99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB2511

 

Introduced 2/9/2016, by Sen. Chris Nybo

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/304  from Ch. 120, par. 3-304

    Amends the Illinois Income Tax Act. Provides that, for the purpose of calculating the sales factor when allocating business income of persons other than residents, if the purchaser is the United States government, then the sale is a sale of personal property in this State if the purchaser is within the State or the property is shipped from an office, store, warehouse, factory or other place of storage in this State (currently, when the purchaser is the United States government, the sale is in this State only if the property is shipped from an office, store, warehouse, factory or other place of storage in this State). Removes provisions providing that the sale is in this State if the property is shipped from an office, store, warehouse, factory or other place of storage in this State and the purchaser is not taxable in the State of the purchaser. Removes provisions concerning purchasers who are doing business on a premises owned or leased by a person who has independently contracted with the seller for the printing of newspapers, periodicals or books. Removes provisions providing that sales of tangible personal property are not in this State if the seller and purchaser would be members of the same unitary business group but for the fact that either the seller or purchaser is a person with 80% or more of total business activity outside of the United States and the property is purchased for resale.


LRB099 18712 HLH 43096 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2511LRB099 18712 HLH 43096 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 Section 304 as follows:
 
6    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
7    Sec. 304. Business income of persons other than residents.
8    (a) In general. The business income of a person other than
9a resident shall be allocated to this State if such person's
10business income is derived solely from this State. If a person
11other than a resident derives business income from this State
12and one or more other states, then, for tax years ending on or
13before December 30, 1998, and except as otherwise provided by
14this Section, such person's business income shall be
15apportioned to this State by multiplying the income by a
16fraction, the numerator of which is the sum of the property
17factor (if any), the payroll factor (if any) and 200% of the
18sales factor (if any), and the denominator of which is 4
19reduced by the number of factors other than the sales factor
20which have a denominator of zero and by an additional 2 if the
21sales factor has a denominator of zero. For tax years ending on
22or after December 31, 1998, and except as otherwise provided by
23this Section, persons other than residents who derive business

 

 

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1income from this State and one or more other states shall
2compute their apportionment factor by weighting their
3property, payroll, and sales factors as provided in subsection
4(h) of this Section.
5    (1) Property factor.
6        (A) The property factor is a fraction, the numerator of
7    which is the average value of the person's real and
8    tangible personal property owned or rented and used in the
9    trade or business in this State during the taxable year and
10    the denominator of which is the average value of all the
11    person's real and tangible personal property owned or
12    rented and used in the trade or business during the taxable
13    year.
14        (B) Property owned by the person is valued at its
15    original cost. Property rented by the person is valued at 8
16    times the net annual rental rate. Net annual rental rate is
17    the annual rental rate paid by the person less any annual
18    rental rate received by the person from sub-rentals.
19        (C) The average value of property shall be determined
20    by averaging the values at the beginning and ending of the
21    taxable year but the Director may require the averaging of
22    monthly values during the taxable year if reasonably
23    required to reflect properly the average value of the
24    person's property.
25    (2) Payroll factor.
26        (A) The payroll factor is a fraction, the numerator of

 

 

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1    which is the total amount paid in this State during the
2    taxable year by the person for compensation, and the
3    denominator of which is the total compensation paid
4    everywhere during the taxable year.
5        (B) Compensation is paid in this State if:
6            (i) The individual's service is performed entirely
7        within this State;
8            (ii) The individual's service is performed both
9        within and without this State, but the service
10        performed without this State is incidental to the
11        individual's service performed within this State; or
12            (iii) Some of the service is performed within this
13        State and either the base of operations, or if there is
14        no base of operations, the place from which the service
15        is directed or controlled is within this State, or the
16        base of operations or the place from which the service
17        is directed or controlled is not in any state in which
18        some part of the service is performed, but the
19        individual's residence is in this State.
20            (iv) Compensation paid to nonresident professional
21        athletes.
22            (a) General. The Illinois source income of a
23        nonresident individual who is a member of a
24        professional athletic team includes the portion of the
25        individual's total compensation for services performed
26        as a member of a professional athletic team during the

 

 

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1        taxable year which the number of duty days spent within
2        this State performing services for the team in any
3        manner during the taxable year bears to the total
4        number of duty days spent both within and without this
5        State during the taxable year.
6            (b) Travel days. Travel days that do not involve
7        either a game, practice, team meeting, or other similar
8        team event are not considered duty days spent in this
9        State. However, such travel days are considered in the
10        total duty days spent both within and without this
11        State.
12            (c) Definitions. For purposes of this subpart
13        (iv):
14                (1) The term "professional athletic team"
15            includes, but is not limited to, any professional
16            baseball, basketball, football, soccer, or hockey
17            team.
18                (2) The term "member of a professional
19            athletic team" includes those employees who are
20            active players, players on the disabled list, and
21            any other persons required to travel and who travel
22            with and perform services on behalf of a
23            professional athletic team on a regular basis.
24            This includes, but is not limited to, coaches,
25            managers, and trainers.
26                (3) Except as provided in items (C) and (D) of

 

 

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1            this subpart (3), the term "duty days" means all
2            days during the taxable year from the beginning of
3            the professional athletic team's official
4            pre-season training period through the last game
5            in which the team competes or is scheduled to
6            compete. Duty days shall be counted for the year in
7            which they occur, including where a team's
8            official pre-season training period through the
9            last game in which the team competes or is
10            scheduled to compete, occurs during more than one
11            tax year.
12                    (A) Duty days shall also include days on
13                which a member of a professional athletic team
14                performs service for a team on a date that does
15                not fall within the foregoing period (e.g.,
16                participation in instructional leagues, the
17                "All Star Game", or promotional "caravans").
18                Performing a service for a professional
19                athletic team includes conducting training and
20                rehabilitation activities, when such
21                activities are conducted at team facilities.
22                    (B) Also included in duty days are game
23                days, practice days, days spent at team
24                meetings, promotional caravans, preseason
25                training camps, and days served with the team
26                through all post-season games in which the team

 

 

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1                competes or is scheduled to compete.
2                    (C) Duty days for any person who joins a
3                team during the period from the beginning of
4                the professional athletic team's official
5                pre-season training period through the last
6                game in which the team competes, or is
7                scheduled to compete, shall begin on the day
8                that person joins the team. Conversely, duty
9                days for any person who leaves a team during
10                this period shall end on the day that person
11                leaves the team. Where a person switches teams
12                during a taxable year, a separate duty-day
13                calculation shall be made for the period the
14                person was with each team.
15                    (D) Days for which a member of a
16                professional athletic team is not compensated
17                and is not performing services for the team in
18                any manner, including days when such member of
19                a professional athletic team has been
20                suspended without pay and prohibited from
21                performing any services for the team, shall not
22                be treated as duty days.
23                    (E) Days for which a member of a
24                professional athletic team is on the disabled
25                list and does not conduct rehabilitation
26                activities at facilities of the team, and is

 

 

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1                not otherwise performing services for the team
2                in Illinois, shall not be considered duty days
3                spent in this State. All days on the disabled
4                list, however, are considered to be included in
5                total duty days spent both within and without
6                this State.
7                (4) The term "total compensation for services
8            performed as a member of a professional athletic
9            team" means the total compensation received during
10            the taxable year for services performed:
11                    (A) from the beginning of the official
12                pre-season training period through the last
13                game in which the team competes or is scheduled
14                to compete during that taxable year; and
15                    (B) during the taxable year on a date which
16                does not fall within the foregoing period
17                (e.g., participation in instructional leagues,
18                the "All Star Game", or promotional caravans).
19                This compensation shall include, but is not
20            limited to, salaries, wages, bonuses as described
21            in this subpart, and any other type of compensation
22            paid during the taxable year to a member of a
23            professional athletic team for services performed
24            in that year. This compensation does not include
25            strike benefits, severance pay, termination pay,
26            contract or option year buy-out payments,

 

 

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1            expansion or relocation payments, or any other
2            payments not related to services performed for the
3            team.
4                For purposes of this subparagraph, "bonuses"
5            included in "total compensation for services
6            performed as a member of a professional athletic
7            team" subject to the allocation described in
8            Section 302(c)(1) are: bonuses earned as a result
9            of play (i.e., performance bonuses) during the
10            season, including bonuses paid for championship,
11            playoff or "bowl" games played by a team, or for
12            selection to all-star league or other honorary
13            positions; and bonuses paid for signing a
14            contract, unless the payment of the signing bonus
15            is not conditional upon the signee playing any
16            games for the team or performing any subsequent
17            services for the team or even making the team, the
18            signing bonus is payable separately from the
19            salary and any other compensation, and the signing
20            bonus is nonrefundable.
21    (3) Sales factor.
22        (A) The sales factor is a fraction, the numerator of
23    which is the total sales of the person in this State during
24    the taxable year, and the denominator of which is the total
25    sales of the person everywhere during the taxable year.
26        (B) Sales of tangible personal property are in this

 

 

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1    State if:
2            (i) The property is delivered or shipped to a
3        purchaser, other than the United States government,
4        within this State regardless of the f. o. b. point or
5        other conditions of the sale; or
6            (ii) The property is shipped from an office, store,
7        warehouse, factory or other place of storage in this
8        State and either the purchaser is the United States
9        government or the person is not taxable in the state of
10        the purchaser; provided, however, that premises owned
11        or leased by a person who has independently contracted
12        with the seller for the printing of newspapers,
13        periodicals or books shall not be deemed to be an
14        office, store, warehouse, factory or other place of
15        storage for purposes of this Section. Sales of tangible
16        personal property are not in this State if the seller
17        and purchaser would be members of the same unitary
18        business group but for the fact that either the seller
19        or purchaser is a person with 80% or more of total
20        business activity outside of the United States and the
21        property is purchased for resale.
22        (B-1) Patents, copyrights, trademarks, and similar
23    items of intangible personal property.
24            (i) Gross receipts from the licensing, sale, or
25        other disposition of a patent, copyright, trademark,
26        or similar item of intangible personal property, other

 

 

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1        than gross receipts governed by paragraph (B-7) of this
2        item (3), are in this State to the extent the item is
3        utilized in this State during the year the gross
4        receipts are included in gross income.
5            (ii) Place of utilization.
6                (I) A patent is utilized in a state to the
7            extent that it is employed in production,
8            fabrication, manufacturing, or other processing in
9            the state or to the extent that a patented product
10            is produced in the state. If a patent is utilized
11            in more than one state, the extent to which it is
12            utilized in any one state shall be a fraction equal
13            to the gross receipts of the licensee or purchaser
14            from sales or leases of items produced,
15            fabricated, manufactured, or processed within that
16            state using the patent and of patented items
17            produced within that state, divided by the total of
18            such gross receipts for all states in which the
19            patent is utilized.
20                (II) A copyright is utilized in a state to the
21            extent that printing or other publication
22            originates in the state. If a copyright is utilized
23            in more than one state, the extent to which it is
24            utilized in any one state shall be a fraction equal
25            to the gross receipts from sales or licenses of
26            materials printed or published in that state

 

 

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1            divided by the total of such gross receipts for all
2            states in which the copyright is utilized.
3                (III) Trademarks and other items of intangible
4            personal property governed by this paragraph (B-1)
5            are utilized in the state in which the commercial
6            domicile of the licensee or purchaser is located.
7            (iii) If the state of utilization of an item of
8        property governed by this paragraph (B-1) cannot be
9        determined from the taxpayer's books and records or
10        from the books and records of any person related to the
11        taxpayer within the meaning of Section 267(b) of the
12        Internal Revenue Code, 26 U.S.C. 267, the gross
13        receipts attributable to that item shall be excluded
14        from both the numerator and the denominator of the
15        sales factor.
16        (B-2) Gross receipts from the license, sale, or other
17    disposition of patents, copyrights, trademarks, and
18    similar items of intangible personal property, other than
19    gross receipts governed by paragraph (B-7) of this item
20    (3), may be included in the numerator or denominator of the
21    sales factor only if gross receipts from licenses, sales,
22    or other disposition of such items comprise more than 50%
23    of the taxpayer's total gross receipts included in gross
24    income during the tax year and during each of the 2
25    immediately preceding tax years; provided that, when a
26    taxpayer is a member of a unitary business group, such

 

 

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1    determination shall be made on the basis of the gross
2    receipts of the entire unitary business group.
3        (B-5) For taxable years ending on or after December 31,
4    2008, except as provided in subsections (ii) through (vii),
5    receipts from the sale of telecommunications service or
6    mobile telecommunications service are in this State if the
7    customer's service address is in this State.
8            (i) For purposes of this subparagraph (B-5), the
9        following terms have the following meanings:
10            "Ancillary services" means services that are
11        associated with or incidental to the provision of
12        "telecommunications services", including but not
13        limited to "detailed telecommunications billing",
14        "directory assistance", "vertical service", and "voice
15        mail services".
16            "Air-to-Ground Radiotelephone service" means a
17        radio service, as that term is defined in 47 CFR 22.99,
18        in which common carriers are authorized to offer and
19        provide radio telecommunications service for hire to
20        subscribers in aircraft.
21            "Call-by-call Basis" means any method of charging
22        for telecommunications services where the price is
23        measured by individual calls.
24            "Communications Channel" means a physical or
25        virtual path of communications over which signals are
26        transmitted between or among customer channel

 

 

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1        termination points.
2            "Conference bridging service" means an "ancillary
3        service" that links two or more participants of an
4        audio or video conference call and may include the
5        provision of a telephone number. "Conference bridging
6        service" does not include the "telecommunications
7        services" used to reach the conference bridge.
8            "Customer Channel Termination Point" means the
9        location where the customer either inputs or receives
10        the communications.
11            "Detailed telecommunications billing service"
12        means an "ancillary service" of separately stating
13        information pertaining to individual calls on a
14        customer's billing statement.
15            "Directory assistance" means an "ancillary
16        service" of providing telephone number information,
17        and/or address information.
18            "Home service provider" means the facilities based
19        carrier or reseller with which the customer contracts
20        for the provision of mobile telecommunications
21        services.
22            "Mobile telecommunications service" means
23        commercial mobile radio service, as defined in Section
24        20.3 of Title 47 of the Code of Federal Regulations as
25        in effect on June 1, 1999.
26            "Place of primary use" means the street address

 

 

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1        representative of where the customer's use of the
2        telecommunications service primarily occurs, which
3        must be the residential street address or the primary
4        business street address of the customer. In the case of
5        mobile telecommunications services, "place of primary
6        use" must be within the licensed service area of the
7        home service provider.
8            "Post-paid telecommunication service" means the
9        telecommunications service obtained by making a
10        payment on a call-by-call basis either through the use
11        of a credit card or payment mechanism such as a bank
12        card, travel card, credit card, or debit card, or by
13        charge made to a telephone number which is not
14        associated with the origination or termination of the
15        telecommunications service. A post-paid calling
16        service includes telecommunications service, except a
17        prepaid wireless calling service, that would be a
18        prepaid calling service except it is not exclusively a
19        telecommunication service.
20            "Prepaid telecommunication service" means the
21        right to access exclusively telecommunications
22        services, which must be paid for in advance and which
23        enables the origination of calls using an access number
24        or authorization code, whether manually or
25        electronically dialed, and that is sold in
26        predetermined units or dollars of which the number

 

 

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1        declines with use in a known amount.
2            "Prepaid Mobile telecommunication service" means a
3        telecommunications service that provides the right to
4        utilize mobile wireless service as well as other
5        non-telecommunication services, including but not
6        limited to ancillary services, which must be paid for
7        in advance that is sold in predetermined units or
8        dollars of which the number declines with use in a
9        known amount.
10            "Private communication service" means a
11        telecommunication service that entitles the customer
12        to exclusive or priority use of a communications
13        channel or group of channels between or among
14        termination points, regardless of the manner in which
15        such channel or channels are connected, and includes
16        switching capacity, extension lines, stations, and any
17        other associated services that are provided in
18        connection with the use of such channel or channels.
19            "Service address" means:
20                (a) The location of the telecommunications
21            equipment to which a customer's call is charged and
22            from which the call originates or terminates,
23            regardless of where the call is billed or paid;
24                (b) If the location in line (a) is not known,
25            service address means the origination point of the
26            signal of the telecommunications services first

 

 

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1            identified by either the seller's
2            telecommunications system or in information
3            received by the seller from its service provider
4            where the system used to transport such signals is
5            not that of the seller; and
6                (c) If the locations in line (a) and line (b)
7            are not known, the service address means the
8            location of the customer's place of primary use.
9            "Telecommunications service" means the electronic
10        transmission, conveyance, or routing of voice, data,
11        audio, video, or any other information or signals to a
12        point, or between or among points. The term
13        "telecommunications service" includes such
14        transmission, conveyance, or routing in which computer
15        processing applications are used to act on the form,
16        code or protocol of the content for purposes of
17        transmission, conveyance or routing without regard to
18        whether such service is referred to as voice over
19        Internet protocol services or is classified by the
20        Federal Communications Commission as enhanced or value
21        added. "Telecommunications service" does not include:
22                (a) Data processing and information services
23            that allow data to be generated, acquired, stored,
24            processed, or retrieved and delivered by an
25            electronic transmission to a purchaser when such
26            purchaser's primary purpose for the underlying

 

 

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1            transaction is the processed data or information;
2                (b) Installation or maintenance of wiring or
3            equipment on a customer's premises;
4                (c) Tangible personal property;
5                (d) Advertising, including but not limited to
6            directory advertising.
7                (e) Billing and collection services provided
8            to third parties;
9                (f) Internet access service;
10                (g) Radio and television audio and video
11            programming services, regardless of the medium,
12            including the furnishing of transmission,
13            conveyance and routing of such services by the
14            programming service provider. Radio and television
15            audio and video programming services shall include
16            but not be limited to cable service as defined in
17            47 USC 522(6) and audio and video programming
18            services delivered by commercial mobile radio
19            service providers, as defined in 47 CFR 20.3;
20                (h) "Ancillary services"; or
21                (i) Digital products "delivered
22            electronically", including but not limited to
23            software, music, video, reading materials or ring
24            tones.
25            "Vertical service" means an "ancillary service"
26        that is offered in connection with one or more

 

 

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1        "telecommunications services", which offers advanced
2        calling features that allow customers to identify
3        callers and to manage multiple calls and call
4        connections, including "conference bridging services".
5            "Voice mail service" means an "ancillary service"
6        that enables the customer to store, send or receive
7        recorded messages. "Voice mail service" does not
8        include any "vertical services" that the customer may
9        be required to have in order to utilize the "voice mail
10        service".
11            (ii) Receipts from the sale of telecommunications
12        service sold on an individual call-by-call basis are in
13        this State if either of the following applies:
14                (a) The call both originates and terminates in
15            this State.
16                (b) The call either originates or terminates
17            in this State and the service address is located in
18            this State.
19            (iii) Receipts from the sale of postpaid
20        telecommunications service at retail are in this State
21        if the origination point of the telecommunication
22        signal, as first identified by the service provider's
23        telecommunication system or as identified by
24        information received by the seller from its service
25        provider if the system used to transport
26        telecommunication signals is not the seller's, is

 

 

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1        located in this State.
2            (iv) Receipts from the sale of prepaid
3        telecommunications service or prepaid mobile
4        telecommunications service at retail are in this State
5        if the purchaser obtains the prepaid card or similar
6        means of conveyance at a location in this State.
7        Receipts from recharging a prepaid telecommunications
8        service or mobile telecommunications service is in
9        this State if the purchaser's billing information
10        indicates a location in this State.
11            (v) Receipts from the sale of private
12        communication services are in this State as follows:
13                (a) 100% of receipts from charges imposed at
14            each channel termination point in this State.
15                (b) 100% of receipts from charges for the total
16            channel mileage between each channel termination
17            point in this State.
18                (c) 50% of the total receipts from charges for
19            service segments when those segments are between 2
20            customer channel termination points, 1 of which is
21            located in this State and the other is located
22            outside of this State, which segments are
23            separately charged.
24                (d) The receipts from charges for service
25            segments with a channel termination point located
26            in this State and in two or more other states, and

 

 

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1            which segments are not separately billed, are in
2            this State based on a percentage determined by
3            dividing the number of customer channel
4            termination points in this State by the total
5            number of customer channel termination points.
6            (vi) Receipts from charges for ancillary services
7        for telecommunications service sold to customers at
8        retail are in this State if the customer's primary
9        place of use of telecommunications services associated
10        with those ancillary services is in this State. If the
11        seller of those ancillary services cannot determine
12        where the associated telecommunications are located,
13        then the ancillary services shall be based on the
14        location of the purchaser.
15            (vii) Receipts to access a carrier's network or
16        from the sale of telecommunication services or
17        ancillary services for resale are in this State as
18        follows:
19                (a) 100% of the receipts from access fees
20            attributable to intrastate telecommunications
21            service that both originates and terminates in
22            this State.
23                (b) 50% of the receipts from access fees
24            attributable to interstate telecommunications
25            service if the interstate call either originates
26            or terminates in this State.

 

 

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1                (c) 100% of the receipts from interstate end
2            user access line charges, if the customer's
3            service address is in this State. As used in this
4            subdivision, "interstate end user access line
5            charges" includes, but is not limited to, the
6            surcharge approved by the federal communications
7            commission and levied pursuant to 47 CFR 69.
8                (d) Gross receipts from sales of
9            telecommunication services or from ancillary
10            services for telecommunications services sold to
11            other telecommunication service providers for
12            resale shall be sourced to this State using the
13            apportionment concepts used for non-resale
14            receipts of telecommunications services if the
15            information is readily available to make that
16            determination. If the information is not readily
17            available, then the taxpayer may use any other
18            reasonable and consistent method.
19        (B-7) For taxable years ending on or after December 31,
20    2008, receipts from the sale of broadcasting services are
21    in this State if the broadcasting services are received in
22    this State. For purposes of this paragraph (B-7), the
23    following terms have the following meanings:
24            "Advertising revenue" means consideration received
25        by the taxpayer in exchange for broadcasting services
26        or allowing the broadcasting of commercials or

 

 

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1        announcements in connection with the broadcasting of
2        film or radio programming, from sponsorships of the
3        programming, or from product placements in the
4        programming.
5            "Audience factor" means the ratio that the
6        audience or subscribers located in this State of a
7        station, a network, or a cable system bears to the
8        total audience or total subscribers for that station,
9        network, or cable system. The audience factor for film
10        or radio programming shall be determined by reference
11        to the books and records of the taxpayer or by
12        reference to published rating statistics provided the
13        method used by the taxpayer is consistently used from
14        year to year for this purpose and fairly represents the
15        taxpayer's activity in this State.
16            "Broadcast" or "broadcasting" or "broadcasting
17        services" means the transmission or provision of film
18        or radio programming, whether through the public
19        airwaves, by cable, by direct or indirect satellite
20        transmission, or by any other means of communication,
21        either through a station, a network, or a cable system.
22            "Film" or "film programming" means the broadcast
23        on television of any and all performances, events, or
24        productions, including but not limited to news,
25        sporting events, plays, stories, or other literary,
26        commercial, educational, or artistic works, either

 

 

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1        live or through the use of video tape, disc, or any
2        other type of format or medium. Each episode of a
3        series of films produced for television shall
4        constitute separate "film" notwithstanding that the
5        series relates to the same principal subject and is
6        produced during one or more tax periods.
7            "Radio" or "radio programming" means the broadcast
8        on radio of any and all performances, events, or
9        productions, including but not limited to news,
10        sporting events, plays, stories, or other literary,
11        commercial, educational, or artistic works, either
12        live or through the use of an audio tape, disc, or any
13        other format or medium. Each episode in a series of
14        radio programming produced for radio broadcast shall
15        constitute a separate "radio programming"
16        notwithstanding that the series relates to the same
17        principal subject and is produced during one or more
18        tax periods.
19                (i) In the case of advertising revenue from
20            broadcasting, the customer is the advertiser and
21            the service is received in this State if the
22            commercial domicile of the advertiser is in this
23            State.
24                (ii) In the case where film or radio
25            programming is broadcast by a station, a network,
26            or a cable system for a fee or other remuneration

 

 

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1            received from the recipient of the broadcast, the
2            portion of the service that is received in this
3            State is measured by the portion of the recipients
4            of the broadcast located in this State.
5            Accordingly, the fee or other remuneration for
6            such service that is included in the Illinois
7            numerator of the sales factor is the total of those
8            fees or other remuneration received from
9            recipients in Illinois. For purposes of this
10            paragraph, a taxpayer may determine the location
11            of the recipients of its broadcast using the
12            address of the recipient shown in its contracts
13            with the recipient or using the billing address of
14            the recipient in the taxpayer's records.
15                (iii) In the case where film or radio
16            programming is broadcast by a station, a network,
17            or a cable system for a fee or other remuneration
18            from the person providing the programming, the
19            portion of the broadcast service that is received
20            by such station, network, or cable system in this
21            State is measured by the portion of recipients of
22            the broadcast located in this State. Accordingly,
23            the amount of revenue related to such an
24            arrangement that is included in the Illinois
25            numerator of the sales factor is the total fee or
26            other total remuneration from the person providing

 

 

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1            the programming related to that broadcast
2            multiplied by the Illinois audience factor for
3            that broadcast.
4                (iv) In the case where film or radio
5            programming is provided by a taxpayer that is a
6            network or station to a customer for broadcast in
7            exchange for a fee or other remuneration from that
8            customer the broadcasting service is received at
9            the location of the office of the customer from
10            which the services were ordered in the regular
11            course of the customer's trade or business.
12            Accordingly, in such a case the revenue derived by
13            the taxpayer that is included in the taxpayer's
14            Illinois numerator of the sales factor is the
15            revenue from such customers who receive the
16            broadcasting service in Illinois.
17                (v) In the case where film or radio programming
18            is provided by a taxpayer that is not a network or
19            station to another person for broadcasting in
20            exchange for a fee or other remuneration from that
21            person, the broadcasting service is received at
22            the location of the office of the customer from
23            which the services were ordered in the regular
24            course of the customer's trade or business.
25            Accordingly, in such a case the revenue derived by
26            the taxpayer that is included in the taxpayer's

 

 

SB2511- 26 -LRB099 18712 HLH 43096 b

1            Illinois numerator of the sales factor is the
2            revenue from such customers who receive the
3            broadcasting service in Illinois.
4        (B-8) Gross receipts from winnings under the Illinois
5    Lottery Law from the assignment of a prize under Section
6    13.1 13-1 of the Illinois Lottery Law are received in this
7    State. This paragraph (B-8) applies only to taxable years
8    ending on or after December 31, 2013.
9        (C) For taxable years ending before December 31, 2008,
10    sales, other than sales governed by paragraphs (B), (B-1),
11    (B-2), and (B-8) are in this State if:
12            (i) The income-producing activity is performed in
13        this State; or
14            (ii) The income-producing activity is performed
15        both within and without this State and a greater
16        proportion of the income-producing activity is
17        performed within this State than without this State,
18        based on performance costs.
19        (C-5) For taxable years ending on or after December 31,
20    2008, sales, other than sales governed by paragraphs (B),
21    (B-1), (B-2), (B-5), and (B-7), are in this State if any of
22    the following criteria are met:
23            (i) Sales from the sale or lease of real property
24        are in this State if the property is located in this
25        State.
26            (ii) Sales from the lease or rental of tangible

 

 

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1        personal property are in this State if the property is
2        located in this State during the rental period. Sales
3        from the lease or rental of tangible personal property
4        that is characteristically moving property, including,
5        but not limited to, motor vehicles, rolling stock,
6        aircraft, vessels, or mobile equipment are in this
7        State to the extent that the property is used in this
8        State.
9            (iii) In the case of interest, net gains (but not
10        less than zero) and other items of income from
11        intangible personal property, the sale is in this State
12        if:
13                (a) in the case of a taxpayer who is a dealer
14            in the item of intangible personal property within
15            the meaning of Section 475 of the Internal Revenue
16            Code, the income or gain is received from a
17            customer in this State. For purposes of this
18            subparagraph, a customer is in this State if the
19            customer is an individual, trust or estate who is a
20            resident of this State and, for all other
21            customers, if the customer's commercial domicile
22            is in this State. Unless the dealer has actual
23            knowledge of the residence or commercial domicile
24            of a customer during a taxable year, the customer
25            shall be deemed to be a customer in this State if
26            the billing address of the customer, as shown in

 

 

SB2511- 28 -LRB099 18712 HLH 43096 b

1            the records of the dealer, is in this State; or
2                (b) in all other cases, if the
3            income-producing activity of the taxpayer is
4            performed in this State or, if the
5            income-producing activity of the taxpayer is
6            performed both within and without this State, if a
7            greater proportion of the income-producing
8            activity of the taxpayer is performed within this
9            State than in any other state, based on performance
10            costs.
11            (iv) Sales of services are in this State if the
12        services are received in this State. For the purposes
13        of this section, gross receipts from the performance of
14        services provided to a corporation, partnership, or
15        trust may only be attributed to a state where that
16        corporation, partnership, or trust has a fixed place of
17        business. If the state where the services are received
18        is not readily determinable or is a state where the
19        corporation, partnership, or trust receiving the
20        service does not have a fixed place of business, the
21        services shall be deemed to be received at the location
22        of the office of the customer from which the services
23        were ordered in the regular course of the customer's
24        trade or business. If the ordering office cannot be
25        determined, the services shall be deemed to be received
26        at the office of the customer to which the services are

 

 

SB2511- 29 -LRB099 18712 HLH 43096 b

1        billed. If the taxpayer is not taxable in the state in
2        which the services are received, the sale must be
3        excluded from both the numerator and the denominator of
4        the sales factor. The Department shall adopt rules
5        prescribing where specific types of service are
6        received, including, but not limited to, publishing,
7        and utility service.
8        (D) For taxable years ending on or after December 31,
9    1995, the following items of income shall not be included
10    in the numerator or denominator of the sales factor:
11    dividends; amounts included under Section 78 of the
12    Internal Revenue Code; and Subpart F income as defined in
13    Section 952 of the Internal Revenue Code. No inference
14    shall be drawn from the enactment of this paragraph (D) in
15    construing this Section for taxable years ending before
16    December 31, 1995.
17        (E) Paragraphs (B-1) and (B-2) shall apply to tax years
18    ending on or after December 31, 1999, provided that a
19    taxpayer may elect to apply the provisions of these
20    paragraphs to prior tax years. Such election shall be made
21    in the form and manner prescribed by the Department, shall
22    be irrevocable, and shall apply to all tax years; provided
23    that, if a taxpayer's Illinois income tax liability for any
24    tax year, as assessed under Section 903 prior to January 1,
25    1999, was computed in a manner contrary to the provisions
26    of paragraphs (B-1) or (B-2), no refund shall be payable to

 

 

SB2511- 30 -LRB099 18712 HLH 43096 b

1    the taxpayer for that tax year to the extent such refund is
2    the result of applying the provisions of paragraph (B-1) or
3    (B-2) retroactively. In the case of a unitary business
4    group, such election shall apply to all members of such
5    group for every tax year such group is in existence, but
6    shall not apply to any taxpayer for any period during which
7    that taxpayer is not a member of such group.
8    (b) Insurance companies.
9        (1) In general. Except as otherwise provided by
10    paragraph (2), business income of an insurance company for
11    a taxable year shall be apportioned to this State by
12    multiplying such income by a fraction, the numerator of
13    which is the direct premiums written for insurance upon
14    property or risk in this State, and the denominator of
15    which is the direct premiums written for insurance upon
16    property or risk everywhere. For purposes of this
17    subsection, the term "direct premiums written" means the
18    total amount of direct premiums written, assessments and
19    annuity considerations as reported for the taxable year on
20    the annual statement filed by the company with the Illinois
21    Director of Insurance in the form approved by the National
22    Convention of Insurance Commissioners or such other form as
23    may be prescribed in lieu thereof.
24        (2) Reinsurance. If the principal source of premiums
25    written by an insurance company consists of premiums for
26    reinsurance accepted by it, the business income of such

 

 

SB2511- 31 -LRB099 18712 HLH 43096 b

1    company shall be apportioned to this State by multiplying
2    such income by a fraction, the numerator of which is the
3    sum of (i) direct premiums written for insurance upon
4    property or risk in this State, plus (ii) premiums written
5    for reinsurance accepted in respect of property or risk in
6    this State, and the denominator of which is the sum of
7    (iii) direct premiums written for insurance upon property
8    or risk everywhere, plus (iv) premiums written for
9    reinsurance accepted in respect of property or risk
10    everywhere. For purposes of this paragraph, premiums
11    written for reinsurance accepted in respect of property or
12    risk in this State, whether or not otherwise determinable,
13    may, at the election of the company, be determined on the
14    basis of the proportion which premiums written for
15    reinsurance accepted from companies commercially domiciled
16    in Illinois bears to premiums written for reinsurance
17    accepted from all sources, or, alternatively, in the
18    proportion which the sum of the direct premiums written for
19    insurance upon property or risk in this State by each
20    ceding company from which reinsurance is accepted bears to
21    the sum of the total direct premiums written by each such
22    ceding company for the taxable year. The election made by a
23    company under this paragraph for its first taxable year
24    ending on or after December 31, 2011, shall be binding for
25    that company for that taxable year and for all subsequent
26    taxable years, and may be altered only with the written

 

 

SB2511- 32 -LRB099 18712 HLH 43096 b

1    permission of the Department, which shall not be
2    unreasonably withheld.
3    (c) Financial organizations.
4        (1) In general. For taxable years ending before
5    December 31, 2008, business income of a financial
6    organization shall be apportioned to this State by
7    multiplying such income by a fraction, the numerator of
8    which is its business income from sources within this
9    State, and the denominator of which is its business income
10    from all sources. For the purposes of this subsection, the
11    business income of a financial organization from sources
12    within this State is the sum of the amounts referred to in
13    subparagraphs (A) through (E) following, but excluding the
14    adjusted income of an international banking facility as
15    determined in paragraph (2):
16            (A) Fees, commissions or other compensation for
17        financial services rendered within this State;
18            (B) Gross profits from trading in stocks, bonds or
19        other securities managed within this State;
20            (C) Dividends, and interest from Illinois
21        customers, which are received within this State;
22            (D) Interest charged to customers at places of
23        business maintained within this State for carrying
24        debit balances of margin accounts, without deduction
25        of any costs incurred in carrying such accounts; and
26            (E) Any other gross income resulting from the

 

 

SB2511- 33 -LRB099 18712 HLH 43096 b

1        operation as a financial organization within this
2        State. In computing the amounts referred to in
3        paragraphs (A) through (E) of this subsection, any
4        amount received by a member of an affiliated group
5        (determined under Section 1504(a) of the Internal
6        Revenue Code but without reference to whether any such
7        corporation is an "includible corporation" under
8        Section 1504(b) of the Internal Revenue Code) from
9        another member of such group shall be included only to
10        the extent such amount exceeds expenses of the
11        recipient directly related thereto.
12        (2) International Banking Facility. For taxable years
13    ending before December 31, 2008:
14            (A) Adjusted Income. The adjusted income of an
15        international banking facility is its income reduced
16        by the amount of the floor amount.
17            (B) Floor Amount. The floor amount shall be the
18        amount, if any, determined by multiplying the income of
19        the international banking facility by a fraction, not
20        greater than one, which is determined as follows:
21                (i) The numerator shall be:
22                The average aggregate, determined on a
23            quarterly basis, of the financial organization's
24            loans to banks in foreign countries, to foreign
25            domiciled borrowers (except where secured
26            primarily by real estate) and to foreign

 

 

SB2511- 34 -LRB099 18712 HLH 43096 b

1            governments and other foreign official
2            institutions, as reported for its branches,
3            agencies and offices within the state on its
4            "Consolidated Report of Condition", Schedule A,
5            Lines 2.c., 5.b., and 7.a., which was filed with
6            the Federal Deposit Insurance Corporation and
7            other regulatory authorities, for the year 1980,
8            minus
9                The average aggregate, determined on a
10            quarterly basis, of such loans (other than loans of
11            an international banking facility), as reported by
12            the financial institution for its branches,
13            agencies and offices within the state, on the
14            corresponding Schedule and lines of the
15            Consolidated Report of Condition for the current
16            taxable year, provided, however, that in no case
17            shall the amount determined in this clause (the
18            subtrahend) exceed the amount determined in the
19            preceding clause (the minuend); and
20                (ii) the denominator shall be the average
21            aggregate, determined on a quarterly basis, of the
22            international banking facility's loans to banks in
23            foreign countries, to foreign domiciled borrowers
24            (except where secured primarily by real estate)
25            and to foreign governments and other foreign
26            official institutions, which were recorded in its

 

 

SB2511- 35 -LRB099 18712 HLH 43096 b

1            financial accounts for the current taxable year.
2            (C) Change to Consolidated Report of Condition and
3        in Qualification. In the event the Consolidated Report
4        of Condition which is filed with the Federal Deposit
5        Insurance Corporation and other regulatory authorities
6        is altered so that the information required for
7        determining the floor amount is not found on Schedule
8        A, lines 2.c., 5.b. and 7.a., the financial institution
9        shall notify the Department and the Department may, by
10        regulations or otherwise, prescribe or authorize the
11        use of an alternative source for such information. The
12        financial institution shall also notify the Department
13        should its international banking facility fail to
14        qualify as such, in whole or in part, or should there
15        be any amendment or change to the Consolidated Report
16        of Condition, as originally filed, to the extent such
17        amendment or change alters the information used in
18        determining the floor amount.
19        (3) For taxable years ending on or after December 31,
20    2008, the business income of a financial organization shall
21    be apportioned to this State by multiplying such income by
22    a fraction, the numerator of which is its gross receipts
23    from sources in this State or otherwise attributable to
24    this State's marketplace and the denominator of which is
25    its gross receipts everywhere during the taxable year.
26    "Gross receipts" for purposes of this subparagraph (3)

 

 

SB2511- 36 -LRB099 18712 HLH 43096 b

1    means gross income, including net taxable gain on
2    disposition of assets, including securities and money
3    market instruments, when derived from transactions and
4    activities in the regular course of the financial
5    organization's trade or business. The following examples
6    are illustrative:
7            (i) Receipts from the lease or rental of real or
8        tangible personal property are in this State if the
9        property is located in this State during the rental
10        period. Receipts from the lease or rental of tangible
11        personal property that is characteristically moving
12        property, including, but not limited to, motor
13        vehicles, rolling stock, aircraft, vessels, or mobile
14        equipment are from sources in this State to the extent
15        that the property is used in this State.
16            (ii) Interest income, commissions, fees, gains on
17        disposition, and other receipts from assets in the
18        nature of loans that are secured primarily by real
19        estate or tangible personal property are from sources
20        in this State if the security is located in this State.
21            (iii) Interest income, commissions, fees, gains on
22        disposition, and other receipts from consumer loans
23        that are not secured by real or tangible personal
24        property are from sources in this State if the debtor
25        is a resident of this State.
26            (iv) Interest income, commissions, fees, gains on

 

 

SB2511- 37 -LRB099 18712 HLH 43096 b

1        disposition, and other receipts from commercial loans
2        and installment obligations that are not secured by
3        real or tangible personal property are from sources in
4        this State if the proceeds of the loan are to be
5        applied in this State. If it cannot be determined where
6        the funds are to be applied, the income and receipts
7        are from sources in this State if the office of the
8        borrower from which the loan was negotiated in the
9        regular course of business is located in this State. If
10        the location of this office cannot be determined, the
11        income and receipts shall be excluded from the
12        numerator and denominator of the sales factor.
13            (v) Interest income, fees, gains on disposition,
14        service charges, merchant discount income, and other
15        receipts from credit card receivables are from sources
16        in this State if the card charges are regularly billed
17        to a customer in this State.
18            (vi) Receipts from the performance of services,
19        including, but not limited to, fiduciary, advisory,
20        and brokerage services, are in this State if the
21        services are received in this State within the meaning
22        of subparagraph (a)(3)(C-5)(iv) of this Section.
23            (vii) Receipts from the issuance of travelers
24        checks and money orders are from sources in this State
25        if the checks and money orders are issued from a
26        location within this State.

 

 

SB2511- 38 -LRB099 18712 HLH 43096 b

1            (viii) Receipts from investment assets and
2        activities and trading assets and activities are
3        included in the receipts factor as follows:
4                (1) Interest, dividends, net gains (but not
5            less than zero) and other income from investment
6            assets and activities from trading assets and
7            activities shall be included in the receipts
8            factor. Investment assets and activities and
9            trading assets and activities include but are not
10            limited to: investment securities; trading account
11            assets; federal funds; securities purchased and
12            sold under agreements to resell or repurchase;
13            options; futures contracts; forward contracts;
14            notional principal contracts such as swaps;
15            equities; and foreign currency transactions. With
16            respect to the investment and trading assets and
17            activities described in subparagraphs (A) and (B)
18            of this paragraph, the receipts factor shall
19            include the amounts described in such
20            subparagraphs.
21                    (A) The receipts factor shall include the
22                amount by which interest from federal funds
23                sold and securities purchased under resale
24                agreements exceeds interest expense on federal
25                funds purchased and securities sold under
26                repurchase agreements.

 

 

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1                    (B) The receipts factor shall include the
2                amount by which interest, dividends, gains and
3                other income from trading assets and
4                activities, including but not limited to
5                assets and activities in the matched book, in
6                the arbitrage book, and foreign currency
7                transactions, exceed amounts paid in lieu of
8                interest, amounts paid in lieu of dividends,
9                and losses from such assets and activities.
10                (2) The numerator of the receipts factor
11            includes interest, dividends, net gains (but not
12            less than zero), and other income from investment
13            assets and activities and from trading assets and
14            activities described in paragraph (1) of this
15            subsection that are attributable to this State.
16                    (A) The amount of interest, dividends, net
17                gains (but not less than zero), and other
18                income from investment assets and activities
19                in the investment account to be attributed to
20                this State and included in the numerator is
21                determined by multiplying all such income from
22                such assets and activities by a fraction, the
23                numerator of which is the gross income from
24                such assets and activities which are properly
25                assigned to a fixed place of business of the
26                taxpayer within this State and the denominator

 

 

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1                of which is the gross income from all such
2                assets and activities.
3                    (B) The amount of interest from federal
4                funds sold and purchased and from securities
5                purchased under resale agreements and
6                securities sold under repurchase agreements
7                attributable to this State and included in the
8                numerator is determined by multiplying the
9                amount described in subparagraph (A) of
10                paragraph (1) of this subsection from such
11                funds and such securities by a fraction, the
12                numerator of which is the gross income from
13                such funds and such securities which are
14                properly assigned to a fixed place of business
15                of the taxpayer within this State and the
16                denominator of which is the gross income from
17                all such funds and such securities.
18                    (C) The amount of interest, dividends,
19                gains, and other income from trading assets and
20                activities, including but not limited to
21                assets and activities in the matched book, in
22                the arbitrage book and foreign currency
23                transactions (but excluding amounts described
24                in subparagraphs (A) or (B) of this paragraph),
25                attributable to this State and included in the
26                numerator is determined by multiplying the

 

 

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1                amount described in subparagraph (B) of
2                paragraph (1) of this subsection by a fraction,
3                the numerator of which is the gross income from
4                such trading assets and activities which are
5                properly assigned to a fixed place of business
6                of the taxpayer within this State and the
7                denominator of which is the gross income from
8                all such assets and activities.
9                    (D) Properly assigned, for purposes of
10                this paragraph (2) of this subsection, means
11                the investment or trading asset or activity is
12                assigned to the fixed place of business with
13                which it has a preponderance of substantive
14                contacts. An investment or trading asset or
15                activity assigned by the taxpayer to a fixed
16                place of business without the State shall be
17                presumed to have been properly assigned if:
18                        (i) the taxpayer has assigned, in the
19                    regular course of its business, such asset
20                    or activity on its records to a fixed place
21                    of business consistent with federal or
22                    state regulatory requirements;
23                        (ii) such assignment on its records is
24                    based upon substantive contacts of the
25                    asset or activity to such fixed place of
26                    business; and

 

 

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1                        (iii) the taxpayer uses such records
2                    reflecting assignment of such assets or
3                    activities for the filing of all state and
4                    local tax returns for which an assignment
5                    of such assets or activities to a fixed
6                    place of business is required.
7                    (E) The presumption of proper assignment
8                of an investment or trading asset or activity
9                provided in subparagraph (D) of paragraph (2)
10                of this subsection may be rebutted upon a
11                showing by the Department, supported by a
12                preponderance of the evidence, that the
13                preponderance of substantive contacts
14                regarding such asset or activity did not occur
15                at the fixed place of business to which it was
16                assigned on the taxpayer's records. If the
17                fixed place of business that has a
18                preponderance of substantive contacts cannot
19                be determined for an investment or trading
20                asset or activity to which the presumption in
21                subparagraph (D) of paragraph (2) of this
22                subsection does not apply or with respect to
23                which that presumption has been rebutted, that
24                asset or activity is properly assigned to the
25                state in which the taxpayer's commercial
26                domicile is located. For purposes of this

 

 

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1                subparagraph (E), it shall be presumed,
2                subject to rebuttal, that taxpayer's
3                commercial domicile is in the state of the
4                United States or the District of Columbia to
5                which the greatest number of employees are
6                regularly connected with the management of the
7                investment or trading income or out of which
8                they are working, irrespective of where the
9                services of such employees are performed, as of
10                the last day of the taxable year.
11        (4) (Blank).
12        (5) (Blank).
13    (c-1) Federally regulated exchanges. For taxable years
14ending on or after December 31, 2012, business income of a
15federally regulated exchange shall, at the option of the
16federally regulated exchange, be apportioned to this State by
17multiplying such income by a fraction, the numerator of which
18is its business income from sources within this State, and the
19denominator of which is its business income from all sources.
20For purposes of this subsection, the business income within
21this State of a federally regulated exchange is the sum of the
22following:
23        (1) Receipts attributable to transactions executed on
24    a physical trading floor if that physical trading floor is
25    located in this State.
26        (2) Receipts attributable to all other matching,

 

 

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1    execution, or clearing transactions, including without
2    limitation receipts from the provision of matching,
3    execution, or clearing services to another entity,
4    multiplied by (i) for taxable years ending on or after
5    December 31, 2012 but before December 31, 2013, 63.77%; and
6    (ii) for taxable years ending on or after December 31,
7    2013, 27.54%.
8        (3) All other receipts not governed by subparagraphs
9    (1) or (2) of this subsection (c-1), to the extent the
10    receipts would be characterized as "sales in this State"
11    under item (3) of subsection (a) of this Section.
12    "Federally regulated exchange" means (i) a "registered
13entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B),
14or (C), (ii) an "exchange" or "clearing agency" within the
15meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such
16entities regulated under any successor regulatory structure to
17the foregoing, and (iv) all taxpayers who are members of the
18same unitary business group as a federally regulated exchange,
19determined without regard to the prohibition in Section
201501(a)(27) of this Act against including in a unitary business
21group taxpayers who are ordinarily required to apportion
22business income under different subsections of this Section;
23provided that this subparagraph (iv) shall apply only if 50% or
24more of the business receipts of the unitary business group
25determined by application of this subparagraph (iv) for the
26taxable year are attributable to the matching, execution, or

 

 

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1clearing of transactions conducted by an entity described in
2subparagraph (i), (ii), or (iii) of this paragraph.
3    In no event shall the Illinois apportionment percentage
4computed in accordance with this subsection (c-1) for any
5taxpayer for any tax year be less than the Illinois
6apportionment percentage computed under this subsection (c-1)
7for that taxpayer for the first full tax year ending on or
8after December 31, 2013 for which this subsection (c-1) applied
9to the taxpayer.
10    (d) Transportation services. For taxable years ending
11before December 31, 2008, business income derived from
12furnishing transportation services shall be apportioned to
13this State in accordance with paragraphs (1) and (2):
14        (1) Such business income (other than that derived from
15    transportation by pipeline) shall be apportioned to this
16    State by multiplying such income by a fraction, the
17    numerator of which is the revenue miles of the person in
18    this State, and the denominator of which is the revenue
19    miles of the person everywhere. For purposes of this
20    paragraph, a revenue mile is the transportation of 1
21    passenger or 1 net ton of freight the distance of 1 mile
22    for a consideration. Where a person is engaged in the
23    transportation of both passengers and freight, the
24    fraction above referred to shall be determined by means of
25    an average of the passenger revenue mile fraction and the
26    freight revenue mile fraction, weighted to reflect the

 

 

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1    person's
2            (A) relative railway operating income from total
3        passenger and total freight service, as reported to the
4        Interstate Commerce Commission, in the case of
5        transportation by railroad, and
6            (B) relative gross receipts from passenger and
7        freight transportation, in case of transportation
8        other than by railroad.
9        (2) Such business income derived from transportation
10    by pipeline shall be apportioned to this State by
11    multiplying such income by a fraction, the numerator of
12    which is the revenue miles of the person in this State, and
13    the denominator of which is the revenue miles of the person
14    everywhere. For the purposes of this paragraph, a revenue
15    mile is the transportation by pipeline of 1 barrel of oil,
16    1,000 cubic feet of gas, or of any specified quantity of
17    any other substance, the distance of 1 mile for a
18    consideration.
19        (3) For taxable years ending on or after December 31,
20    2008, business income derived from providing
21    transportation services other than airline services shall
22    be apportioned to this State by using a fraction, (a) the
23    numerator of which shall be (i) all receipts from any
24    movement or shipment of people, goods, mail, oil, gas, or
25    any other substance (other than by airline) that both
26    originates and terminates in this State, plus (ii) that

 

 

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1    portion of the person's gross receipts from movements or
2    shipments of people, goods, mail, oil, gas, or any other
3    substance (other than by airline) that originates in one
4    state or jurisdiction and terminates in another state or
5    jurisdiction, that is determined by the ratio that the
6    miles traveled in this State bears to total miles
7    everywhere and (b) the denominator of which shall be all
8    revenue derived from the movement or shipment of people,
9    goods, mail, oil, gas, or any other substance (other than
10    by airline). Where a taxpayer is engaged in the
11    transportation of both passengers and freight, the
12    fraction above referred to shall first be determined
13    separately for passenger miles and freight miles. Then an
14    average of the passenger miles fraction and the freight
15    miles fraction shall be weighted to reflect the taxpayer's:
16            (A) relative railway operating income from total
17        passenger and total freight service, as reported to the
18        Surface Transportation Board, in the case of
19        transportation by railroad; and
20            (B) relative gross receipts from passenger and
21        freight transportation, in case of transportation
22        other than by railroad.
23        (4) For taxable years ending on or after December 31,
24    2008, business income derived from furnishing airline
25    transportation services shall be apportioned to this State
26    by multiplying such income by a fraction, the numerator of

 

 

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1    which is the revenue miles of the person in this State, and
2    the denominator of which is the revenue miles of the person
3    everywhere. For purposes of this paragraph, a revenue mile
4    is the transportation of one passenger or one net ton of
5    freight the distance of one mile for a consideration. If a
6    person is engaged in the transportation of both passengers
7    and freight, the fraction above referred to shall be
8    determined by means of an average of the passenger revenue
9    mile fraction and the freight revenue mile fraction,
10    weighted to reflect the person's relative gross receipts
11    from passenger and freight airline transportation.
12    (e) Combined apportionment. Where 2 or more persons are
13engaged in a unitary business as described in subsection
14(a)(27) of Section 1501, a part of which is conducted in this
15State by one or more members of the group, the business income
16attributable to this State by any such member or members shall
17be apportioned by means of the combined apportionment method.
18    (f) Alternative allocation. If the allocation and
19apportionment provisions of subsections (a) through (e) and of
20subsection (h) do not, for taxable years ending before December
2131, 2008, fairly represent the extent of a person's business
22activity in this State, or, for taxable years ending on or
23after December 31, 2008, fairly represent the market for the
24person's goods, services, or other sources of business income,
25the person may petition for, or the Director may, without a
26petition, permit or require, in respect of all or any part of

 

 

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1the person's business activity, if reasonable:
2        (1) Separate accounting;
3        (2) The exclusion of any one or more factors;
4        (3) The inclusion of one or more additional factors
5    which will fairly represent the person's business
6    activities or market in this State; or
7        (4) The employment of any other method to effectuate an
8    equitable allocation and apportionment of the person's
9    business income.
10    (g) Cross reference. For allocation of business income by
11residents, see Section 301(a).
12    (h) For tax years ending on or after December 31, 1998, the
13apportionment factor of persons who apportion their business
14income to this State under subsection (a) shall be equal to:
15        (1) for tax years ending on or after December 31, 1998
16    and before December 31, 1999, 16 2/3% of the property
17    factor plus 16 2/3% of the payroll factor plus 66 2/3% of
18    the sales factor;
19        (2) for tax years ending on or after December 31, 1999
20    and before December 31, 2000, 8 1/3% of the property factor
21    plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
22    factor;
23        (3) for tax years ending on or after December 31, 2000,
24    the sales factor.
25If, in any tax year ending on or after December 31, 1998 and
26before December 31, 2000, the denominator of the payroll,

 

 

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1property, or sales factor is zero, the apportionment factor
2computed in paragraph (1) or (2) of this subsection for that
3year shall be divided by an amount equal to 100% minus the
4percentage weight given to each factor whose denominator is
5equal to zero.
6(Source: P.A. 97-507, eff. 8-23-11; 97-636, eff. 6-1-12;
798-478, eff. 1-1-14; 98-496, eff. 1-1-14; 98-756, eff. 7-16-14;
8revised 10-19-15.)