93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB6935

 

Introduced 02/09/04, by James H. Meyer - Ed Sullivan Jr. - Sidney H. Mathias

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201   from Ch. 120, par. 2-201
35 ILCS 5/204   from Ch. 120, par. 2-204
35 ILCS 5/207   from Ch. 120, par. 2-207

    Amends the Illinois Income Tax Act. Restores income tax credits, the standard deduction for corporations, and net loss carryback provisions eliminated by Public Act 93-29. Effective immediately.


LRB093 18499 SJM 44216 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB6935 LRB093 18499 SJM 44216 b

1     AN ACT concerning taxes.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Income Tax Act is amended by
5 changing Sections 201, 204, and 207 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
9 imposed on every individual, corporation, trust and estate for
10 each taxable year ending after July 31, 1969 on the privilege
11 of earning or receiving income in or as a resident of this
12 State. Such tax shall be in addition to all other occupation or
13 privilege taxes imposed by this State or by any municipal
14 corporation or political subdivision thereof.
15     (b) Rates. The tax imposed by subsection (a) of this
16 Section shall be determined as follows, except as adjusted by
17 subsection (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
24     after June 30, 1989, an amount equal to the sum of (i) 2
25     1/2% of the taxpayer's net income for the period prior to
26     July 1, 1989, as calculated under Section 202.3, and (ii)
27     3% of the taxpayer's net income for the period after June
28     30, 1989, as calculated under Section 202.3.
29         (3) In the case of an individual, trust or estate, for
30     taxable years beginning after June 30, 1989, an amount
31     equal to 3% of the taxpayer's net income for the taxable
32     year.

 

 

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1         (4) (Blank).
2         (5) (Blank).
3         (6) In the case of a corporation, for taxable years
4     ending prior to July 1, 1989, an amount equal to 4% of the
5     taxpayer's net income for the taxable year.
6         (7) In the case of a corporation, for taxable years
7     beginning prior to July 1, 1989 and ending after June 30,
8     1989, an amount equal to the sum of (i) 4% of the
9     taxpayer's net income for the period prior to July 1, 1989,
10     as calculated under Section 202.3, and (ii) 4.8% of the
11     taxpayer's net income for the period after June 30, 1989,
12     as calculated under Section 202.3.
13         (8) In the case of a corporation, for taxable years
14     beginning after June 30, 1989, an amount equal to 4.8% of
15     the taxpayer's net income for the taxable year.
16     (c) Personal Property Tax Replacement Income Tax.
17 Beginning on July 1, 1979 and thereafter, in addition to such
18 income tax, there is also hereby imposed the Personal Property
19 Tax Replacement Income Tax measured by net income on every
20 corporation (including Subchapter S corporations), partnership
21 and trust, for each taxable year ending after June 30, 1979.
22 Such taxes are imposed on the privilege of earning or receiving
23 income in or as a resident of this State. The Personal Property
24 Tax Replacement Income Tax shall be in addition to the income
25 tax imposed by subsections (a) and (b) of this Section and in
26 addition to all other occupation or privilege taxes imposed by
27 this State or by any municipal corporation or political
28 subdivision thereof.
29     (d) Additional Personal Property Tax Replacement Income
30 Tax Rates. The personal property tax replacement income tax
31 imposed by this subsection and subsection (c) of this Section
32 in the case of a corporation, other than a Subchapter S
33 corporation and except as adjusted by subsection (d-1), shall
34 be an additional amount equal to 2.85% of such taxpayer's net
35 income for the taxable year, except that beginning on January
36 1, 1981, and thereafter, the rate of 2.85% specified in this

 

 

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1 subsection shall be reduced to 2.5%, and in the case of a
2 partnership, trust or a Subchapter S corporation shall be an
3 additional amount equal to 1.5% of such taxpayer's net income
4 for the taxable year.
5     (d-1) Rate reduction for certain foreign insurers. In the
6 case of a foreign insurer, as defined by Section 35A-5 of the
7 Illinois Insurance Code, whose state or country of domicile
8 imposes on insurers domiciled in Illinois a retaliatory tax
9 (excluding any insurer whose premiums from reinsurance assumed
10 are 50% or more of its total insurance premiums as determined
11 under paragraph (2) of subsection (b) of Section 304, except
12 that for purposes of this determination premiums from
13 reinsurance do not include premiums from inter-affiliate
14 reinsurance arrangements), beginning with taxable years ending
15 on or after December 31, 1999, the sum of the rates of tax
16 imposed by subsections (b) and (d) shall be reduced (but not
17 increased) to the rate at which the total amount of tax imposed
18 under this Act, net of all credits allowed under this Act,
19 shall equal (i) the total amount of tax that would be imposed
20 on the foreign insurer's net income allocable to Illinois for
21 the taxable year by such foreign insurer's state or country of
22 domicile if that net income were subject to all income taxes
23 and taxes measured by net income imposed by such foreign
24 insurer's state or country of domicile, net of all credits
25 allowed or (ii) a rate of zero if no such tax is imposed on such
26 income by the foreign insurer's state of domicile. For the
27 purposes of this subsection (d-1), an inter-affiliate includes
28 a mutual insurer under common management.
29         (1) For the purposes of subsection (d-1), in no event
30     shall the sum of the rates of tax imposed by subsections
31     (b) and (d) be reduced below the rate at which the sum of:
32             (A) the total amount of tax imposed on such foreign
33         insurer under this Act for a taxable year, net of all
34         credits allowed under this Act, plus
35             (B) the privilege tax imposed by Section 409 of the
36         Illinois Insurance Code, the fire insurance company

 

 

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1         tax imposed by Section 12 of the Fire Investigation
2         Act, and the fire department taxes imposed under
3         Section 11-10-1 of the Illinois Municipal Code,
4     equals 1.25% for taxable years ending prior to December 31,
5     2003, or 1.75% for taxable years ending on or after
6     December 31, 2003, of the net taxable premiums written for
7     the taxable year, as described by subsection (1) of Section
8     409 of the Illinois Insurance Code. This paragraph will in
9     no event increase the rates imposed under subsections (b)
10     and (d).
11         (2) Any reduction in the rates of tax imposed by this
12     subsection shall be applied first against the rates imposed
13     by subsection (b) and only after the tax imposed by
14     subsection (a) net of all credits allowed under this
15     Section other than the credit allowed under subsection (i)
16     has been reduced to zero, against the rates imposed by
17     subsection (d).
18     This subsection (d-1) is exempt from the provisions of
19 Section 250.
20     (e) Investment credit. A taxpayer shall be allowed a credit
21 against the Personal Property Tax Replacement Income Tax for
22 investment in qualified property.
23         (1) A taxpayer shall be allowed a credit equal to .5%
24     of the basis of qualified property placed in service during
25     the taxable year, provided such property is placed in
26     service on or after July 1, 1984. There shall be allowed an
27     additional credit equal to .5% of the basis of qualified
28     property placed in service during the taxable year,
29     provided such property is placed in service on or after
30     July 1, 1986, and the taxpayer's base employment within
31     Illinois has increased by 1% or more over the preceding
32     year as determined by the taxpayer's employment records
33     filed with the Illinois Department of Employment Security.
34     Taxpayers who are new to Illinois shall be deemed to have
35     met the 1% growth in base employment for the first year in
36     which they file employment records with the Illinois

 

 

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1     Department of Employment Security. The provisions added to
2     this Section by Public Act 85-1200 (and restored by Public
3     Act 87-895) shall be construed as declaratory of existing
4     law and not as a new enactment. If, in any year, the
5     increase in base employment within Illinois over the
6     preceding year is less than 1%, the additional credit shall
7     be limited to that percentage times a fraction, the
8     numerator of which is .5% and the denominator of which is
9     1%, but shall not exceed .5%. The investment credit shall
10     not be allowed to the extent that it would reduce a
11     taxpayer's liability in any tax year below zero, nor may
12     any credit for qualified property be allowed for any year
13     other than the year in which the property was placed in
14     service in Illinois. For tax years ending on or after
15     December 31, 1987, and on or before December 31, 1988, the
16     credit shall be allowed for the tax year in which the
17     property is placed in service, or, if the amount of the
18     credit exceeds the tax liability for that year, whether it
19     exceeds the original liability or the liability as later
20     amended, such excess may be carried forward and applied to
21     the tax liability of the 5 taxable years following the
22     excess credit years if the taxpayer (i) makes investments
23     which cause the creation of a minimum of 2,000 full-time
24     equivalent jobs in Illinois, (ii) is located in an
25     enterprise zone established pursuant to the Illinois
26     Enterprise Zone Act and (iii) is certified by the
27     Department of Commerce and Community Affairs (now
28     Department of Commerce and Economic Opportunity) as
29     complying with the requirements specified in clause (i) and
30     (ii) by July 1, 1986. The Department of Commerce and
31     Community Affairs (now Department of Commerce and Economic
32     Opportunity) shall notify the Department of Revenue of all
33     such certifications immediately. For tax years ending
34     after December 31, 1988, the credit shall be allowed for
35     the tax year in which the property is placed in service,
36     or, if the amount of the credit exceeds the tax liability

 

 

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1     for that year, whether it exceeds the original liability or
2     the liability as later amended, such excess may be carried
3     forward and applied to the tax liability of the 5 taxable
4     years following the excess credit years. The credit shall
5     be applied to the earliest year for which there is a
6     liability. If there is credit from more than one tax year
7     that is available to offset a liability, earlier credit
8     shall be applied first.
9         (2) The term "qualified property" means property
10     which:
11             (A) is tangible, whether new or used, including
12         buildings and structural components of buildings and
13         signs that are real property, but not including land or
14         improvements to real property that are not a structural
15         component of a building such as landscaping, sewer
16         lines, local access roads, fencing, parking lots, and
17         other appurtenances;
18             (B) is depreciable pursuant to Section 167 of the
19         Internal Revenue Code, except that "3-year property"
20         as defined in Section 168(c)(2)(A) of that Code is not
21         eligible for the credit provided by this subsection
22         (e);
23             (C) is acquired by purchase as defined in Section
24         179(d) of the Internal Revenue Code;
25             (D) is used in Illinois by a taxpayer who is
26         primarily engaged in manufacturing, or in mining coal
27         or fluorite, or in retailing; and
28             (E) has not previously been used in Illinois in
29         such a manner and by such a person as would qualify for
30         the credit provided by this subsection (e) or
31         subsection (f).
32         (3) For purposes of this subsection (e),
33     "manufacturing" means the material staging and production
34     of tangible personal property by procedures commonly
35     regarded as manufacturing, processing, fabrication, or
36     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 or services rendered in conjunction with the sale
7     of tangible consumer goods or commodities.
8         (4) The basis of qualified property shall be the basis
9     used to compute the depreciation deduction for federal
10     income tax purposes.
11         (5) If the basis of the property for federal income tax
12     depreciation purposes is increased after it has been placed
13     in service in Illinois by the taxpayer, the amount of such
14     increase shall be deemed property placed in service on the
15     date of such increase in basis.
16         (6) The term "placed in service" shall have the same
17     meaning as under Section 46 of the Internal Revenue Code.
18         (7) If during any taxable year, any property ceases to
19     be qualified property in the hands of the taxpayer within
20     48 months after being placed in service, or the situs of
21     any qualified property is moved outside Illinois within 48
22     months after being placed in service, the Personal Property
23     Tax Replacement Income Tax for such taxable year shall be
24     increased. Such increase shall be determined by (i)
25     recomputing the investment credit which would have been
26     allowed for the year in which credit for such property was
27     originally allowed by eliminating such property from such
28     computation and, (ii) subtracting such recomputed credit
29     from the amount of credit previously allowed. For the
30     purposes of this paragraph (7), a reduction of the basis of
31     qualified property resulting from a redetermination of the
32     purchase price shall be deemed a disposition of qualified
33     property to the extent of such reduction.
34         (8) Unless the investment credit is extended by law,
35     the basis of qualified property shall not include costs
36     incurred after December 31, 2003, except for costs incurred

 

 

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1     pursuant to a binding contract entered into on or before
2     December 31, 2003.
3         (9) Each taxable year ending before December 31, 2000,
4     a partnership may elect to pass through to its partners the
5     credits to which the partnership is entitled under this
6     subsection (e) for the taxable year. A partner may use the
7     credit allocated to him or her under this paragraph only
8     against the tax imposed in subsections (c) and (d) of this
9     Section. If the partnership makes that election, those
10     credits shall be allocated among the partners in the
11     partnership in accordance with the rules set forth in
12     Section 704(b) of the Internal Revenue Code, and the rules
13     promulgated under that Section, and the allocated amount of
14     the credits shall be allowed to the partners for that
15     taxable year. The partnership shall make this election on
16     its Personal Property Tax Replacement Income Tax return for
17     that taxable year. The election to pass through the credits
18     shall be irrevocable.
19         For taxable years ending on or after December 31, 2000,
20     a partner that qualifies its partnership for a subtraction
21     under subparagraph (I) of paragraph (2) of subsection (d)
22     of Section 203 or a shareholder that qualifies a Subchapter
23     S corporation for a subtraction under subparagraph (S) of
24     paragraph (2) of subsection (b) of Section 203 shall be
25     allowed a credit under this subsection (e) equal to its
26     share of the credit earned under this subsection (e) during
27     the taxable year by the partnership or Subchapter S
28     corporation, determined in accordance with the
29     determination of income and distributive share of income
30     under Sections 702 and 704 and Subchapter S of the Internal
31     Revenue Code. This paragraph is exempt from the provisions
32     of Section 250.
33       (f) Investment credit; Enterprise Zone.
34         (1) A taxpayer shall be allowed a credit against the
35     tax imposed by subsections (a) and (b) of this Section for
36     investment in qualified property which is placed in service

 

 

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1     in an Enterprise Zone created pursuant to the Illinois
2     Enterprise Zone Act. For partners, shareholders of
3     Subchapter S corporations, and owners of limited liability
4     companies, if the liability company is treated as a
5     partnership for purposes of federal and State income
6     taxation, there shall be allowed a credit under this
7     subsection (f) to be determined in accordance with the
8     determination of income and distributive share of income
9     under Sections 702 and 704 and Subchapter S of the Internal
10     Revenue Code. The credit shall be .5% of the basis for such
11     property. The credit shall be available only in the taxable
12     year in which the property is placed in service in the
13     Enterprise Zone and shall not be allowed to the extent that
14     it would reduce a taxpayer's liability for the tax imposed
15     by subsections (a) and (b) of this Section to below zero.
16     For tax years ending on or after December 31, 1985, the
17     credit shall be allowed for the tax year in which the
18     property is placed in service, or, if the amount of the
19     credit exceeds the tax liability for that year, whether it
20     exceeds the original liability or the liability as later
21     amended, such excess may be carried forward and applied to
22     the tax liability of the 5 taxable years following the
23     excess credit year. The credit shall be applied to the
24     earliest year for which there is a liability. If there is
25     credit from more than one tax year that is available to
26     offset a liability, the credit accruing first in time shall
27     be applied first.
28         (2) The term qualified property means property which:
29             (A) is tangible, whether new or used, including
30         buildings and structural components of buildings;
31             (B) is depreciable pursuant to Section 167 of the
32         Internal Revenue Code, except that "3-year property"
33         as defined in Section 168(c)(2)(A) of that Code is not
34         eligible for the credit provided by this subsection
35         (f);
36             (C) is acquired by purchase as defined in Section

 

 

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1         179(d) of the Internal Revenue Code;
2             (D) is used in the Enterprise Zone by the taxpayer;
3         and
4             (E) has not been previously used in Illinois in
5         such a manner and by such a person as would qualify for
6         the credit provided by this subsection (f) or
7         subsection (e).
8         (3) The basis of qualified property shall be the basis
9     used to compute the depreciation deduction for federal
10     income tax purposes.
11         (4) If the basis of the property for federal income tax
12     depreciation purposes is increased after it has been placed
13     in service in the Enterprise Zone by the taxpayer, the
14     amount of such increase shall be deemed property placed in
15     service on the date of such increase in basis.
16         (5) The term "placed in service" shall have the same
17     meaning as under Section 46 of the Internal Revenue Code.
18         (6) If during any taxable year, any property ceases to
19     be qualified property in the hands of the taxpayer within
20     48 months after being placed in service, or the situs of
21     any qualified property is moved outside the Enterprise Zone
22     within 48 months after being placed in service, the tax
23     imposed under subsections (a) and (b) of this Section for
24     such taxable year shall be increased. Such increase shall
25     be determined by (i) recomputing the investment credit
26     which would have been allowed for the year in which credit
27     for such property was originally allowed by eliminating
28     such property from such computation, and (ii) subtracting
29     such recomputed credit from the amount of credit previously
30     allowed. For the purposes of this paragraph (6), a
31     reduction of the basis of qualified property resulting from
32     a redetermination of the purchase price shall be deemed a
33     disposition of qualified property to the extent of such
34     reduction.
35       (g) Jobs Tax Credit; Enterprise Zone and Foreign Trade
36 Zone or Sub-Zone.

 

 

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1         (1) A taxpayer conducting a trade or business in an
2     enterprise zone or a High Impact Business designated by the
3     Department of Commerce and Economic Opportunity Community
4     Affairs conducting a trade or business in a federally
5     designated Foreign Trade Zone or Sub-Zone shall be allowed
6     a credit against the tax imposed by subsections (a) and (b)
7     of this Section in the amount of $500 per eligible employee
8     hired to work in the zone during the taxable year.
9         (2) To qualify for the credit:
10             (A) the taxpayer must hire 5 or more eligible
11         employees to work in an enterprise zone or federally
12         designated Foreign Trade Zone or Sub-Zone during the
13         taxable year;
14             (B) the taxpayer's total employment within the
15         enterprise zone or federally designated Foreign Trade
16         Zone or Sub-Zone must increase by 5 or more full-time
17         employees beyond the total employed in that zone at the
18         end of the previous tax year for which a jobs tax
19         credit under this Section was taken, or beyond the
20         total employed by the taxpayer as of December 31, 1985,
21         whichever is later; and
22             (C) the eligible employees must be employed 180
23         consecutive days in order to be deemed hired for
24         purposes of this subsection.
25         (3) An "eligible employee" means an employee who is:
26             (A) Certified by the Department of Commerce and
27         Economic Opportunity Community Affairs as "eligible
28         for services" pursuant to regulations promulgated in
29         accordance with Title II of the Job Training
30         Partnership Act, Training Services for the
31         Disadvantaged or Title III of the Job Training
32         Partnership Act, Employment and Training Assistance
33         for Dislocated Workers Program.
34             (B) Hired after the enterprise zone or federally
35         designated Foreign Trade Zone or Sub-Zone was
36         designated or the trade or business was located in that

 

 

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1         zone, whichever is later.
2             (C) Employed in the enterprise zone or Foreign
3         Trade Zone or Sub-Zone. An employee is employed in an
4         enterprise zone or federally designated Foreign Trade
5         Zone or Sub-Zone if his services are rendered there or
6         it is the base of operations for the services
7         performed.
8             (D) A full-time employee working 30 or more hours
9         per week.
10         (4) For tax years ending on or after December 31, 1985
11     and prior to December 31, 1988, the credit shall be allowed
12     for the tax year in which the eligible employees are hired.
13     For tax years ending on or after December 31, 1988, the
14     credit shall be allowed for the tax year immediately
15     following the tax year in which the eligible employees are
16     hired. If the amount of the credit exceeds the tax
17     liability for that year, whether it exceeds the original
18     liability or the liability as later amended, such excess
19     may be carried forward and applied to the tax liability of
20     the 5 taxable years following the excess credit year. The
21     credit shall be applied to the earliest year for which
22     there is a liability. If there is credit from more than one
23     tax year that is available to offset a liability, earlier
24     credit shall be applied first.
25         (5) The Department of Revenue shall promulgate such
26     rules and regulations as may be deemed necessary to carry
27     out the purposes of this subsection (g).
28         (6) The credit shall be available for eligible
29     employees hired on or after January 1, 1986.
30     (h) Investment credit; High Impact Business.
31         (1) Subject to subsections (b) and (b-5) of Section 5.5
32     of the Illinois Enterprise Zone Act, a taxpayer shall be
33     allowed a credit against the tax imposed by subsections (a)
34     and (b) of this Section for investment in qualified
35     property which is placed in service by a Department of
36     Commerce and Economic Opportunity Community Affairs

 

 

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1     designated High Impact Business. The credit shall be .5% of
2     the basis for such property. The credit shall not be
3     available (i) until the minimum investments in qualified
4     property set forth in subdivision (a)(3)(A) of Section 5.5
5     of the Illinois Enterprise Zone Act have been satisfied or
6     (ii) until the time authorized in subsection (b-5) of the
7     Illinois Enterprise Zone Act for entities designated as
8     High Impact Businesses under subdivisions (a)(3)(B),
9     (a)(3)(C), and (a)(3)(D) of Section 5.5 of the Illinois
10     Enterprise Zone Act, and shall not be allowed to the extent
11     that it would reduce a taxpayer's liability for the tax
12     imposed by subsections (a) and (b) of this Section to below
13     zero. The credit applicable to such investments shall be
14     taken in the taxable year in which such investments have
15     been completed. The credit for additional investments
16     beyond the minimum investment by a designated high impact
17     business authorized under subdivision (a)(3)(A) of Section
18     5.5 of the Illinois Enterprise Zone Act shall be available
19     only in the taxable year in which the property is placed in
20     service and shall not be allowed to the extent that it
21     would reduce a taxpayer's liability for the tax imposed by
22     subsections (a) and (b) of this Section to below zero. For
23     tax years ending on or after December 31, 1987, the credit
24     shall be allowed for the tax year in which the property is
25     placed in service, or, if the amount of the credit exceeds
26     the tax liability for that year, whether it exceeds the
27     original liability or the liability as later amended, such
28     excess may be carried forward and applied to the tax
29     liability of the 5 taxable years following the excess
30     credit year. The credit shall be applied to the earliest
31     year for which there is a liability. If there is credit
32     from more than one tax year that is available to offset a
33     liability, the credit accruing first in time shall be
34     applied first.
35         Changes made in this subdivision (h)(1) by Public Act
36     88-670 restore changes made by Public Act 85-1182 and

 

 

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1     reflect existing law.
2         (2) The term qualified property means property which:
3             (A) is tangible, whether new or used, including
4         buildings and structural components of buildings;
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         (h);
10             (C) is acquired by purchase as defined in Section
11         179(d) of the Internal Revenue Code; and
12             (D) is not eligible for the Enterprise Zone
13         Investment Credit provided by subsection (f) of this
14         Section.
15         (3) The basis of qualified property shall be the basis
16     used to compute the depreciation deduction for federal
17     income tax purposes.
18         (4) If the basis of the property for federal income tax
19     depreciation purposes is increased after it has been placed
20     in service in a federally designated Foreign Trade Zone or
21     Sub-Zone located in Illinois by the taxpayer, the amount of
22     such increase shall be deemed property placed in service on
23     the date of such increase in basis.
24         (5) The term "placed in service" shall have the same
25     meaning as under Section 46 of the Internal Revenue Code.
26         (6) If during any taxable year ending on or before
27     December 31, 1996, any property ceases to be qualified
28     property in the hands of the taxpayer within 48 months
29     after being placed in service, or the situs of any
30     qualified property is moved outside Illinois within 48
31     months after being placed in service, the tax imposed under
32     subsections (a) and (b) of this Section for such taxable
33     year shall be increased. Such increase shall be determined
34     by (i) recomputing the investment credit which would have
35     been allowed for the year in which credit for such property
36     was originally allowed by eliminating such property from

 

 

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1     such computation, and (ii) subtracting such recomputed
2     credit from the amount of credit previously allowed. For
3     the purposes of this paragraph (6), a reduction of the
4     basis of qualified property resulting from a
5     redetermination of the purchase price shall be deemed a
6     disposition of qualified property to the extent of such
7     reduction.
8         (7) Beginning with tax years ending after December 31,
9     1996, if a taxpayer qualifies for the credit under this
10     subsection (h) and thereby is granted a tax abatement and
11     the taxpayer relocates its entire facility in violation of
12     the explicit terms and length of the contract under Section
13     18-183 of the Property Tax Code, the tax imposed under
14     subsections (a) and (b) of this Section shall be increased
15     for the taxable year in which the taxpayer relocated its
16     facility by an amount equal to the amount of credit
17     received by the taxpayer under this subsection (h).
18     (i) Credit for Personal Property Tax Replacement Income
19 Tax. For tax years ending prior to December 31, 2003 and on or
20 after December 31, 2004, a credit shall be allowed against the
21 tax imposed by subsections (a) and (b) of this Section for the
22 tax imposed by subsections (c) and (d) of this Section. This
23 credit shall be computed by multiplying the tax imposed by
24 subsections (c) and (d) of this Section by a fraction, the
25 numerator of which is base income allocable to Illinois and the
26 denominator of which is Illinois base income, and further
27 multiplying the product by the tax rate imposed by subsections
28 (a) and (b) of this Section.
29     Any credit earned on or after December 31, 1986 under this
30 subsection which is unused in the year the credit is computed
31 because it exceeds the tax liability imposed by subsections (a)
32 and (b) for that year (whether it exceeds the original
33 liability or the liability as later amended) may be carried
34 forward and applied to the tax liability imposed by subsections
35 (a) and (b) of the 5 taxable years following the excess credit
36 year, provided that no credit may be carried forward to any

 

 

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1 year ending on or after December 31, 2003. This credit shall be
2 applied first to the earliest year for which there is a
3 liability. If there is a credit under this subsection from more
4 than one tax year that is available to offset a liability the
5 earliest credit arising under this subsection shall be applied
6 first.
7     If, during any taxable year ending on or after December 31,
8 1986, the tax imposed by subsections (c) and (d) of this
9 Section for which a taxpayer has claimed a credit under this
10 subsection (i) is reduced, the amount of credit for such tax
11 shall also be reduced. Such reduction shall be determined by
12 recomputing the credit to take into account the reduced tax
13 imposed by subsections (c) and (d). If any portion of the
14 reduced amount of credit has been carried to a different
15 taxable year, an amended return shall be filed for such taxable
16 year to reduce the amount of credit claimed.
17     (j) Training expense credit. Beginning with tax years
18 ending on or after December 31, 1986 and prior to December 31,
19 2003, and beginning again with tax years ending on or after
20 December 31, 2004, a taxpayer shall be allowed a credit against
21 the tax imposed by subsections (a) and (b) under this Section
22 for all amounts paid or accrued, on behalf of all persons
23 employed by the taxpayer in Illinois or Illinois residents
24 employed outside of Illinois by a taxpayer, for educational or
25 vocational training in semi-technical or technical fields or
26 semi-skilled or skilled fields, which were deducted from gross
27 income in the computation of taxable income. The credit against
28 the tax imposed by subsections (a) and (b) shall be 1.6% of
29 such training expenses. For partners, shareholders of
30 subchapter S corporations, and owners of limited liability
31 companies, if the liability company is treated as a partnership
32 for purposes of federal and State income taxation, there shall
33 be allowed a credit under this subsection (j) to be determined
34 in accordance with the determination of income and distributive
35 share of income under Sections 702 and 704 and subchapter S of
36 the Internal Revenue Code.

 

 

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1     Any credit allowed under this subsection which is unused in
2 the year the credit is earned may be carried forward to each of
3 the 5 taxable years following the year for which the credit is
4 first computed until it is used. This credit shall be applied
5 first to the earliest year for which there is a liability. If
6 there is a credit under this subsection from more than one tax
7 year that is available to offset a liability the earliest
8 credit arising under this subsection shall be applied first. No
9 carryforward credit may be claimed in any tax year ending on or
10 after December 31, 2003.
11     (k) Research and development credit.
12     For tax years ending after July 1, 1990 and prior to
13 December 31, 2003, and beginning again with tax years ending on
14 or after December 31, 2004, a taxpayer shall be allowed a
15 credit against the tax imposed by subsections (a) and (b) of
16 this Section for increasing research activities in this State.
17 The credit allowed against the tax imposed by subsections (a)
18 and (b) shall be equal to 6 1/2% of the qualifying expenditures
19 for increasing research activities in this State. For partners,
20 shareholders of subchapter S corporations, and owners of
21 limited liability companies, if the liability company is
22 treated as a partnership for purposes of federal and State
23 income taxation, there shall be allowed a credit under this
24 subsection to be determined in accordance with the
25 determination of income and distributive share of income under
26 Sections 702 and 704 and subchapter S of the Internal Revenue
27 Code.
28     For purposes of this subsection, "qualifying expenditures"
29 means the qualifying expenditures as defined for the federal
30 credit for increasing research activities which would be
31 allowable under Section 41 of the Internal Revenue Code and
32 which are conducted in this State, "qualifying expenditures for
33 increasing research activities in this State" means the excess
34 of qualifying expenditures for the taxable year in which
35 incurred over qualifying expenditures for the base period,
36 "qualifying expenditures for the base period" means the average

 

 

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1 of the qualifying expenditures for each year in the base
2 period, and "base period" means the 3 taxable years immediately
3 preceding the taxable year for which the determination is being
4 made.
5     Any credit in excess of the tax liability for the taxable
6 year may be carried forward. A taxpayer may elect to have the
7 unused credit shown on its final completed return carried over
8 as a credit against the tax liability for the following 5
9 taxable years or until it has been fully used, whichever occurs
10 first; provided that no credit may be carried forward to any
11 year ending on or after December 31, 2003.
12     If an unused credit is carried forward to a given year from
13 2 or more earlier years, that credit arising in the earliest
14 year will be applied first against the tax liability for the
15 given year. If a tax liability for the given year still
16 remains, the credit from the next earliest year will then be
17 applied, and so on, until all credits have been used or no tax
18 liability for the given year remains. Any remaining unused
19 credit or credits then will be carried forward to the next
20 following year in which a tax liability is incurred, except
21 that no credit can be carried forward to a year which is more
22 than 5 years after the year in which the expense for which the
23 credit is given was incurred.
24     Unless extended by law, the credit shall not include costs
25 incurred after December 31, 2009, except for costs incurred
26 pursuant to a binding contract entered into on or before
27 December 31, 2004.
28     No inference shall be drawn from this amendatory Act of the
29 91st General Assembly in construing this Section for taxable
30 years beginning before January 1, 1999.
31     (l) Environmental Remediation Tax Credit.
32         (i) For tax years ending after December 31, 1997 and on
33     or before December 31, 2001, a taxpayer shall be allowed a
34     credit against the tax imposed by subsections (a) and (b)
35     of this Section for certain amounts paid for unreimbursed
36     eligible remediation costs, as specified in this

 

 

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1     subsection. For purposes of this Section, "unreimbursed
2     eligible remediation costs" means costs approved by the
3     Illinois Environmental Protection Agency ("Agency") under
4     Section 58.14 of the Environmental Protection Act that were
5     paid in performing environmental remediation at a site for
6     which a No Further Remediation Letter was issued by the
7     Agency and recorded under Section 58.10 of the
8     Environmental Protection Act. The credit must be claimed
9     for the taxable year in which Agency approval of the
10     eligible remediation costs is granted. The credit is not
11     available to any taxpayer if the taxpayer or any related
12     party caused or contributed to, in any material respect, a
13     release of regulated substances on, in, or under the site
14     that was identified and addressed by the remedial action
15     pursuant to the Site Remediation Program of the
16     Environmental Protection Act. After the Pollution Control
17     Board rules are adopted pursuant to the Illinois
18     Administrative Procedure Act for the administration and
19     enforcement of Section 58.9 of the Environmental
20     Protection Act, determinations as to credit availability
21     for purposes of this Section shall be made consistent with
22     those rules. For purposes of this Section, "taxpayer"
23     includes a person whose tax attributes the taxpayer has
24     succeeded to under Section 381 of the Internal Revenue Code
25     and "related party" includes the persons disallowed a
26     deduction for losses by paragraphs (b), (c), and (f)(1) of
27     Section 267 of the Internal Revenue Code by virtue of being
28     a related taxpayer, as well as any of its partners. The
29     credit allowed against the tax imposed by subsections (a)
30     and (b) shall be equal to 25% of the unreimbursed eligible
31     remediation costs in excess of $100,000 per site, except
32     that the $100,000 threshold shall not apply to any site
33     contained in an enterprise zone as determined by the
34     Department of Commerce and Community Affairs (now
35     Department of Commerce and Economic Opportunity). The
36     total credit allowed shall not exceed $40,000 per year with

 

 

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1     a maximum total of $150,000 per site. For partners and
2     shareholders of subchapter S corporations, there shall be
3     allowed a credit under this subsection to be determined in
4     accordance with the determination of income and
5     distributive share of income under Sections 702 and 704 and
6     subchapter S of the Internal Revenue Code.
7         (ii) A credit allowed under this subsection that is
8     unused in the year the credit is earned may be carried
9     forward to each of the 5 taxable years following the year
10     for which the credit is first earned until it is used. The
11     term "unused credit" does not include any amounts of
12     unreimbursed eligible remediation costs in excess of the
13     maximum credit per site authorized under paragraph (i).
14     This credit shall be applied first to the earliest year for
15     which there is a liability. If there is a credit under this
16     subsection from more than one tax year that is available to
17     offset a liability, the earliest credit arising under this
18     subsection shall be applied first. A credit allowed under
19     this subsection may be sold to a buyer as part of a sale of
20     all or part of the remediation site for which the credit
21     was granted. The purchaser of a remediation site and the
22     tax credit shall succeed to the unused credit and remaining
23     carry-forward period of the seller. To perfect the
24     transfer, the assignor shall record the transfer in the
25     chain of title for the site and provide written notice to
26     the Director of the Illinois Department of Revenue of the
27     assignor's intent to sell the remediation site and the
28     amount of the tax credit to be transferred as a portion of
29     the sale. In no event may a credit be transferred to any
30     taxpayer if the taxpayer or a related party would not be
31     eligible under the provisions of subsection (i).
32         (iii) For purposes of this Section, the term "site"
33     shall have the same meaning as under Section 58.2 of the
34     Environmental Protection Act.
35     (m) Education expense credit. Beginning with tax years
36 ending after December 31, 1999, a taxpayer who is the custodian

 

 

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1 of one or more qualifying pupils shall be allowed a credit
2 against the tax imposed by subsections (a) and (b) of this
3 Section for qualified education expenses incurred on behalf of
4 the qualifying pupils. The credit shall be equal to 25% of
5 qualified education expenses, but in no event may the total
6 credit under this subsection claimed by a family that is the
7 custodian of qualifying pupils exceed $500. In no event shall a
8 credit under this subsection reduce the taxpayer's liability
9 under this Act to less than zero. This subsection is exempt
10 from the provisions of Section 250 of this Act.
11     For purposes of this subsection:
12     "Qualifying pupils" means individuals who (i) are
13 residents of the State of Illinois, (ii) are under the age of
14 21 at the close of the school year for which a credit is
15 sought, and (iii) during the school year for which a credit is
16 sought were full-time pupils enrolled in a kindergarten through
17 twelfth grade education program at any school, as defined in
18 this subsection.
19     "Qualified education expense" means the amount incurred on
20 behalf of a qualifying pupil in excess of $250 for tuition,
21 book fees, and lab fees at the school in which the pupil is
22 enrolled during the regular school year.
23     "School" means any public or nonpublic elementary or
24 secondary school in Illinois that is in compliance with Title
25 VI of the Civil Rights Act of 1964 and attendance at which
26 satisfies the requirements of Section 26-1 of the School Code,
27 except that nothing shall be construed to require a child to
28 attend any particular public or nonpublic school to qualify for
29 the credit under this Section.
30     "Custodian" means, with respect to qualifying pupils, an
31 Illinois resident who is a parent, the parents, a legal
32 guardian, or the legal guardians of the qualifying pupils.
33 (Source: P.A. 92-12, eff. 7-1-01; 92-16, eff. 6-28-01; 92-651,
34 eff. 7-11-02; 92-846, eff. 8-23-02; 93-29, eff. 6-20-03;
35 revised 12-6-03.)
 

 

 

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1     (35 ILCS 5/204)  (from Ch. 120, par. 2-204)
2     Sec. 204. Standard Exemption.
3     (a) Allowance of exemption. In computing net income under
4 this Act, there shall be allowed as an exemption the sum of the
5 amounts determined under subsections (b), (c) and (d),
6 multiplied by a fraction the numerator of which is the amount
7 of the taxpayer's base income allocable to this State for the
8 taxable year and the denominator of which is the taxpayer's
9 total base income for the taxable year.
10     (b) Basic amount. For the purpose of subsection (a) of this
11 Section, except as provided by subsection (a) of Section 205
12 and in this subsection, each taxpayer shall be allowed a basic
13 amount of $1000, except that for corporations the basic amount
14 shall be zero for tax years ending on or after December 31,
15 2003 and ending before the effective date of this amendatory
16 Act of the 93rd General Assembly, and for individuals the basic
17 amount shall be:
18         (1) for taxable years ending on or after December 31,
19     1998 and prior to December 31, 1999, $1,300;
20         (2) for taxable years ending on or after December 31,
21     1999 and prior to December 31, 2000, $1,650;
22         (3) for taxable years ending on or after December 31,
23     2000, $2,000.
24 For taxable years ending on or after December 31, 1992, a
25 taxpayer whose Illinois base income exceeds the basic amount
26 and who is claimed as a dependent on another person's tax
27 return under the Internal Revenue Code of 1986 shall not be
28 allowed any basic amount under this subsection.
29     (c) Additional amount for individuals. In the case of an
30 individual taxpayer, there shall be allowed for the purpose of
31 subsection (a), in addition to the basic amount provided by
32 subsection (b), an additional exemption equal to the basic
33 amount for each exemption in excess of one allowable to such
34 individual taxpayer for the taxable year under Section 151 of
35 the Internal Revenue Code.
36     (d) Additional exemptions for an individual taxpayer and

 

 

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1 his or her spouse. In the case of an individual taxpayer and
2 his or her spouse, he or she shall each be allowed additional
3 exemptions as follows:
4         (1) Additional exemption for taxpayer or spouse 65
5     years of age or older.
6             (A) For taxpayer. An additional exemption of
7         $1,000 for the taxpayer if he or she has attained the
8         age of 65 before the end of the taxable year.
9             (B) For spouse when a joint return is not filed. An
10         additional exemption of $1,000 for the spouse of the
11         taxpayer if a joint return is not made by the taxpayer
12         and his spouse, and if the spouse has attained the age
13         of 65 before the end of such taxable year, and, for the
14         calendar year in which the taxable year of the taxpayer
15         begins, has no gross income and is not the dependent of
16         another taxpayer.
17         (2) Additional exemption for blindness of taxpayer or
18     spouse.
19             (A) For taxpayer. An additional exemption of
20         $1,000 for the taxpayer if he or she is blind at the
21         end of the taxable year.
22             (B) For spouse when a joint return is not filed. An
23         additional exemption of $1,000 for the spouse of the
24         taxpayer if a separate return is made by the taxpayer,
25         and if the spouse is blind and, for the calendar year
26         in which the taxable year of the taxpayer begins, has
27         no gross income and is not the dependent of another
28         taxpayer. For purposes of this paragraph, the
29         determination of whether the spouse is blind shall be
30         made as of the end of the taxable year of the taxpayer;
31         except that if the spouse dies during such taxable year
32         such determination shall be made as of the time of such
33         death.
34             (C) Blindness defined. For purposes of this
35         subsection, an individual is blind only if his or her
36         central visual acuity does not exceed 20/200 in the

 

 

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1         better eye with correcting lenses, or if his or her
2         visual acuity is greater than 20/200 but is accompanied
3         by a limitation in the fields of vision such that the
4         widest diameter of the visual fields subtends an angle
5         no greater than 20 degrees.
6     (e) Cross reference. See Article 3 for the manner of
7 determining base income allocable to this State.
8     (f) Application of Section 250. Section 250 does not apply
9 to the amendments to this Section made by Public Act 90-613.
10 (Source: P.A. 93-29, eff. 6-20-03.)
 
11     (35 ILCS 5/207)  (from Ch. 120, par. 2-207)
12     Sec. 207. Net Losses.
13     (a) If after applying all of the modifications provided for
14 in paragraph (2) of Section 203(b), paragraph (2) of Section
15 203(c) and paragraph (2) of Section 203(d) and the allocation
16 and apportionment provisions of Article 3 of this Act, the
17 taxpayer's net income results in a loss;
18         (1) for any taxable year ending prior to December 31,
19     1999, such loss shall be allowed as a carryover or
20     carryback deduction in the manner allowed under Section 172
21     of the Internal Revenue Code;
22         (2) for any taxable year ending on or after December
23     31, 1999 and prior to December 31, 2003, and beginning
24     again with taxable years ending on or after December 31,
25     2004, such loss shall be allowed as a carryback to each of
26     the 2 taxable years preceding the taxable year of such loss
27     and shall be a net operating carryover to each of the 20
28     taxable years following the taxable year of such loss; and
29         (3) for any taxable year ending on or after December
30     31, 2003 and prior to December 31, 2004, such loss shall be
31     allowed as a net operating carryover to each of the 12
32     taxable years following the taxable year of such loss.
33     (a-5) Election to relinquish carryback and order of
34 application of losses.
35             (A) For losses incurred in tax years ending prior

 

 

HB6935 - 25 - LRB093 18499 SJM 44216 b

1         to December 31, 2003, and beginning again with taxable
2         years ending on or after December 31, 2004, the
3         taxpayer may elect to relinquish the entire carryback
4         period with respect to such loss. Such election shall
5         be made in the form and manner prescribed by the
6         Department and shall be made by the due date (including
7         extensions of time) for filing the taxpayer's return
8         for the taxable year in which such loss is incurred,
9         and such election, once made, shall be irrevocable.
10             (B) The entire amount of such loss shall be carried
11         to the earliest taxable year to which such loss may be
12         carried. The amount of such loss which shall be carried
13         to each of the other taxable years shall be the excess,
14         if any, of the amount of such loss over the sum of the
15         deductions for carryback or carryover of such loss
16         allowable for each of the prior taxable years to which
17         such loss may be carried.
18     (b) Any loss determined under subsection (a) of this
19 Section must be carried back or carried forward in the same
20 manner for purposes of subsections (a) and (b) of Section 201
21 of this Act as for purposes of subsections (c) and (d) of
22 Section 201 of this Act.
23 (Source: P.A. 93-29, eff. 6-20-03.)
 
24     Section 99. Effective date. This Act takes effect upon
25 becoming law.