99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB0176

 

Introduced , by Rep. David McSweeney

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201  from Ch. 120, par. 2-201
35 ILCS 5/201.5
35 ILCS 5/901  from Ch. 120, par. 9-901
30 ILCS 105/5.786 rep.
30 ILCS 105/5.787 rep.
30 ILCS 105/6z-85 rep.
30 ILCS 105/6z-86 rep.

    Amends the Illinois Income Tax Act. For taxable years beginning on or after January 1, 2015, reduces the rate of tax to 3% for individuals, trusts, and estates and 4.8% for corporations. Makes corresponding changes concerning the distribution of tax proceeds. Provides that, if the State exceeds certain specified spending limitations, the Auditor General shall post a copy of the supplemental spending report on his or her website. Effective immediately.


LRB099 03475 HLH 23483 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB0176LRB099 03475 HLH 23483 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 Sections 201, 201.5, and 901 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% 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 3%
5    3.75% of the taxpayer's net income for the taxable year.
6        (5.3) (Blank). In the case of an individual, trust, or
7    estate, for taxable years beginning prior to January 1,
8    2025, and ending after December 31, 2024, an amount equal
9    to the sum of (i) 3.75% of the taxpayer's net income for
10    the period prior to January 1, 2025, as calculated under
11    Section 202.5, and (ii) 3.25% of the taxpayer's net income
12    for the period after December 31, 2024, as calculated under
13    Section 202.5.
14        (5.4) (Blank). In the case of an individual, trust, or
15    estate, for taxable years beginning on or after January 1,
16    2025, an amount equal to 3.25% of the taxpayer's net income
17    for the 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, 2015, an amount equal to 7% of the taxpayer's
16    net income for the taxable year.
17        (11) In the case of a corporation, for taxable years
18    beginning prior to January 1, 2015, and ending after
19    December 31, 2014, an amount equal to the sum of (i) 7% of
20    the taxpayer's net income for the period prior to January
21    1, 2015, as calculated under Section 202.5, and (ii) 4.8%
22    5.25% of the taxpayer's net income for the period after
23    December 31, 2014, as calculated under Section 202.5.
24        (12) In the case of a corporation, for taxable years
25    beginning on or after January 1, 2015, and ending prior to
26    January 1, 2025, an amount equal to 4.8% 5.25% of the

 

 

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1    taxpayer's net income for the taxable year.
2        (13) (Blank). In the case of a corporation, for taxable
3    years beginning prior to January 1, 2025, and ending after
4    December 31, 2024, an amount equal to the sum of (i) 5.25%
5    of the taxpayer's net income for the period prior to
6    January 1, 2025, as calculated under Section 202.5, and
7    (ii) 4.8% of the taxpayer's net income for the period after
8    December 31, 2024, as calculated under Section 202.5.
9        (14) (Blank). In the case of a corporation, for taxable
10    years beginning on or after January 1, 2025, an amount
11    equal to 4.8% of the taxpayer's net income for the taxable
12    year.
13    The rates under this subsection (b) are subject to the
14provisions of Section 201.5.
15    (c) Personal Property Tax Replacement Income Tax.
16Beginning on July 1, 1979 and thereafter, in addition to such
17income tax, there is also hereby imposed the Personal Property
18Tax Replacement Income Tax measured by net income on every
19corporation (including Subchapter S corporations), partnership
20and trust, for each taxable year ending after June 30, 1979.
21Such taxes are imposed on the privilege of earning or receiving
22income in or as a resident of this State. The Personal Property
23Tax Replacement Income Tax shall be in addition to the income
24tax imposed by subsections (a) and (b) of this Section and in
25addition to all other occupation or privilege taxes imposed by
26this State or by any municipal corporation or political

 

 

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1subdivision thereof.
2    (d) Additional Personal Property Tax Replacement Income
3Tax Rates. The personal property tax replacement income tax
4imposed by this subsection and subsection (c) of this Section
5in the case of a corporation, other than a Subchapter S
6corporation and except as adjusted by subsection (d-1), shall
7be an additional amount equal to 2.85% of such taxpayer's net
8income for the taxable year, except that beginning on January
91, 1981, and thereafter, the rate of 2.85% specified in this
10subsection shall be reduced to 2.5%, and in the case of a
11partnership, trust or a Subchapter S corporation shall be an
12additional amount equal to 1.5% of such taxpayer's net income
13for the taxable year.
14    (d-1) Rate reduction for certain foreign insurers. In the
15case of a foreign insurer, as defined by Section 35A-5 of the
16Illinois Insurance Code, whose state or country of domicile
17imposes on insurers domiciled in Illinois a retaliatory tax
18(excluding any insurer whose premiums from reinsurance assumed
19are 50% or more of its total insurance premiums as determined
20under paragraph (2) of subsection (b) of Section 304, except
21that for purposes of this determination premiums from
22reinsurance do not include premiums from inter-affiliate
23reinsurance arrangements), beginning with taxable years ending
24on or after December 31, 1999, the sum of the rates of tax
25imposed by subsections (b) and (d) shall be reduced (but not
26increased) to the rate at which the total amount of tax imposed

 

 

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1under this Act, net of all credits allowed under this Act,
2shall equal (i) the total amount of tax that would be imposed
3on the foreign insurer's net income allocable to Illinois for
4the taxable year by such foreign insurer's state or country of
5domicile if that net income were subject to all income taxes
6and taxes measured by net income imposed by such foreign
7insurer's state or country of domicile, net of all credits
8allowed or (ii) a rate of zero if no such tax is imposed on such
9income by the foreign insurer's state of domicile. For the
10purposes of this subsection (d-1), an inter-affiliate includes
11a mutual insurer under common management.
12        (1) For the purposes of subsection (d-1), in no event
13    shall the sum of the rates of tax imposed by subsections
14    (b) and (d) be reduced below the rate at which the sum of:
15            (A) the total amount of tax imposed on such foreign
16        insurer under this Act for a taxable year, net of all
17        credits allowed under this Act, plus
18            (B) the privilege tax imposed by Section 409 of the
19        Illinois Insurance Code, the fire insurance company
20        tax imposed by Section 12 of the Fire Investigation
21        Act, and the fire department taxes imposed under
22        Section 11-10-1 of the Illinois Municipal Code,
23    equals 1.25% for taxable years ending prior to December 31,
24    2003, or 1.75% for taxable years ending on or after
25    December 31, 2003, of the net taxable premiums written for
26    the taxable year, as described by subsection (1) of Section

 

 

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1    409 of the Illinois Insurance Code. This paragraph will in
2    no event increase the rates imposed under subsections (b)
3    and (d).
4        (2) Any reduction in the rates of tax imposed by this
5    subsection shall be applied first against the rates imposed
6    by subsection (b) and only after the tax imposed by
7    subsection (a) net of all credits allowed under this
8    Section other than the credit allowed under subsection (i)
9    has been reduced to zero, against the rates imposed by
10    subsection (d).
11    This subsection (d-1) is exempt from the provisions of
12Section 250.
13    (e) Investment credit. A taxpayer shall be allowed a credit
14against the Personal Property Tax Replacement Income Tax for
15investment in qualified property.
16        (1) A taxpayer shall be allowed a credit equal to .5%
17    of the basis of qualified property placed in service during
18    the taxable year, provided such property is placed in
19    service on or after July 1, 1984. There shall be allowed an
20    additional credit equal to .5% of the basis of qualified
21    property placed in service during the taxable year,
22    provided such property is placed in service on or after
23    July 1, 1986, and the taxpayer's base employment within
24    Illinois has increased by 1% or more over the preceding
25    year as determined by the taxpayer's employment records
26    filed with the Illinois Department of Employment Security.

 

 

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1    Taxpayers who are new to Illinois shall be deemed to have
2    met the 1% growth in base employment for the first year in
3    which they file employment records with the Illinois
4    Department of Employment Security. The provisions added to
5    this Section by Public Act 85-1200 (and restored by Public
6    Act 87-895) shall be construed as declaratory of existing
7    law and not as a new enactment. If, in any year, the
8    increase in base employment within Illinois over the
9    preceding year is less than 1%, the additional credit shall
10    be limited to that percentage times a fraction, the
11    numerator of which is .5% and the denominator of which is
12    1%, but shall not exceed .5%. The investment credit shall
13    not be allowed to the extent that it would reduce a
14    taxpayer's liability in any tax year below zero, nor may
15    any credit for qualified property be allowed for any year
16    other than the year in which the property was placed in
17    service in Illinois. For tax years ending on or after
18    December 31, 1987, and on or before December 31, 1988, the
19    credit shall be allowed for the tax year in which the
20    property is placed in service, or, if the amount of the
21    credit exceeds the tax liability for that year, whether it
22    exceeds the original liability or the liability as later
23    amended, such excess may be carried forward and applied to
24    the tax liability of the 5 taxable years following the
25    excess credit years if the taxpayer (i) makes investments
26    which cause the creation of a minimum of 2,000 full-time

 

 

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1    equivalent jobs in Illinois, (ii) is located in an
2    enterprise zone established pursuant to the Illinois
3    Enterprise Zone Act and (iii) is certified by the
4    Department of Commerce and Community Affairs (now
5    Department of Commerce and Economic Opportunity) as
6    complying with the requirements specified in clause (i) and
7    (ii) by July 1, 1986. The Department of Commerce and
8    Community Affairs (now Department of Commerce and Economic
9    Opportunity) shall notify the Department of Revenue of all
10    such certifications immediately. For tax years ending
11    after December 31, 1988, the credit shall be allowed for
12    the tax year in which the property is placed in service,
13    or, if the amount of the credit exceeds the tax liability
14    for that year, whether it exceeds the original liability or
15    the liability as later amended, such excess may be carried
16    forward and applied to the tax liability of the 5 taxable
17    years following the excess credit years. The credit shall
18    be 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, earlier credit
21    shall be applied first.
22        (2) The term "qualified property" means property
23    which:
24            (A) is tangible, whether new or used, including
25        buildings and structural components of buildings and
26        signs that are real property, but not including land or

 

 

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1        improvements to real property that are not a structural
2        component of a building such as landscaping, sewer
3        lines, local access roads, fencing, parking lots, and
4        other appurtenances;
5            (B) is depreciable pursuant to Section 167 of the
6        Internal Revenue Code, except that "3-year property"
7        as defined in Section 168(c)(2)(A) of that Code is not
8        eligible for the credit provided by this subsection
9        (e);
10            (C) is acquired by purchase as defined in Section
11        179(d) of the Internal Revenue Code;
12            (D) is used in Illinois by a taxpayer who is
13        primarily engaged in manufacturing, or in mining coal
14        or fluorite, or in retailing, or was placed in service
15        on or after July 1, 2006 in a River Edge Redevelopment
16        Zone established pursuant to the River Edge
17        Redevelopment Zone Act; and
18            (E) has not previously been used in Illinois in
19        such a manner and by such a person as would qualify for
20        the credit provided by this subsection (e) or
21        subsection (f).
22        (3) For purposes of this subsection (e),
23    "manufacturing" means the material staging and production
24    of tangible personal property by procedures commonly
25    regarded as manufacturing, processing, fabrication, or
26    assembling which changes some existing material into new

 

 

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1    shapes, new qualities, or new combinations. For purposes of
2    this subsection (e) the term "mining" shall have the same
3    meaning as the term "mining" in Section 613(c) of the
4    Internal Revenue Code. For purposes of this subsection (e),
5    the term "retailing" means the sale of tangible personal
6    property for use or consumption and not for resale, or
7    services rendered in conjunction with the sale of tangible
8    personal property for use or consumption and not for
9    resale. For purposes of this subsection (e), "tangible
10    personal property" has the same meaning as when that term
11    is used in the Retailers' Occupation Tax Act, and, for
12    taxable years ending after December 31, 2008, does not
13    include the generation, transmission, or distribution of
14    electricity.
15        (4) The basis of qualified property shall be the basis
16    used to compute the depreciation deduction for federal
17    income tax purposes.
18        (5) If the basis of the property for federal income tax
19    depreciation purposes is increased after it has been placed
20    in service in Illinois by the taxpayer, the amount of such
21    increase shall be deemed property placed in service on the
22    date of such increase in basis.
23        (6) The term "placed in service" shall have the same
24    meaning as under Section 46 of the Internal Revenue Code.
25        (7) If during any taxable year, any property ceases to
26    be qualified property in the hands of the taxpayer within

 

 

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1    48 months after being placed in service, or the situs of
2    any qualified property is moved outside Illinois within 48
3    months after being placed in service, the Personal Property
4    Tax Replacement Income Tax for such taxable year shall be
5    increased. Such increase shall be determined by (i)
6    recomputing the investment credit which would have been
7    allowed for the year in which credit for such property was
8    originally allowed by eliminating such property from such
9    computation and, (ii) subtracting such recomputed credit
10    from the amount of credit previously allowed. For the
11    purposes of this paragraph (7), a reduction of the basis of
12    qualified property resulting from a redetermination of the
13    purchase price shall be deemed a disposition of qualified
14    property to the extent of such reduction.
15        (8) Unless the investment credit is extended by law,
16    the basis of qualified property shall not include costs
17    incurred after December 31, 2018, except for costs incurred
18    pursuant to a binding contract entered into on or before
19    December 31, 2018.
20        (9) Each taxable year ending before December 31, 2000,
21    a partnership may elect to pass through to its partners the
22    credits to which the partnership is entitled under this
23    subsection (e) for the taxable year. A partner may use the
24    credit allocated to him or her under this paragraph only
25    against the tax imposed in subsections (c) and (d) of this
26    Section. If the partnership makes that election, those

 

 

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1    credits shall be allocated among the partners in the
2    partnership in accordance with the rules set forth in
3    Section 704(b) of the Internal Revenue Code, and the rules
4    promulgated under that Section, and the allocated amount of
5    the credits shall be allowed to the partners for that
6    taxable year. The partnership shall make this election on
7    its Personal Property Tax Replacement Income Tax return for
8    that taxable year. The election to pass through the credits
9    shall be irrevocable.
10        For taxable years ending on or after December 31, 2000,
11    a partner that qualifies its partnership for a subtraction
12    under subparagraph (I) of paragraph (2) of subsection (d)
13    of Section 203 or a shareholder that qualifies a Subchapter
14    S corporation for a subtraction under subparagraph (S) of
15    paragraph (2) of subsection (b) of Section 203 shall be
16    allowed a credit under this subsection (e) equal to its
17    share of the credit earned under this subsection (e) during
18    the taxable year by the partnership or Subchapter S
19    corporation, determined in accordance with the
20    determination of income and distributive share of income
21    under Sections 702 and 704 and Subchapter S of the Internal
22    Revenue Code. This paragraph is exempt from the provisions
23    of Section 250.
24    (f) Investment credit; Enterprise Zone; River Edge
25Redevelopment Zone.
26        (1) A taxpayer shall be allowed a credit against the

 

 

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1    tax imposed by subsections (a) and (b) of this Section for
2    investment in qualified property which is placed in service
3    in an Enterprise Zone created pursuant to the Illinois
4    Enterprise Zone Act or, for property placed in service on
5    or after July 1, 2006, a River Edge Redevelopment Zone
6    established pursuant to the River Edge Redevelopment Zone
7    Act. For partners, shareholders of Subchapter S
8    corporations, and owners of limited liability companies,
9    if the liability company is treated as a partnership for
10    purposes of federal and State income taxation, there shall
11    be allowed a credit under this subsection (f) to be
12    determined in accordance with the determination of income
13    and distributive share of income under Sections 702 and 704
14    and Subchapter S of the Internal Revenue Code. The credit
15    shall be .5% of the basis for such property. The credit
16    shall be available only in the taxable year in which the
17    property is placed in service in the Enterprise Zone or
18    River Edge Redevelopment Zone and shall not be allowed to
19    the extent that it would reduce a taxpayer's liability for
20    the tax imposed by subsections (a) and (b) of this Section
21    to below zero. For tax years ending on or after December
22    31, 1985, the credit shall be allowed for the tax year in
23    which the property is placed in service, or, if the amount
24    of the credit exceeds the tax liability for that year,
25    whether it exceeds the original liability or the liability
26    as later amended, such excess may be carried forward and

 

 

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1    applied to the tax liability of the 5 taxable years
2    following the excess credit year. The credit shall be
3    applied to the earliest year for which there is a
4    liability. If there is credit from more than one tax year
5    that is available to offset a liability, the credit
6    accruing first in time shall be applied first.
7        (2) The term qualified property means property which:
8            (A) is tangible, whether new or used, including
9        buildings and structural components of buildings;
10            (B) is depreciable pursuant to Section 167 of the
11        Internal Revenue Code, except that "3-year property"
12        as defined in Section 168(c)(2)(A) of that Code is not
13        eligible for the credit provided by this subsection
14        (f);
15            (C) is acquired by purchase as defined in Section
16        179(d) of the Internal Revenue Code;
17            (D) is used in the Enterprise Zone or River Edge
18        Redevelopment Zone by the taxpayer; and
19            (E) has not been previously used in Illinois in
20        such a manner and by such a person as would qualify for
21        the credit provided by this subsection (f) or
22        subsection (e).
23        (3) The basis of qualified property shall be the basis
24    used to compute the depreciation deduction for federal
25    income tax purposes.
26        (4) If the basis of the property for federal income tax

 

 

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1    depreciation purposes is increased after it has been placed
2    in service in the Enterprise Zone or River Edge
3    Redevelopment Zone by the taxpayer, the amount of such
4    increase shall be deemed property placed in service on the
5    date of such increase in basis.
6        (5) The term "placed in service" shall have the same
7    meaning as under Section 46 of the Internal Revenue Code.
8        (6) If during any taxable year, any property ceases to
9    be qualified property in the hands of the taxpayer within
10    48 months after being placed in service, or the situs of
11    any qualified property is moved outside the Enterprise Zone
12    or River Edge Redevelopment Zone within 48 months after
13    being placed in service, the tax imposed under subsections
14    (a) and (b) of this Section for such taxable year shall be
15    increased. Such increase shall be determined by (i)
16    recomputing the investment credit which would have been
17    allowed for the year in which credit for such property was
18    originally allowed by eliminating such property from such
19    computation, and (ii) subtracting such recomputed credit
20    from the amount of credit previously allowed. For the
21    purposes of this paragraph (6), a reduction of the basis of
22    qualified property resulting from a redetermination of the
23    purchase price shall be deemed a disposition of qualified
24    property to the extent of such reduction.
25        (7) There shall be allowed an additional credit equal
26    to 0.5% of the basis of qualified property placed in

 

 

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1    service during the taxable year in a River Edge
2    Redevelopment Zone, provided such property is placed in
3    service on or after July 1, 2006, and the taxpayer's base
4    employment within Illinois has increased by 1% or more over
5    the preceding year as determined by the taxpayer's
6    employment records filed with the Illinois Department of
7    Employment Security. Taxpayers who are new to Illinois
8    shall be deemed to have met the 1% growth in base
9    employment for the first year in which they file employment
10    records with the Illinois Department of Employment
11    Security. If, in any year, the increase in base employment
12    within Illinois over the preceding year is less than 1%,
13    the additional credit shall be limited to that percentage
14    times a fraction, the numerator of which is 0.5% and the
15    denominator of which is 1%, but shall not exceed 0.5%.
16    (g) (Blank).
17    (h) Investment credit; High Impact Business.
18        (1) Subject to subsections (b) and (b-5) of Section 5.5
19    of the Illinois Enterprise Zone Act, a taxpayer shall be
20    allowed a credit against the tax imposed by subsections (a)
21    and (b) of this Section for investment in qualified
22    property which is placed in service by a Department of
23    Commerce and Economic Opportunity designated High Impact
24    Business. The credit shall be .5% of the basis for such
25    property. The credit shall not be available (i) until the
26    minimum investments in qualified property set forth in

 

 

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1    subdivision (a)(3)(A) of Section 5.5 of the Illinois
2    Enterprise Zone Act have been satisfied or (ii) until the
3    time authorized in subsection (b-5) of the Illinois
4    Enterprise Zone Act for entities designated as High Impact
5    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
6    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
7    Act, and shall not be allowed to the extent that it would
8    reduce a taxpayer's liability for the tax imposed by
9    subsections (a) and (b) of this Section to below zero. The
10    credit applicable to such investments shall be taken in the
11    taxable year in which such investments have been completed.
12    The credit for additional investments beyond the minimum
13    investment by a designated high impact business authorized
14    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
15    Enterprise Zone Act shall be available only in the taxable
16    year in which the property is placed in service and shall
17    not be allowed to the extent that it would reduce a
18    taxpayer's liability for the tax imposed by subsections (a)
19    and (b) of this Section to below zero. For tax years ending
20    on or after December 31, 1987, the credit shall be allowed
21    for the tax year in which the property is placed in
22    service, or, if the amount of the credit exceeds the tax
23    liability for that year, whether it exceeds the original
24    liability or the liability as later amended, such excess
25    may be carried forward and applied to the tax liability of
26    the 5 taxable years following the excess credit year. The

 

 

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1    credit shall be applied to the earliest year for which
2    there is a liability. If there is credit from more than one
3    tax year that is available to offset a liability, the
4    credit accruing first in time shall be applied first.
5        Changes made in this subdivision (h)(1) by Public Act
6    88-670 restore changes made by Public Act 85-1182 and
7    reflect existing law.
8        (2) The term qualified property means property which:
9            (A) is tangible, whether new or used, including
10        buildings and structural components of buildings;
11            (B) is depreciable pursuant to Section 167 of the
12        Internal Revenue Code, except that "3-year property"
13        as defined in Section 168(c)(2)(A) of that Code is not
14        eligible for the credit provided by this subsection
15        (h);
16            (C) is acquired by purchase as defined in Section
17        179(d) of the Internal Revenue Code; and
18            (D) is not eligible for the Enterprise Zone
19        Investment Credit provided by subsection (f) of this
20        Section.
21        (3) The basis of qualified property shall be the basis
22    used to compute the depreciation deduction for federal
23    income tax purposes.
24        (4) If the basis of the property for federal income tax
25    depreciation purposes is increased after it has been placed
26    in service in a federally designated Foreign Trade Zone or

 

 

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1    Sub-Zone located in Illinois by the taxpayer, the amount of
2    such increase shall be deemed property placed in service on
3    the date of such increase in basis.
4        (5) The term "placed in service" shall have the same
5    meaning as under Section 46 of the Internal Revenue Code.
6        (6) If during any taxable year ending on or before
7    December 31, 1996, any property ceases to be qualified
8    property in the hands of the taxpayer within 48 months
9    after being placed in service, or the situs of any
10    qualified property is moved outside Illinois within 48
11    months after being placed in service, the tax imposed under
12    subsections (a) and (b) of this Section for such taxable
13    year shall be increased. Such increase shall be determined
14    by (i) recomputing the investment credit which would have
15    been allowed for the year in which credit for such property
16    was originally allowed by eliminating such property from
17    such computation, and (ii) subtracting such recomputed
18    credit from the amount of credit previously allowed. For
19    the purposes of this paragraph (6), a reduction of the
20    basis of qualified property resulting from a
21    redetermination of the purchase price shall be deemed a
22    disposition of qualified property to the extent of such
23    reduction.
24        (7) Beginning with tax years ending after December 31,
25    1996, if a taxpayer qualifies for the credit under this
26    subsection (h) and thereby is granted a tax abatement and

 

 

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1    the taxpayer relocates its entire facility in violation of
2    the explicit terms and length of the contract under Section
3    18-183 of the Property Tax Code, the tax imposed under
4    subsections (a) and (b) of this Section shall be increased
5    for the taxable year in which the taxpayer relocated its
6    facility by an amount equal to the amount of credit
7    received by the taxpayer under this subsection (h).
8    (i) Credit for Personal Property Tax Replacement Income
9Tax. For tax years ending prior to December 31, 2003, a credit
10shall be allowed against the tax imposed by subsections (a) and
11(b) of this Section for the tax imposed by subsections (c) and
12(d) of this Section. This credit shall be computed by
13multiplying the tax imposed by subsections (c) and (d) of this
14Section by a fraction, the numerator of which is base income
15allocable to Illinois and the denominator of which is Illinois
16base income, and further multiplying the product by the tax
17rate imposed by subsections (a) and (b) of this Section.
18    Any credit earned on or after December 31, 1986 under this
19subsection which is unused in the year the credit is computed
20because it exceeds the tax liability imposed by subsections (a)
21and (b) for that year (whether it exceeds the original
22liability or the liability as later amended) may be carried
23forward and applied to the tax liability imposed by subsections
24(a) and (b) of the 5 taxable years following the excess credit
25year, provided that no credit may be carried forward to any
26year ending on or after December 31, 2003. This credit shall be

 

 

HB0176- 23 -LRB099 03475 HLH 23483 b

1applied first to the earliest year for which there is a
2liability. If there is a credit under this subsection from more
3than one tax year that is available to offset a liability the
4earliest credit arising under this subsection shall be applied
5first.
6    If, during any taxable year ending on or after December 31,
71986, the tax imposed by subsections (c) and (d) of this
8Section for which a taxpayer has claimed a credit under this
9subsection (i) is reduced, the amount of credit for such tax
10shall also be reduced. Such reduction shall be determined by
11recomputing the credit to take into account the reduced tax
12imposed by subsections (c) and (d). If any portion of the
13reduced amount of credit has been carried to a different
14taxable year, an amended return shall be filed for such taxable
15year to reduce the amount of credit claimed.
16    (j) Training expense credit. Beginning with tax years
17ending on or after December 31, 1986 and prior to December 31,
182003, a taxpayer shall be allowed a credit against the tax
19imposed by subsections (a) and (b) under this Section for all
20amounts paid or accrued, on behalf of all persons employed by
21the taxpayer in Illinois or Illinois residents employed outside
22of Illinois by a taxpayer, for educational or vocational
23training in semi-technical or technical fields or semi-skilled
24or skilled fields, which were deducted from gross income in the
25computation of taxable income. The credit against the tax
26imposed by subsections (a) and (b) shall be 1.6% of such

 

 

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1training expenses. For partners, shareholders of subchapter S
2corporations, and owners of limited liability companies, if the
3liability company is treated as a partnership for purposes of
4federal and State income taxation, there shall be allowed a
5credit under this subsection (j) to be determined in accordance
6with the determination of income and distributive share of
7income under Sections 702 and 704 and subchapter S of the
8Internal Revenue Code.
9    Any credit allowed under this subsection which is unused in
10the year the credit is earned may be carried forward to each of
11the 5 taxable years following the year for which the credit is
12first computed until it is used. This credit shall be applied
13first to the earliest year for which there is a liability. If
14there is a credit under this subsection from more than one tax
15year that is available to offset a liability the earliest
16credit arising under this subsection shall be applied first. No
17carryforward credit may be claimed in any tax year ending on or
18after December 31, 2003.
19    (k) Research and development credit. For tax years ending
20after July 1, 1990 and prior to December 31, 2003, and
21beginning again for tax years ending on or after December 31,
222004, and ending prior to January 1, 2016, a taxpayer shall be
23allowed a credit against the tax imposed by subsections (a) and
24(b) of this Section for increasing research activities in this
25State. The credit allowed against the tax imposed by
26subsections (a) and (b) shall be equal to 6 1/2% of the

 

 

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1qualifying expenditures for increasing research activities in
2this State. For partners, shareholders of subchapter S
3corporations, and owners of limited liability companies, if the
4liability company is treated as a partnership for purposes of
5federal and State income taxation, there shall be allowed a
6credit under this subsection to be determined in accordance
7with the determination of income and distributive share of
8income under Sections 702 and 704 and subchapter S of the
9Internal Revenue Code.
10    For purposes of this subsection, "qualifying expenditures"
11means the qualifying expenditures as defined for the federal
12credit for increasing research activities which would be
13allowable under Section 41 of the Internal Revenue Code and
14which are conducted in this State, "qualifying expenditures for
15increasing research activities in this State" means the excess
16of qualifying expenditures for the taxable year in which
17incurred over qualifying expenditures for the base period,
18"qualifying expenditures for the base period" means the average
19of the qualifying expenditures for each year in the base
20period, and "base period" means the 3 taxable years immediately
21preceding the taxable year for which the determination is being
22made.
23    Any credit in excess of the tax liability for the taxable
24year may be carried forward. A taxpayer may elect to have the
25unused credit shown on its final completed return carried over
26as a credit against the tax liability for the following 5

 

 

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1taxable years or until it has been fully used, whichever occurs
2first; provided that no credit earned in a tax year ending
3prior to December 31, 2003 may be carried forward to any year
4ending on or after December 31, 2003.
5    If an unused credit is carried forward to a given year from
62 or more earlier years, that credit arising in the earliest
7year will be applied first against the tax liability for the
8given year. If a tax liability for the given year still
9remains, the credit from the next earliest year will then be
10applied, and so on, until all credits have been used or no tax
11liability for the given year remains. Any remaining unused
12credit or credits then will be carried forward to the next
13following year in which a tax liability is incurred, except
14that no credit can be carried forward to a year which is more
15than 5 years after the year in which the expense for which the
16credit is given was incurred.
17    No inference shall be drawn from this amendatory Act of the
1891st General Assembly in construing this Section for taxable
19years beginning before January 1, 1999.
20    (l) Environmental Remediation Tax Credit.
21        (i) For tax years ending after December 31, 1997 and on
22    or before December 31, 2001, a taxpayer shall be allowed a
23    credit against the tax imposed by subsections (a) and (b)
24    of this Section for certain amounts paid for unreimbursed
25    eligible remediation costs, as specified in this
26    subsection. For purposes of this Section, "unreimbursed

 

 

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1    eligible remediation costs" means costs approved by the
2    Illinois Environmental Protection Agency ("Agency") under
3    Section 58.14 of the Environmental Protection Act that were
4    paid in performing environmental remediation at a site for
5    which a No Further Remediation Letter was issued by the
6    Agency and recorded under Section 58.10 of the
7    Environmental Protection Act. The credit must be claimed
8    for the taxable year in which Agency approval of the
9    eligible remediation costs is granted. The credit is not
10    available to any taxpayer if the taxpayer or any related
11    party caused or contributed to, in any material respect, a
12    release of regulated substances on, in, or under the site
13    that was identified and addressed by the remedial action
14    pursuant to the Site Remediation Program of the
15    Environmental Protection Act. After the Pollution Control
16    Board rules are adopted pursuant to the Illinois
17    Administrative Procedure Act for the administration and
18    enforcement of Section 58.9 of the Environmental
19    Protection Act, determinations as to credit availability
20    for purposes of this Section shall be made consistent with
21    those rules. For purposes of this Section, "taxpayer"
22    includes a person whose tax attributes the taxpayer has
23    succeeded to under Section 381 of the Internal Revenue Code
24    and "related party" includes the persons disallowed a
25    deduction for losses by paragraphs (b), (c), and (f)(1) of
26    Section 267 of the Internal Revenue Code by virtue of being

 

 

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1    a related taxpayer, as well as any of its partners. The
2    credit allowed against the tax imposed by subsections (a)
3    and (b) shall be equal to 25% of the unreimbursed eligible
4    remediation costs in excess of $100,000 per site, except
5    that the $100,000 threshold shall not apply to any site
6    contained in an enterprise zone as determined by the
7    Department of Commerce and Community Affairs (now
8    Department of Commerce and Economic Opportunity). The
9    total credit allowed shall not exceed $40,000 per year with
10    a maximum total of $150,000 per site. For partners and
11    shareholders of subchapter S corporations, there shall be
12    allowed a credit under this subsection to be determined in
13    accordance with the determination of income and
14    distributive share of income under Sections 702 and 704 and
15    subchapter S of the Internal Revenue Code.
16        (ii) A credit allowed under this subsection that is
17    unused in the year the credit is earned may be carried
18    forward to each of the 5 taxable years following the year
19    for which the credit is first earned until it is used. The
20    term "unused credit" does not include any amounts of
21    unreimbursed eligible remediation costs in excess of the
22    maximum credit per site authorized under paragraph (i).
23    This credit shall be applied first to the earliest year for
24    which there is a liability. If there is a credit under this
25    subsection from more than one tax year that is available to
26    offset a liability, the earliest credit arising under this

 

 

HB0176- 29 -LRB099 03475 HLH 23483 b

1    subsection shall be applied first. A credit allowed under
2    this subsection may be sold to a buyer as part of a sale of
3    all or part of the remediation site for which the credit
4    was granted. The purchaser of a remediation site and the
5    tax credit shall succeed to the unused credit and remaining
6    carry-forward period of the seller. To perfect the
7    transfer, the assignor shall record the transfer in the
8    chain of title for the site and provide written notice to
9    the Director of the Illinois Department of Revenue of the
10    assignor's intent to sell the remediation site and the
11    amount of the tax credit to be transferred as a portion of
12    the sale. In no event may a credit be transferred to any
13    taxpayer if the taxpayer or a related party would not be
14    eligible under the provisions of subsection (i).
15        (iii) For purposes of this Section, the term "site"
16    shall have the same meaning as under Section 58.2 of the
17    Environmental Protection Act.
18    (m) Education expense credit. Beginning with tax years
19ending after December 31, 1999, a taxpayer who is the custodian
20of one or more qualifying pupils shall be allowed a credit
21against the tax imposed by subsections (a) and (b) of this
22Section for qualified education expenses incurred on behalf of
23the qualifying pupils. The credit shall be equal to 25% of
24qualified education expenses, but in no event may the total
25credit under this subsection claimed by a family that is the
26custodian of qualifying pupils exceed $500. In no event shall a

 

 

HB0176- 30 -LRB099 03475 HLH 23483 b

1credit under this subsection reduce the taxpayer's liability
2under this Act to less than zero. This subsection is exempt
3from the provisions of Section 250 of this Act.
4    For purposes of this subsection:
5    "Qualifying pupils" means individuals who (i) are
6residents of the State of Illinois, (ii) are under the age of
721 at the close of the school year for which a credit is
8sought, and (iii) during the school year for which a credit is
9sought were full-time pupils enrolled in a kindergarten through
10twelfth grade education program at any school, as defined in
11this subsection.
12    "Qualified education expense" means the amount incurred on
13behalf of a qualifying pupil in excess of $250 for tuition,
14book fees, and lab fees at the school in which the pupil is
15enrolled during the regular school year.
16    "School" means any public or nonpublic elementary or
17secondary school in Illinois that is in compliance with Title
18VI of the Civil Rights Act of 1964 and attendance at which
19satisfies the requirements of Section 26-1 of the School Code,
20except that nothing shall be construed to require a child to
21attend any particular public or nonpublic school to qualify for
22the credit under this Section.
23    "Custodian" means, with respect to qualifying pupils, an
24Illinois resident who is a parent, the parents, a legal
25guardian, or the legal guardians of the qualifying pupils.
26    (n) River Edge Redevelopment Zone site remediation tax

 

 

HB0176- 31 -LRB099 03475 HLH 23483 b

1credit.
2        (i) For tax years ending on or after December 31, 2006,
3    a taxpayer shall be allowed a credit against the tax
4    imposed by subsections (a) and (b) of this Section for
5    certain amounts paid for unreimbursed eligible remediation
6    costs, as specified in this subsection. For purposes of
7    this Section, "unreimbursed eligible remediation costs"
8    means costs approved by the Illinois Environmental
9    Protection Agency ("Agency") under Section 58.14a of the
10    Environmental Protection Act that were paid in performing
11    environmental remediation at a site within a River Edge
12    Redevelopment Zone for which a No Further Remediation
13    Letter was issued by the Agency and recorded under Section
14    58.10 of the Environmental Protection Act. The credit must
15    be claimed for the taxable year in which Agency approval of
16    the eligible remediation costs is granted. The credit is
17    not available to any taxpayer if the taxpayer or any
18    related party caused or contributed to, in any material
19    respect, a release of regulated substances on, in, or under
20    the site that was identified and addressed by the remedial
21    action pursuant to the Site Remediation Program of the
22    Environmental Protection Act. Determinations as to credit
23    availability for purposes of this Section shall be made
24    consistent with rules adopted by the Pollution Control
25    Board pursuant to the Illinois Administrative Procedure
26    Act for the administration and enforcement of Section 58.9

 

 

HB0176- 32 -LRB099 03475 HLH 23483 b

1    of the Environmental Protection Act. For purposes of this
2    Section, "taxpayer" includes a person whose tax attributes
3    the taxpayer has succeeded to under Section 381 of the
4    Internal Revenue Code and "related party" includes the
5    persons disallowed a deduction for losses by paragraphs
6    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
7    Code by virtue of being a related taxpayer, as well as any
8    of its partners. The credit allowed against the tax imposed
9    by subsections (a) and (b) shall be equal to 25% of the
10    unreimbursed eligible remediation costs in excess of
11    $100,000 per site.
12        (ii) A credit allowed under this subsection that is
13    unused in the year the credit is earned may be carried
14    forward to each of the 5 taxable years following the year
15    for which the credit is first earned until it is used. This
16    credit shall be applied first to the earliest year for
17    which there is a liability. If there is a credit under this
18    subsection from more than one tax year that is available to
19    offset a liability, the earliest credit arising under this
20    subsection shall be applied first. A credit allowed under
21    this subsection may be sold to a buyer as part of a sale of
22    all or part of the remediation site for which the credit
23    was granted. The purchaser of a remediation site and the
24    tax credit shall succeed to the unused credit and remaining
25    carry-forward period of the seller. To perfect the
26    transfer, the assignor shall record the transfer in the

 

 

HB0176- 33 -LRB099 03475 HLH 23483 b

1    chain of title for the site and provide written notice to
2    the Director of the Illinois Department of Revenue of the
3    assignor's intent to sell the remediation site and the
4    amount of the tax credit to be transferred as a portion of
5    the sale. In no event may a credit be transferred to any
6    taxpayer if the taxpayer or a related party would not be
7    eligible under the provisions of subsection (i).
8        (iii) For purposes of this Section, the term "site"
9    shall have the same meaning as under Section 58.2 of the
10    Environmental Protection Act.
11    (o) For each of taxable years during the Compassionate Use
12of Medical Cannabis Pilot Program, a surcharge is imposed on
13all taxpayers on income arising from the sale or exchange of
14capital assets, depreciable business property, real property
15used in the trade or business, and Section 197 intangibles of
16an organization registrant under the Compassionate Use of
17Medical Cannabis Pilot Program Act. The amount of the surcharge
18is equal to the amount of federal income tax liability for the
19taxable year attributable to those sales and exchanges. The
20surcharge imposed does not apply if:
21        (1) the medical cannabis cultivation center
22    registration, medical cannabis dispensary registration, or
23    the property of a registration is transferred as a result
24    of any of the following:
25            (A) bankruptcy, a receivership, or a debt
26        adjustment initiated by or against the initial

 

 

HB0176- 34 -LRB099 03475 HLH 23483 b

1        registration or the substantial owners of the initial
2        registration;
3            (B) cancellation, revocation, or termination of
4        any registration by the Illinois Department of Public
5        Health;
6            (C) a determination by the Illinois Department of
7        Public Health that transfer of the registration is in
8        the best interests of Illinois qualifying patients as
9        defined by the Compassionate Use of Medical Cannabis
10        Pilot Program Act;
11            (D) the death of an owner of the equity interest in
12        a registrant;
13            (E) the acquisition of a controlling interest in
14        the stock or substantially all of the assets of a
15        publicly traded company;
16            (F) a transfer by a parent company to a wholly
17        owned subsidiary; or
18            (G) the transfer or sale to or by one person to
19        another person where both persons were initial owners
20        of the registration when the registration was issued;
21        or
22        (2) the cannabis cultivation center registration,
23    medical cannabis dispensary registration, or the
24    controlling interest in a registrant's property is
25    transferred in a transaction to lineal descendants in which
26    no gain or loss is recognized or as a result of a

 

 

HB0176- 35 -LRB099 03475 HLH 23483 b

1    transaction in accordance with Section 351 of the Internal
2    Revenue Code in which no gain or loss is recognized.
3(Source: P.A. 97-2, eff. 5-6-11; 97-636, eff. 6-1-12; 97-905,
4eff. 8-7-12; 98-109, eff. 7-25-13; 98-122, eff. 1-1-14; 98-756,
5eff. 7-16-14.)
 
6    (35 ILCS 5/201.5)
7    Sec. 201.5. State spending limitation and tax reduction.
8    (a) (Blank). If, beginning in State fiscal year 2012 and
9continuing through State fiscal year 2015, State spending for
10any fiscal year exceeds the State spending limitation set forth
11in subsection (b) of this Section, then the tax rates set forth
12in subsection (b) of Section 201 of this Act shall be reduced,
13according to the procedures set forth in this Section, to 3% of
14the taxpayer's net income for individuals, trusts, and estates
15and to 4.8% of the taxpayer's net income for corporations. For
16all taxable years following the taxable year in which the rate
17has been reduced pursuant to this Section, the tax rate set
18forth in subsection (b) of Section 201 of this Act shall be 3%
19of the taxpayer's net income for individuals, trusts, and
20estates and 4.8% of the taxpayer's net income for corporations.
21    (b) The State spending limitation for fiscal years 2012
22through 2015 shall be as follows: (i) for fiscal year 2012,
23$36,818,000,000; (ii) for fiscal year 2013, $37,554,000,000;
24(iii) for fiscal year 2014, $38,305,000,000; and (iv) for
25fiscal year 2015, $39,072,000,000.

 

 

HB0176- 36 -LRB099 03475 HLH 23483 b

1    (c) Notwithstanding any other provision of law to the
2contrary, the Auditor General shall examine each Public Act
3authorizing State spending from State general funds and prepare
4a report no later than 30 days after receiving notification of
5the Public Act from the Secretary of State or 60 days after the
6effective date of the Public Act, whichever is earlier. The
7Auditor General shall file the report with the Secretary of
8State and copies with the Governor, the State Treasurer, the
9State Comptroller, the Senate, and the House of
10Representatives. The report shall indicate: (i) the amount of
11State spending set forth in the applicable Public Act; (ii) the
12total amount of State spending authorized by law for the
13applicable fiscal year as of the date of the report; and (iii)
14whether State spending exceeds the State spending limitation
15set forth in subsection (b). The Auditor General may examine
16multiple Public Acts in one consolidated report, provided that
17each Public Act is examined within the time period mandated by
18this subsection (c). The Auditor General shall issue reports in
19accordance with this Section through June 30, 2015 or the
20effective date of a reduction in the rate of tax imposed by
21subsections (a) and (b) of Section 201 of this Act pursuant to
22this Section, whichever is earlier.
23    At the request of the Auditor General, each State agency
24shall, without delay, make available to the Auditor General or
25his or her designated representative any record or information
26requested and shall provide for examination or copying all

 

 

HB0176- 37 -LRB099 03475 HLH 23483 b

1records, accounts, papers, reports, vouchers, correspondence,
2books and other documentation in the custody of that agency,
3including information stored in electronic data processing
4systems, which is related to or within the scope of a report
5prepared under this Section. The Auditor General shall report
6to the Governor each instance in which a State agency fails to
7cooperate promptly and fully with his or her office as required
8by this Section.
9    The Auditor General's report shall not be in the nature of
10a post-audit or examination and shall not lead to the issuance
11of an opinion as that term is defined in generally accepted
12government auditing standards.
13    (d) If the Auditor General reports that State spending has
14exceeded the State spending limitation set forth in subsection
15(b) and if the Governor has not been presented with a bill or
16bills passed by the General Assembly to reduce State spending
17to a level that does not exceed the State spending limitation
18within 45 calendar days of receipt of the Auditor General's
19report, then the Governor may, for the purpose of reducing
20State spending to a level that does not exceed the State
21spending limitation set forth in subsection (b), designate
22amounts to be set aside as a reserve from the amounts
23appropriated from the State general funds for all boards,
24commissions, agencies, institutions, authorities, colleges,
25universities, and bodies politic and corporate of the State,
26but not other constitutional officers, the legislative or

 

 

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1judicial branch, the office of the Executive Inspector General,
2or the Executive Ethics Commission. Such a designation must be
3made within 15 calendar days after the end of that 45-day
4period. If the Governor designates amounts to be set aside as a
5reserve, the Governor shall give notice of the designation to
6the Auditor General, the State Treasurer, the State
7Comptroller, the Senate, and the House of Representatives. The
8amounts placed in reserves shall not be transferred, obligated,
9encumbered, expended, or otherwise committed unless so
10authorized by law. Any amount placed in reserves is not State
11spending and shall not be considered when calculating the total
12amount of State spending. Any Public Act authorizing the use of
13amounts placed in reserve by the Governor is considered State
14spending, unless such Public Act authorizes the use of amounts
15placed in reserves in response to a fiscal emergency under
16subsection (g).
17    (e) If the Auditor General reports under subsection (c)
18that State spending has exceeded the State spending limitation
19set forth in subsection (b), then the Auditor General shall
20issue a supplemental report no sooner than the 61st day and no
21later than the 65th day after issuing the report pursuant to
22subsection (c). The supplemental report shall: (i) summarize
23details of actions taken by the General Assembly and the
24Governor after the issuance of the initial report to reduce
25State spending, if any, (ii) indicate whether the level of
26State spending has changed since the initial report, and (iii)

 

 

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1indicate whether State spending exceeds the State spending
2limitation. The Auditor General shall file the report with the
3Secretary of State and copies with the Governor, the State
4Treasurer, the State Comptroller, the Senate, and the House of
5Representatives, and shall post a copy of the report on his or
6her website. If the supplemental report of the Auditor General
7provides that State spending exceeds the State spending
8limitation, then the rate of tax imposed by subsections (a) and
9(b) of Section 201 is reduced as provided in this Section
10beginning on the first day of the first month to occur not less
11than 30 days after issuance of the supplemental report.
12    (f) (Blank). For any taxable year in which the rates of tax
13have been reduced under this Section, the tax imposed by
14subsections (a) and (b) of Section 201 shall be determined as
15follows:
16        (1) In the case of an individual, trust, or estate, the
17    tax shall be imposed in an amount equal to the sum of (i)
18    the rate applicable to the taxpayer under subsection (b) of
19    Section 201 (without regard to the provisions of this
20    Section) times the taxpayer's net income for any portion of
21    the taxable year prior to the effective date of the
22    reduction and (ii) 3% of the taxpayer's net income for any
23    portion of the taxable year on or after the effective date
24    of the reduction.
25        (2) In the case of a corporation, the tax shall be
26    imposed in an amount equal to the sum of (i) the rate

 

 

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1    applicable to the taxpayer under subsection (b) of Section
2    201 (without regard to the provisions of this Section)
3    times the taxpayer's net income for any portion of the
4    taxable year prior to the effective date of the reduction
5    and (ii) 4.8% of the taxpayer's net income for any portion
6    of the taxable year on or after the effective date of the
7    reduction.
8        (3) For any taxpayer for whom the rate has been reduced
9    under this Section for a portion of a taxable year, the
10    taxpayer shall determine the net income for each portion of
11    the taxable year following the rules set forth in Section
12    202.5 of this Act, using the effective date of the rate
13    reduction rather than the January 1 dates found in that
14    Section, and the day before the effective date of the rate
15    reduction rather than the December 31 dates found in that
16    Section.
17        (4) If the rate applicable to the taxpayer under
18    subsection (b) of Section 201 (without regard to the
19    provisions of this Section) changes during a portion of the
20    taxable year to which that rate is applied under paragraphs
21    (1) or (2) of this subsection (f), the tax for that portion
22    of the taxable year for purposes of paragraph (1) or (2) of
23    this subsection (f) shall be determined as if that portion
24    of the taxable year were a separate taxable year, following
25    the rules set forth in Section 202.5 of this Act. If the
26    taxpayer elects to follow the rules set forth in subsection

 

 

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1    (b) of Section 202.5, the taxpayer shall follow the rules
2    set forth in subsection (b) of Section 202.5 for all
3    purposes of this Section for that taxable year.
4    (g) Notwithstanding the State spending limitation set
5forth in subsection (b) of this Section, the Governor may
6declare a fiscal emergency by filing a declaration with the
7Secretary of State and copies with the State Treasurer, the
8State Comptroller, the Senate, and the House of
9Representatives. The declaration must be limited to only one
10State fiscal year, set forth compelling reasons for declaring a
11fiscal emergency, and request a specific dollar amount. Unless,
12within 10 calendar days of receipt of the Governor's
13declaration, the State Comptroller or State Treasurer notifies
14the Senate and the House of Representatives that he or she does
15not concur in the Governor's declaration, State spending
16authorized by law to address the fiscal emergency in an amount
17no greater than the dollar amount specified in the declaration
18shall not be considered "State spending" for purposes of the
19State spending limitation.
20    (h) As used in this Section:
21    "State general funds" means the General Revenue Fund, the
22Common School Fund, the General Revenue Common School Special
23Account Fund, the Education Assistance Fund, and the Budget
24Stabilization Fund.
25    "State spending" means (i) the total amount authorized for
26spending by appropriation or statutory transfer from the State

 

 

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1general funds in the applicable fiscal year, and (ii) any
2amounts the Governor places in reserves in accordance with
3subsection (d) that are subsequently released from reserves
4following authorization by a Public Act. For the purpose of
5this definition, "appropriation" means authority to spend
6money from a State general fund for a specific amount, purpose,
7and time period, including any supplemental appropriation or
8continuing appropriation, but does not include
9reappropriations from a previous fiscal year. For the purpose
10of this definition, "statutory transfer" means authority to
11transfer funds from one State general fund to any other fund in
12the State treasury, but does not include transfers made from
13one State general fund to another State general fund.
14    "State spending limitation" means the amount described in
15subsection (b) of this Section for the applicable fiscal year.
16(Source: P.A. 96-1496, eff. 1-13-11; 97-813, eff. 7-13-12.)
 
17    (35 ILCS 5/901)  (from Ch. 120, par. 9-901)
18    Sec. 901. Collection authority.
19    (a) In general.
20    The Department shall collect the taxes imposed by this Act.
21The Department shall collect certified past due child support
22amounts under Section 2505-650 of the Department of Revenue Law
23(20 ILCS 2505/2505-650). Except as provided in subsections (c),
24(e), (f), (g), and (h) of this Section, money collected
25pursuant to subsections (a) and (b) of Section 201 of this Act

 

 

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1shall be paid into the General Revenue Fund in the State
2treasury; money collected pursuant to subsections (c) and (d)
3of Section 201 of this Act shall be paid into the Personal
4Property Tax Replacement Fund, a special fund in the State
5Treasury; and money collected under Section 2505-650 of the
6Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid
7into the Child Support Enforcement Trust Fund, a special fund
8outside the State Treasury, or to the State Disbursement Unit
9established under Section 10-26 of the Illinois Public Aid
10Code, as directed by the Department of Healthcare and Family
11Services.
12    (b) Local Government Distributive Fund.
13    Beginning August 1, 1969, and continuing through June 30,
141994, the Treasurer shall transfer each month from the General
15Revenue Fund to a special fund in the State treasury, to be
16known as the "Local Government Distributive Fund", an amount
17equal to 1/12 of the net revenue realized from the tax imposed
18by subsections (a) and (b) of Section 201 of this Act during
19the preceding month. Beginning July 1, 1994, and continuing
20through June 30, 1995, the Treasurer shall transfer each month
21from the General Revenue Fund to the Local Government
22Distributive Fund an amount equal to 1/11 of the net revenue
23realized from the tax imposed by subsections (a) and (b) of
24Section 201 of this Act during the preceding month. Beginning
25July 1, 1995 and continuing through January 31, 2011, and
26beginning again on February 1, 2015, the Treasurer shall

 

 

HB0176- 44 -LRB099 03475 HLH 23483 b

1transfer each month from the General Revenue Fund to the Local
2Government Distributive Fund an amount equal to the net of (i)
31/10 of the net revenue realized from the tax imposed by
4subsections (a) and (b) of Section 201 of the Illinois Income
5Tax Act during the preceding month (ii) minus, beginning July
61, 2003 and ending June 30, 2004, $6,666,666, and beginning
7July 1, 2004, zero. Beginning February 1, 2011, and continuing
8through January 31, 2015, the Treasurer shall transfer each
9month from the General Revenue Fund to the Local Government
10Distributive Fund an amount equal to the sum of (i) 6% (10% of
11the ratio of the 3% individual income tax rate prior to 2011 to
12the 5% individual income tax rate after 2010) of the net
13revenue realized from the tax imposed by subsections (a) and
14(b) of Section 201 of this Act upon individuals, trusts, and
15estates during the preceding month and (ii) 6.86% (10% of the
16ratio of the 4.8% corporate income tax rate prior to 2011 to
17the 7% corporate income tax rate after 2010) of the net revenue
18realized from the tax imposed by subsections (a) and (b) of
19Section 201 of this Act upon corporations during the preceding
20month. Beginning February 1, 2015 and continuing through
21January 31, 2025, the Treasurer shall transfer each month from
22the General Revenue Fund to the Local Government Distributive
23Fund an amount equal to the sum of (i) 8% (10% of the ratio of
24the 3% individual income tax rate prior to 2011 to the 3.75%
25individual income tax rate after 2014) of the net revenue
26realized from the tax imposed by subsections (a) and (b) of

 

 

HB0176- 45 -LRB099 03475 HLH 23483 b

1Section 201 of this Act upon individuals, trusts, and estates
2during the preceding month and (ii) 9.14% (10% of the ratio of
3the 4.8% corporate income tax rate prior to 2011 to the 5.25%
4corporate income tax rate after 2014) of the net revenue
5realized from the tax imposed by subsections (a) and (b) of
6Section 201 of this Act upon corporations during the preceding
7month. Beginning February 1, 2025, the Treasurer shall transfer
8each month from the General Revenue Fund to the Local
9Government Distributive Fund an amount equal to the sum of (i)
109.23% (10% of the ratio of the 3% individual income tax rate
11prior to 2011 to the 3.25% individual income tax rate after
122024) of the net revenue realized from the tax imposed by
13subsections (a) and (b) of Section 201 of this Act upon
14individuals, trusts, and estates during the preceding month and
15(ii) 10% of the net revenue realized from the tax imposed by
16subsections (a) and (b) of Section 201 of this Act upon
17corporations during the preceding month. Net revenue realized
18for a month shall be defined as the revenue from the tax
19imposed by subsections (a) and (b) of Section 201 of this Act
20which is deposited in the General Revenue Fund, the Education
21Assistance Fund, and the Income Tax Surcharge Local Government
22Distributive Fund, the Fund for the Advancement of Education,
23and the Commitment to Human Services Fund during the month
24minus the amount paid out of the General Revenue Fund in State
25warrants during that same month as refunds to taxpayers for
26overpayment of liability under the tax imposed by subsections

 

 

HB0176- 46 -LRB099 03475 HLH 23483 b

1(a) and (b) of Section 201 of this Act.
2    Beginning on August 26, 2014 (the effective date of Public
3Act 98-1052) this amendatory Act of the 98th General Assembly,
4the Comptroller shall perform the transfers required by this
5subsection (b) no later than 60 days after he or she receives
6the certification from the Treasurer as provided in Section 1
7of the State Revenue Sharing Act.
8    (c) Deposits Into Income Tax Refund Fund.
9        (1) Beginning on January 1, 1989 and thereafter, the
10    Department shall deposit a percentage of the amounts
11    collected pursuant to subsections (a) and (b)(1), (2), and
12    (3), of Section 201 of this Act into a fund in the State
13    treasury known as the Income Tax Refund Fund. The
14    Department shall deposit 6% of such amounts during the
15    period beginning January 1, 1989 and ending on June 30,
16    1989. Beginning with State fiscal year 1990 and for each
17    fiscal year thereafter, the percentage deposited into the
18    Income Tax Refund Fund during a fiscal year shall be the
19    Annual Percentage. For fiscal years 1999 through 2001, the
20    Annual Percentage shall be 7.1%. For fiscal year 2003, the
21    Annual Percentage shall be 8%. For fiscal year 2004, the
22    Annual Percentage shall be 11.7%. Upon the effective date
23    of this amendatory Act of the 93rd General Assembly, the
24    Annual Percentage shall be 10% for fiscal year 2005. For
25    fiscal year 2006, the Annual Percentage shall be 9.75%. For
26    fiscal year 2007, the Annual Percentage shall be 9.75%. For

 

 

HB0176- 47 -LRB099 03475 HLH 23483 b

1    fiscal year 2008, the Annual Percentage shall be 7.75%. For
2    fiscal year 2009, the Annual Percentage shall be 9.75%. For
3    fiscal year 2010, the Annual Percentage shall be 9.75%. For
4    fiscal year 2011, the Annual Percentage shall be 8.75%. For
5    fiscal year 2012, the Annual Percentage shall be 8.75%. For
6    fiscal year 2013, the Annual Percentage shall be 9.75%. For
7    fiscal year 2014, the Annual Percentage shall be 9.5%. For
8    fiscal year 2015, the Annual Percentage shall be 10%. For
9    all other fiscal years, the Annual Percentage shall be
10    calculated as a fraction, the numerator of which shall be
11    the amount of refunds approved for payment by the
12    Department during the preceding fiscal year as a result of
13    overpayment of tax liability under subsections (a) and
14    (b)(1), (2), and (3) of Section 201 of this Act plus the
15    amount of such refunds remaining approved but unpaid at the
16    end of the preceding fiscal year, minus the amounts
17    transferred into the Income Tax Refund Fund from the
18    Tobacco Settlement Recovery Fund, and the denominator of
19    which shall be the amounts which will be collected pursuant
20    to subsections (a) and (b)(1), (2), and (3) of Section 201
21    of this Act during the preceding fiscal year; except that
22    in State fiscal year 2002, the Annual Percentage shall in
23    no event exceed 7.6%. The Director of Revenue shall certify
24    the Annual Percentage to the Comptroller on the last
25    business day of the fiscal year immediately preceding the
26    fiscal year for which it is to be effective.

 

 

HB0176- 48 -LRB099 03475 HLH 23483 b

1        (2) Beginning on January 1, 1989 and thereafter, the
2    Department shall deposit a percentage of the amounts
3    collected pursuant to subsections (a) and (b)(6), (7), and
4    (8), (c) and (d) of Section 201 of this Act into a fund in
5    the State treasury known as the Income Tax Refund Fund. The
6    Department shall deposit 18% of such amounts during the
7    period beginning January 1, 1989 and ending on June 30,
8    1989. Beginning with State fiscal year 1990 and for each
9    fiscal year thereafter, the percentage deposited into the
10    Income Tax Refund Fund during a fiscal year shall be the
11    Annual Percentage. For fiscal years 1999, 2000, and 2001,
12    the Annual Percentage shall be 19%. For fiscal year 2003,
13    the Annual Percentage shall be 27%. For fiscal year 2004,
14    the Annual Percentage shall be 32%. Upon the effective date
15    of this amendatory Act of the 93rd General Assembly, the
16    Annual Percentage shall be 24% for fiscal year 2005. For
17    fiscal year 2006, the Annual Percentage shall be 20%. For
18    fiscal year 2007, the Annual Percentage shall be 17.5%. For
19    fiscal year 2008, the Annual Percentage shall be 15.5%. For
20    fiscal year 2009, the Annual Percentage shall be 17.5%. For
21    fiscal year 2010, the Annual Percentage shall be 17.5%. For
22    fiscal year 2011, the Annual Percentage shall be 17.5%. For
23    fiscal year 2012, the Annual Percentage shall be 17.5%. For
24    fiscal year 2013, the Annual Percentage shall be 14%. For
25    fiscal year 2014, the Annual Percentage shall be 13.4%. For
26    fiscal year 2015, the Annual Percentage shall be 14%. For

 

 

HB0176- 49 -LRB099 03475 HLH 23483 b

1    all other fiscal years, the Annual Percentage shall be
2    calculated as a fraction, the numerator of which shall be
3    the amount of refunds approved for payment by the
4    Department during the preceding fiscal year as a result of
5    overpayment of tax liability under subsections (a) and
6    (b)(6), (7), and (8), (c) and (d) of Section 201 of this
7    Act plus the amount of such refunds remaining approved but
8    unpaid at the end of the preceding fiscal year, and the
9    denominator of which shall be the amounts which will be
10    collected pursuant to subsections (a) and (b)(6), (7), and
11    (8), (c) and (d) of Section 201 of this Act during the
12    preceding fiscal year; except that in State fiscal year
13    2002, the Annual Percentage shall in no event exceed 23%.
14    The Director of Revenue shall certify the Annual Percentage
15    to the Comptroller on the last business day of the fiscal
16    year immediately preceding the fiscal year for which it is
17    to be effective.
18        (3) The Comptroller shall order transferred and the
19    Treasurer shall transfer from the Tobacco Settlement
20    Recovery Fund to the Income Tax Refund Fund (i) $35,000,000
21    in January, 2001, (ii) $35,000,000 in January, 2002, and
22    (iii) $35,000,000 in January, 2003.
23    (d) Expenditures from Income Tax Refund Fund.
24        (1) Beginning January 1, 1989, money in the Income Tax
25    Refund Fund shall be expended exclusively for the purpose
26    of paying refunds resulting from overpayment of tax

 

 

HB0176- 50 -LRB099 03475 HLH 23483 b

1    liability under Section 201 of this Act, for paying rebates
2    under Section 208.1 in the event that the amounts in the
3    Homeowners' Tax Relief Fund are insufficient for that
4    purpose, and for making transfers pursuant to this
5    subsection (d).
6        (2) The Director shall order payment of refunds
7    resulting from overpayment of tax liability under Section
8    201 of this Act from the Income Tax Refund Fund only to the
9    extent that amounts collected pursuant to Section 201 of
10    this Act and transfers pursuant to this subsection (d) and
11    item (3) of subsection (c) have been deposited and retained
12    in the Fund.
13        (3) As soon as possible after the end of each fiscal
14    year, the Director shall order transferred and the State
15    Treasurer and State Comptroller shall transfer from the
16    Income Tax Refund Fund to the Personal Property Tax
17    Replacement Fund an amount, certified by the Director to
18    the Comptroller, equal to the excess of the amount
19    collected pursuant to subsections (c) and (d) of Section
20    201 of this Act deposited into the Income Tax Refund Fund
21    during the fiscal year over the amount of refunds resulting
22    from overpayment of tax liability under subsections (c) and
23    (d) of Section 201 of this Act paid from the Income Tax
24    Refund Fund during the fiscal year.
25        (4) As soon as possible after the end of each fiscal
26    year, the Director shall order transferred and the State

 

 

HB0176- 51 -LRB099 03475 HLH 23483 b

1    Treasurer and State Comptroller shall transfer from the
2    Personal Property Tax Replacement Fund to the Income Tax
3    Refund Fund an amount, certified by the Director to the
4    Comptroller, equal to the excess of the amount of refunds
5    resulting from overpayment of tax liability under
6    subsections (c) and (d) of Section 201 of this Act paid
7    from the Income Tax Refund Fund during the fiscal year over
8    the amount collected pursuant to subsections (c) and (d) of
9    Section 201 of this Act deposited into the Income Tax
10    Refund Fund during the fiscal year.
11        (4.5) As soon as possible after the end of fiscal year
12    1999 and of each fiscal year thereafter, the Director shall
13    order transferred and the State Treasurer and State
14    Comptroller shall transfer from the Income Tax Refund Fund
15    to the General Revenue Fund any surplus remaining in the
16    Income Tax Refund Fund as of the end of such fiscal year;
17    excluding for fiscal years 2000, 2001, and 2002 amounts
18    attributable to transfers under item (3) of subsection (c)
19    less refunds resulting from the earned income tax credit.
20        (5) This Act shall constitute an irrevocable and
21    continuing appropriation from the Income Tax Refund Fund
22    for the purpose of paying refunds upon the order of the
23    Director in accordance with the provisions of this Section.
24    (e) Deposits into the Education Assistance Fund and the
25Income Tax Surcharge Local Government Distributive Fund.
26    On July 1, 1991, and thereafter, of the amounts collected

 

 

HB0176- 52 -LRB099 03475 HLH 23483 b

1pursuant to subsections (a) and (b) of Section 201 of this Act,
2minus deposits into the Income Tax Refund Fund, the Department
3shall deposit 7.3% into the Education Assistance Fund in the
4State Treasury. Beginning July 1, 1991, and continuing through
5January 31, 1993, of the amounts collected pursuant to
6subsections (a) and (b) of Section 201 of the Illinois Income
7Tax Act, minus deposits into the Income Tax Refund Fund, the
8Department shall deposit 3.0% into the Income Tax Surcharge
9Local Government Distributive Fund in the State Treasury.
10Beginning February 1, 1993 and continuing through June 30,
111993, of the amounts collected pursuant to subsections (a) and
12(b) of Section 201 of the Illinois Income Tax Act, minus
13deposits into the Income Tax Refund Fund, the Department shall
14deposit 4.4% into the Income Tax Surcharge Local Government
15Distributive Fund in the State Treasury. Beginning July 1,
161993, and continuing through June 30, 1994, of the amounts
17collected under subsections (a) and (b) of Section 201 of this
18Act, minus deposits into the Income Tax Refund Fund, the
19Department shall deposit 1.475% into the Income Tax Surcharge
20Local Government Distributive Fund in the State Treasury.
21    (f) (Blank). Deposits into the Fund for the Advancement of
22Education. Beginning February 1, 2015, the Department shall
23deposit the following portions of the revenue realized from the
24tax imposed upon individuals, trusts, and estates by
25subsections (a) and (b) of Section 201 of this Act during the
26preceding month, minus deposits into the Income Tax Refund

 

 

HB0176- 53 -LRB099 03475 HLH 23483 b

1Fund, into the Fund for the Advancement of Education:
2        (1) beginning February 1, 2015, and prior to February
3    1, 2025, 1/30; and
4        (2) beginning February 1, 2025, 1/26.
5    If the rate of tax imposed by subsection (a) and (b) of
6Section 201 is reduced pursuant to Section 201.5 of this Act,
7the Department shall not make the deposits required by this
8subsection (f) on or after the effective date of the reduction.
9    (g) (Blank). Deposits into the Commitment to Human Services
10Fund. Beginning February 1, 2015, the Department shall deposit
11the following portions of the revenue realized from the tax
12imposed upon individuals, trusts, and estates by subsections
13(a) and (b) of Section 201 of this Act during the preceding
14month, minus deposits into the Income Tax Refund Fund, into the
15Commitment to Human Services Fund:
16        (1) beginning February 1, 2015, and prior to February
17    1, 2025, 1/30; and
18        (2) beginning February 1, 2025, 1/26.
19    If the rate of tax imposed by subsection (a) and (b) of
20Section 201 is reduced pursuant to Section 201.5 of this Act,
21the Department shall not make the deposits required by this
22subsection (g) on or after the effective date of the reduction.
23    (h) Deposits into the Tax Compliance and Administration
24Fund. Beginning on the first day of the first calendar month to
25occur on or after August 26, 2014 (the effective date of Public
26Act 98-1098) this amendatory Act of the 98th General Assembly,

 

 

HB0176- 54 -LRB099 03475 HLH 23483 b

1each month the Department shall pay into the Tax Compliance and
2Administration Fund, to be used, subject to appropriation, to
3fund additional auditors and compliance personnel at the
4Department, an amount equal to 1/12 of 5% of the cash receipts
5collected during the preceding fiscal year by the Audit Bureau
6of the Department from the tax imposed by subsections (a), (b),
7(c), and (d) of Section 201 of this Act, net of deposits into
8the Income Tax Refund Fund made from those cash receipts.
9(Source: P.A. 97-72, eff. 7-1-11; 97-732, eff. 6-30-12; 98-24,
10eff. 6-19-13; 98-674, eff. 6-30-14; 98-1052, eff. 8-26-14;
1198-1098, eff. 8-26-14; revised 9-26-14.)
 
12    (30 ILCS 105/5.786 rep.)
13    (30 ILCS 105/5.787 rep.)
14    (30 ILCS 105/6z-85 rep.)
15    (30 ILCS 105/6z-86 rep.)
16    Section 15. The State Finance Act is amended by repealing
17Sections 5.786, 5.787, 6z-85, and 6z-86.
 
18    Section 99. Effective date. This Act takes effect upon
19becoming law.