalty, or interest imposed under this Act, nor shall any administrative or judicial sanction be imposed or enforced based upon nonpayment thereof with respect to a period during which the obligation arose that is prior to January 1, 1993 unless: (1) prior to receipt of the application for authority the Secretary of State had sent written notice to the corporation regarding its failure to obtain an application for authority; or , (2) the corporation had submitted an application for authority previously but had failed to pay any tax, fee, penalty or interest to be paid therewith, or (3) the application for authority was submitted by the corporation with fraudulent intent to evade taxes payable under this Act. A corporation nonetheless shall be required to pay all taxes and fees due under this Act that would have been payable since January 1, 1993 as a result of commencing the transaction of its business in this State and interest thereon for that period.

(Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08; 96-66, eff. 1-1-10.)

(805 ILCS 5/16.05) (from Ch. 32, par. 16.05)

Sec. 16.05. Penalties and interest imposed upon corporations.

(a) Except as otherwise provided in subsection (k), each Each corporation, domestic or foreign, that fails or refuses to file any annual report or report of cumulative changes in paid-in capital and pay any franchise tax due pursuant to the report prior to the first day of its anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the corporation shall pay a penalty of 10% of the amount of any delinquent franchise tax due for the report. From February 1, 2008 through March 15, 2008, no penalty shall be imposed with respect to any amount of delinquent franchise tax paid pursuant to the Franchise Tax and License Fee Amnesty Act of 2007.

(b) Except as otherwise provided in subsection (k), each Each corporation, domestic or foreign, that fails or refuses to file a report of issuance of shares or increase in paid-in capital within the time prescribed by this Act is subject to a penalty on any obligation occurring prior to January 1, 1991, and interest on those obligations on or after January 1, 1991, for each calendar month or part of month that it is delinquent in the amount of 2% of the amount of license fees and franchise taxes provided by this Act to be paid on account of the issuance of shares or increase in paid-in capital. From February 1, 2008 through March 15, 2008, no penalty shall be imposed, or interest charged, with respect to any amount of delinquent license fees and franchise taxes paid pursuant to the Franchise Tax and License Fee Amnesty Act of 2007.

(c) Except as otherwise provided in subsection (k), each Each corporation, domestic or foreign, that fails or refuses to file a report of cumulative changes in paid-in capital or report following merger within the time prescribed by this Act is subject to interest on or after January 1, 1992, for each calendar month or part of month that it is delinquent, in the amount of 2% of the amount of franchise taxes provided by this Act to be paid on account of the issuance of shares or increase in paid-in capital disclosed on the report of cumulative changes in paid-in capital or report following merger, or $1, whichever is greater. From February 1, 2008 through March 15, 2008, no interest shall be charged with respect to any amount of delinquent franchise tax paid pursuant to the Franchise Tax and License Fee Amnesty Act of 2007.

(d) (Blank). If the annual franchise tax, or the supplemental annual franchise tax for any 12-month period commencing July 1, 1968, or July 1 of any subsequent year through June 30, 1983, assessed in accordance with this Act, is not paid by July 31, it is delinquent, and there is added a penalty prior to January 1, 1991, and interest on and after January 1, 1991, of 2% for each month or part of month that it is delinquent commencing with the month of August, or $1, whichever is greater. From February 1, 2008 through March 15, 2008, no penalty shall be imposed, or interest charged, with respect to any amount of delinquent franchise taxes paid pursuant to the Franchise Tax and License Fee Amnesty Act of 2007.

(e) (Blank). If the supplemental annual franchise tax assessed in accordance with the provisions of this Act for the 12-month period commencing July 1, 1967, is not paid by September 30, 1967, it is delinquent, and there is added a penalty prior to January 1, 1991, and interest on and after January 1, 1991, of 2% for each month or part of month that it is delinquent commencing with the month of October, 1967. From February 1, 2008 through March 15, 2008, no penalty shall be imposed, or interest charged, with respect to any amount of delinquent franchise taxes paid pursuant to the Franchise Tax and License Fee Amnesty Act of 2007.

(f) (Blank). If any annual franchise tax for any period beginning on or after July 1, 1983, is not paid by the time period herein prescribed, it is delinquent and there is added a penalty prior to January 1, 1991, and interest on and after January 1, 1991, of 2% for each month or part of a month that it is delinquent commencing with the anniversary month or in the case of a corporation that has established an extended filing month, the extended filing month, or $1, whichever is greater. From February 1, 2008 through March 15, 2008, no penalty shall be imposed, or interest charged, with respect to any amount of delinquent franchise taxes paid pursuant to the Franchise Tax and License Fee Amnesty Act of 2007.

(g) Any corporation, domestic or foreign, failing to pay the prescribed fee for assumed corporate name renewal when due and payable shall be given notice of nonpayment by the Secretary of State by regular mail; and if the fee together with a penalty fee of $5 is not paid within 90 days after the notice is mailed, the right to use the assumed name shall cease.

(h) Any corporation which (i) puts forth any sign or advertisement, assuming any name other than that by which it is incorporated or otherwise authorized by law to act or (ii) violates Section 3.25, shall be guilty of a Class C misdemeanor and shall be deemed guilty of an additional offense for each day it shall continue to so offend.

(i) Each corporation, domestic or foreign, that fails or refuses (1) to answer truthfully and fully within the time prescribed by this Act interrogatories propounded by the Secretary of State in accordance with this Act or (2) to perform any other act required by this Act to be performed by the corporation, is guilty of a Class C misdemeanor.

(j) Each corporation that fails or refuses to file articles of revocation of dissolution within the time prescribed by this Act is subject to a penalty for each calendar month or part of the month that it is delinquent in the amount of $50.

(k) The rate of penalties and interest on any franchise tax or fee imposed under this Act, for which the Secretary of State provides written notice of the amount of penalties and interest owed to a corporation on or after January 1, 2026, shall be the rate of interest established under Section 1003 of the Illinois Income Tax Act, and no other penalties or interest shall be imposed or charged to a corporation.

(Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08; 96-1121, eff. 1-1-11.)

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