95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB0750

 

Introduced 2/7/2007, by Rep. David E. Miller - John A. Fritchey - Cynthia Soto - George Scully, Jr., Elizabeth Hernandez, et al.

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the State Finance Act. Creates the School District Property Tax Relief Fund. Requires annual appropriations from the education appropriation minimum to the School District Property Tax Relief Fund. Requires the Department of Revenue to annually certify the amounts of property tax relief grants that school districts will receive from the Fund. Sets forth procedures for appropriating these grants. Amends the Illinois Income Tax Act. Increases the tax rate for individuals, trusts, and estates from 3% to 5% and increased the tax rate for corporations from 4.8% to 8%. Includes retirement income within the definition of "base income" for certain individuals. Eliminates certain corporate exemptions. Creates the Family Tax Credit, which is a refundable tax credit. Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Eliminates exemptions concerning newsprint and ink and concerning manufacturing and assembling machinery. Includes certain arts, entertainment, and recreation services within the definition of "sale at retail" in the Retailers' Occupation Tax Act. Amends the Property Tax Code. Requires county clerks to abate the extensions for educational purposes by the amount of the property tax relief grants. Amends the Motor Fuel Tax Law. Deletes provisions concerning discounts for timely filing and paying the taxes. Amends the School Code. In the State aid formula provisions, increases the foundation level of support and grant amount for supplemental general State aid. Provides for an education appropriation minimum and supplemental State aid for rapidly expanding school districts.


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FISCAL NOTE ACT MAY APPLY
HOUSING AFFORDABILITY IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1     AN ACT concerning education.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The State Finance Act is amended by adding
5 Section 5.675 and 6z-69 as follows:
 
6     (30 ILCS 105/5.675 new)
7     Sec. 5.675. The School District Property Tax Relief Fund.
 
8     (30 ILCS 105/6z-69 new)
9     Sec. 6z-69. School District Property Tax Relief Fund.
10     (a) The School District property Tax Relief Fund is created
11 as a special Fund in the State treasury. All interest earned on
12 moneys in the Fund shall be deposited into the Fund.
13     (b) As used in this Section:
14     "Department" means the Department of Revenue.
15     "Minimum property tax relief grant" means the minimum
16 amount of property tax relief that will be distributed to each
17 school district from the School District Property Tax Relief
18 Fund in each fiscal year.
19     "High property tax effort school district" means each
20 school district that has a total tax rate that is in the top
21 25% of all total tax rates of all school districts.
22     "Supplemental percentage" means the average daily head

 

 

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1 count of a particular high property tax effort school district
2 in a fiscal year, divided by the head count total for that
3 fiscal year.
4     "Head count total" means the aggregate average daily
5 attendance of all high property tax effort school districts in
6 the applicable fiscal year.
7     "Supplemental property tax relief grant" means the amount
8 of property tax relief granted to each high property tax effort
9 school district in each fiscal year that is in addition to the
10 minimum property tax relief grant that the district receives.
11     (c) Beginning in fiscal year 2008, the General Assembly
12 shall appropriate $2.4 billion from the education
13 appropriation minimum, as defined in Section 18-25 of the
14 School Code, to the School District Property Tax Relief Fund.
15 In each fiscal year thereafter, the General Assembly shall
16 appropriate an amount from the education appropriation
17 minimum, to the School District Property Tax Relief Fund equal
18 to the amount appropriated to the School District Property Tax
19 Relief Fund in the immediately preceding fiscal year, increased
20 by the Employment Cost Index ("ECI") published by the U.S.
21 Bureau of Labor Statistics for the immediately preceding fiscal
22 year.
23     (d) Between November 15 and 17 beginning in fiscal year
24 2008 and for every year thereafter, the Department must
25 certify, no earlier than November 15 and no later than November
26 17, the total amount of property tax relief each school

 

 

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1 district will receive from the School District Property Tax
2 Relief Fund. The relief shall be determined as follows:
3         (1) In each fiscal year commencing with fiscal year
4     2008, the General Assembly shall appropriate 80% of the
5     total amount appropriated to the School District Property
6     Tax Relief Fund for that fiscal year to fund the aggregate
7     amount of minimum property tax relief grants that will be
8     distributed to all school districts. The Department then
9     shall calculate the amount of minimum property tax relief
10     grant to be distributed to each school district in each
11     fiscal year as follows:
12             (A) for fiscal year 2008, each school district
13         shall receive a minimum property tax relief grant in an
14         amount equal to 20% of the total property taxes
15         reported as payable for that school district in fiscal
16         year 2002; and
17             (B) for each fiscal year thereafter, the minimum
18         property tax relief grant for each school district must
19         be increased by the percentage increase, if any, in the
20         ECI published for the prior fiscal year.
21         (2) In each fiscal year commencing with fiscal year
22     2008, the General Assembly shall appropriate 20% of the
23     total amount appropriated to the School District Property
24     Tax Relief Fund for that fiscal year to fund the aggregate
25     amount of supplemental property tax relief grants that will
26     be distributed to all high property tax effort school

 

 

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1     districts. The Department shall calculate the amount of
2     supplemental property tax relief grants payable to a
3     particular high property tax effort school district in each
4     fiscal year commencing in fiscal year 2008 and continuing
5     in each fiscal year thereafter by multiplying the
6     Supplemental Percentage of that high property tax effort
7     school district for that fiscal year by the total amount
8     appropriated to fund all the supplemental property tax
9     relief grants in that fiscal year.
 
10     Section 10. The Illinois Income Tax Act is amended by
11 changing Sections 201 and 203 and by adding Section 247 as
12 follows:
 
13     (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
14     Sec. 201. Tax Imposed.
15     (a) In general. A tax measured by net income is hereby
16 imposed on every individual, corporation, trust and estate for
17 each taxable year ending after July 31, 1969 on the privilege
18 of earning or receiving income in or as a resident of this
19 State. Such tax shall be in addition to all other occupation or
20 privilege taxes imposed by this State or by any municipal
21 corporation or political subdivision thereof.
22     (b) Rates. The tax imposed by subsection (a) of this
23 Section shall be determined as follows, except as adjusted by
24 subsection (d-1):

 

 

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1         (1) In the case of an individual, trust or estate, for
2     taxable years ending prior to July 1, 1989, an amount equal
3     to 2 1/2% of the taxpayer's net income for the taxable
4     year.
5         (2) In the case of an individual, trust or estate, for
6     taxable years beginning prior to July 1, 1989 and ending
7     after June 30, 1989, an amount equal to the sum of (i) 2
8     1/2% of the taxpayer's net income for the period prior to
9     July 1, 1989, as calculated under Section 202.3, and (ii)
10     3% of the taxpayer's net income for the period after June
11     30, 1989, as calculated under Section 202.3.
12         (3) In the case of an individual, trust or estate, for
13     taxable years beginning after June 30, 1989 and beginning
14     on or before January 1, 2007, an amount equal to 3% of the
15     taxpayer's net income for the taxable year.
16         (4) In the case of an individual, trust or estate, for
17     taxable years beginning after January 1, 2007, an amount
18     equal to 5% of the taxpayer's net income for the taxable
19     year (Blank).
20         (5) (Blank).
21         (6) In the case of a corporation, for taxable years
22     ending prior to July 1, 1989, an amount equal to 4% of the
23     taxpayer's net income for the taxable year.
24         (7) In the case of a corporation, for taxable years
25     beginning prior to July 1, 1989 and ending after June 30,
26     1989, an amount equal to the sum of (i) 4% of the

 

 

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1     taxpayer's net income for the period prior to July 1, 1989,
2     as calculated under Section 202.3, and (ii) 4.8% of the
3     taxpayer's net income for the period after June 30, 1989,
4     as calculated under Section 202.3.
5         (8) In the case of a corporation, for taxable years
6     beginning after June 30, 1989 and beginning on or before
7     January 1, 2007, an amount equal to 4.8% of the taxpayer's
8     net income for the taxable year.
9         (9) In the case of a corporation, for taxable years
10     beginning after January 1, 2007, an amount equal to 8% of
11     the taxpayer's net income for the taxable year.
12     (c) Personal Property Tax Replacement Income Tax.
13 Beginning on July 1, 1979 and thereafter, in addition to such
14 income tax, there is also hereby imposed the Personal Property
15 Tax Replacement Income Tax measured by net income on every
16 corporation (including Subchapter S corporations), partnership
17 and trust, for each taxable year ending after June 30, 1979.
18 Such taxes are imposed on the privilege of earning or receiving
19 income in or as a resident of this State. The Personal Property
20 Tax Replacement Income Tax shall be in addition to the income
21 tax imposed by subsections (a) and (b) of this Section and in
22 addition to all other occupation or privilege taxes imposed by
23 this State or by any municipal corporation or political
24 subdivision thereof.
25     (d) Additional Personal Property Tax Replacement Income
26 Tax Rates. The personal property tax replacement income tax

 

 

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

 

 

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

 

 

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1         (2) Any reduction in the rates of tax imposed by this
2     subsection shall be applied first against the rates imposed
3     by subsection (b) and only after the tax imposed by
4     subsection (a) net of all credits allowed under this
5     Section other than the credit allowed under subsection (i)
6     has been reduced to zero, against the rates imposed by
7     subsection (d).
8     This subsection (d-1) is exempt from the provisions of
9 Section 250.
10     (e) Investment credit. A taxpayer shall be allowed a credit
11 against the Personal Property Tax Replacement Income Tax for
12 investment in qualified property.
13         (1) A taxpayer shall be allowed a credit equal to .5%
14     of the basis of qualified property placed in service during
15     the taxable year, provided such property is placed in
16     service on or after July 1, 1984. There shall be allowed an
17     additional credit equal to .5% of the basis of qualified
18     property placed in service during the taxable year,
19     provided such property is placed in service on or after
20     July 1, 1986, and the taxpayer's base employment within
21     Illinois has increased by 1% or more over the preceding
22     year as determined by the taxpayer's employment records
23     filed with the Illinois Department of Employment Security.
24     Taxpayers who are new to Illinois shall be deemed to have
25     met the 1% growth in base employment for the first year in
26     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

 

 

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1     Department of Commerce and Community Affairs (now
2     Department of Commerce and Economic Opportunity) as
3     complying with the requirements specified in clause (i) and
4     (ii) by July 1, 1986. The Department of Commerce and
5     Community Affairs (now Department of Commerce and Economic
6     Opportunity) shall notify the Department of Revenue of all
7     such certifications immediately. For tax years ending
8     after December 31, 1988, the credit shall be allowed for
9     the tax year in which the property is placed in service,
10     or, if the amount of the credit exceeds the tax liability
11     for that year, whether it exceeds the original liability or
12     the liability as later amended, such excess may be carried
13     forward and applied to the tax liability of the 5 taxable
14     years following the excess credit years. The credit shall
15     be applied to the earliest year for which there is a
16     liability. If there is credit from more than one tax year
17     that is available to offset a liability, earlier credit
18     shall be applied first.
19         (2) The term "qualified property" means property
20     which:
21             (A) is tangible, whether new or used, including
22         buildings and structural components of buildings and
23         signs that are real property, but not including land or
24         improvements to real property that are not a structural
25         component of a building such as landscaping, sewer
26         lines, local access roads, fencing, parking lots, and

 

 

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1         other appurtenances;
2             (B) is depreciable pursuant to Section 167 of the
3         Internal Revenue Code, except that "3-year property"
4         as defined in Section 168(c)(2)(A) of that Code is not
5         eligible for the credit provided by this subsection
6         (e);
7             (C) is acquired by purchase as defined in Section
8         179(d) of the Internal Revenue Code;
9             (D) is used in Illinois by a taxpayer who is
10         primarily engaged in manufacturing, or in mining coal
11         or fluorite, or in retailing, or was placed in service
12         on or after July 1, 2006 in a River Edge Redevelopment
13         Zone established pursuant to the River Edge
14         Redevelopment Zone Act; and
15             (E) has not previously been used in Illinois in
16         such a manner and by such a person as would qualify for
17         the credit provided by this subsection (e) or
18         subsection (f).
19         (3) For purposes of this subsection (e),
20     "manufacturing" means the material staging and production
21     of tangible personal property by procedures commonly
22     regarded as manufacturing, processing, fabrication, or
23     assembling which changes some existing material into new
24     shapes, new qualities, or new combinations. For purposes of
25     this subsection (e) the term "mining" shall have the same
26     meaning as the term "mining" in Section 613(c) of the

 

 

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1     Internal Revenue Code. For purposes of this subsection (e),
2     the term "retailing" means the sale of tangible personal
3     property or services rendered in conjunction with the sale
4     of tangible consumer goods or commodities.
5         (4) The basis of qualified property shall be the basis
6     used to compute the depreciation deduction for federal
7     income tax purposes.
8         (5) If the basis of the property for federal income tax
9     depreciation purposes is increased after it has been placed
10     in service in Illinois by the taxpayer, the amount of such
11     increase shall be deemed property placed in service on the
12     date of such increase in basis.
13         (6) The term "placed in service" shall have the same
14     meaning as under Section 46 of the Internal Revenue Code.
15         (7) If during any taxable year, any property ceases to
16     be qualified property in the hands of the taxpayer within
17     48 months after being placed in service, or the situs of
18     any qualified property is moved outside Illinois within 48
19     months after being placed in service, the Personal Property
20     Tax Replacement Income Tax for such taxable year shall be
21     increased. Such increase shall be determined by (i)
22     recomputing the investment credit which would have been
23     allowed for the year in which credit for such property was
24     originally allowed by eliminating such property from such
25     computation and, (ii) subtracting such recomputed credit
26     from the amount of credit previously allowed. For the

 

 

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1     purposes of this paragraph (7), a reduction of the basis of
2     qualified property resulting from a redetermination of the
3     purchase price shall be deemed a disposition of qualified
4     property to the extent of such reduction.
5         (8) Unless the investment credit is extended by law,
6     the basis of qualified property shall not include costs
7     incurred after December 31, 2008, except for costs incurred
8     pursuant to a binding contract entered into on or before
9     December 31, 2008.
10         (9) Each taxable year ending before December 31, 2000,
11     a partnership may elect to pass through to its partners the
12     credits to which the partnership is entitled under this
13     subsection (e) for the taxable year. A partner may use the
14     credit allocated to him or her under this paragraph only
15     against the tax imposed in subsections (c) and (d) of this
16     Section. If the partnership makes that election, those
17     credits shall be allocated among the partners in the
18     partnership in accordance with the rules set forth in
19     Section 704(b) of the Internal Revenue Code, and the rules
20     promulgated under that Section, and the allocated amount of
21     the credits shall be allowed to the partners for that
22     taxable year. The partnership shall make this election on
23     its Personal Property Tax Replacement Income Tax return for
24     that taxable year. The election to pass through the credits
25     shall be irrevocable.
26         For taxable years ending on or after December 31, 2000,

 

 

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1     a partner that qualifies its partnership for a subtraction
2     under subparagraph (I) of paragraph (2) of subsection (d)
3     of Section 203 or a shareholder that qualifies a Subchapter
4     S corporation for a subtraction under subparagraph (S) of
5     paragraph (2) of subsection (b) of Section 203 shall be
6     allowed a credit under this subsection (e) equal to its
7     share of the credit earned under this subsection (e) during
8     the taxable year by the partnership or Subchapter S
9     corporation, determined in accordance with the
10     determination of income and distributive share of income
11     under Sections 702 and 704 and Subchapter S of the Internal
12     Revenue Code. This paragraph is exempt from the provisions
13     of Section 250.
14       (f) Investment credit; Enterprise Zone; River Edge
15 Redevelopment Zone.
16         (1) A taxpayer shall be allowed a credit against the
17     tax imposed by subsections (a) and (b) of this Section for
18     investment in qualified property which is placed in service
19     in an Enterprise Zone created pursuant to the Illinois
20     Enterprise Zone Act or, for property placed in service on
21     or after July 1, 2006, a River Edge Redevelopment Zone
22     established pursuant to the River Edge Redevelopment Zone
23     Act. For partners, shareholders of Subchapter S
24     corporations, and owners of limited liability companies,
25     if the liability company is treated as a partnership for
26     purposes of federal and State income taxation, there shall

 

 

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1     be allowed a credit under this subsection (f) to be
2     determined in accordance with the determination of income
3     and distributive share of income under Sections 702 and 704
4     and Subchapter S of the Internal Revenue Code. The credit
5     shall be .5% of the basis for such property. The credit
6     shall be available only in the taxable year in which the
7     property is placed in service in the Enterprise Zone or
8     River Edge Redevelopment Zone and shall not be allowed to
9     the extent that it would reduce a taxpayer's liability for
10     the tax imposed by subsections (a) and (b) of this Section
11     to below zero. For tax years ending on or after December
12     31, 1985, the credit shall be allowed for the tax year in
13     which the property is placed in service, or, if the amount
14     of the credit exceeds the tax liability for that year,
15     whether it exceeds the original liability or the liability
16     as later amended, such excess may be carried forward and
17     applied to the tax liability of the 5 taxable years
18     following the excess credit year. The credit shall be
19     applied to the earliest year for which there is a
20     liability. If there is credit from more than one tax year
21     that is available to offset a liability, the credit
22     accruing first in time shall be applied first.
23         (2) The term qualified property means property which:
24             (A) is tangible, whether new or used, including
25         buildings and structural components of buildings;
26             (B) is depreciable pursuant to Section 167 of the

 

 

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1         Internal Revenue Code, except that "3-year property"
2         as defined in Section 168(c)(2)(A) of that Code is not
3         eligible for the credit provided by this subsection
4         (f);
5             (C) is acquired by purchase as defined in Section
6         179(d) of the Internal Revenue Code;
7             (D) is used in the Enterprise Zone or River Edge
8         Redevelopment Zone by the taxpayer; and
9             (E) has not been previously used in Illinois in
10         such a manner and by such a person as would qualify for
11         the credit provided by this subsection (f) or
12         subsection (e).
13         (3) The basis of qualified property shall be the basis
14     used to compute the depreciation deduction for federal
15     income tax purposes.
16         (4) If the basis of the property for federal income tax
17     depreciation purposes is increased after it has been placed
18     in service in the Enterprise Zone or River Edge
19     Redevelopment Zone by the taxpayer, the amount of such
20     increase shall be deemed property placed in service on the
21     date of such increase in basis.
22         (5) The term "placed in service" shall have the same
23     meaning as under Section 46 of the Internal Revenue Code.
24         (6) If during any taxable year, any property ceases to
25     be qualified property in the hands of the taxpayer within
26     48 months after being placed in service, or the situs of

 

 

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1     any qualified property is moved outside the Enterprise Zone
2     or River Edge Redevelopment Zone within 48 months after
3     being placed in service, the tax imposed under subsections
4     (a) and (b) of this Section for such taxable year shall be
5     increased. Such increase shall be determined by (i)
6     recomputing the investment credit which would have been
7     allowed for the year in which credit for such property was
8     originally allowed by eliminating such property from such
9     computation, and (ii) subtracting such recomputed credit
10     from the amount of credit previously allowed. For the
11     purposes of this paragraph (6), a reduction of the basis of
12     qualified property resulting from a redetermination of the
13     purchase price shall be deemed a disposition of qualified
14     property to the extent of such reduction.
15         (7) There shall be allowed an additional credit equal
16     to 0.5% of the basis of qualified property placed in
17     service during the taxable year in a River Edge
18     Redevelopment Zone, provided such property is placed in
19     service on or after July 1, 2006, and the taxpayer's base
20     employment within Illinois has increased by 1% or more over
21     the preceding year as determined by the taxpayer's
22     employment records filed with the Illinois Department of
23     Employment Security. Taxpayers who are new to Illinois
24     shall be deemed to have met the 1% growth in base
25     employment for the first year in which they file employment
26     records with the Illinois Department of Employment

 

 

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1     Security. If, in any year, the increase in base employment
2     within Illinois over the preceding year is less than 1%,
3     the additional credit shall be limited to that percentage
4     times a fraction, the numerator of which is 0.5% and the
5     denominator of which is 1%, but shall not exceed 0.5%.
6       (g) Jobs Tax Credit; Enterprise Zone, River Edge
7 Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
8         (1) A taxpayer conducting a trade or business in an
9     enterprise zone or a High Impact Business designated by the
10     Department of Commerce and Economic Opportunity or for
11     taxable years ending on or after December 31, 2006, in a
12     River Edge Redevelopment Zone conducting a trade or
13     business in a federally designated Foreign Trade Zone or
14     Sub-Zone shall be allowed a credit against the tax imposed
15     by subsections (a) and (b) of this Section in the amount of
16     $500 per eligible employee hired to work in the zone during
17     the taxable year.
18         (2) To qualify for the credit:
19             (A) the taxpayer must hire 5 or more eligible
20         employees to work in an enterprise zone, River Edge
21         Redevelopment Zone, or federally designated Foreign
22         Trade Zone or Sub-Zone during the taxable year;
23             (B) the taxpayer's total employment within the
24         enterprise zone, River Edge Redevelopment Zone, or
25         federally designated Foreign Trade Zone or Sub-Zone
26         must increase by 5 or more full-time employees beyond

 

 

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1         the total employed in that zone at the end of the
2         previous tax year for which a jobs tax credit under
3         this Section was taken, or beyond the total employed by
4         the taxpayer as of December 31, 1985, whichever is
5         later; and
6             (C) the eligible employees must be employed 180
7         consecutive days in order to be deemed hired for
8         purposes of this subsection.
9         (3) An "eligible employee" means an employee who is:
10             (A) Certified by the Department of Commerce and
11         Economic Opportunity as "eligible for services"
12         pursuant to regulations promulgated in accordance with
13         Title II of the Job Training Partnership Act, Training
14         Services for the Disadvantaged or Title III of the Job
15         Training Partnership Act, Employment and Training
16         Assistance for Dislocated Workers Program.
17             (B) Hired after the enterprise zone, River Edge
18         Redevelopment Zone, or federally designated Foreign
19         Trade Zone or Sub-Zone was designated or the trade or
20         business was located in that zone, whichever is later.
21             (C) Employed in the enterprise zone, River Edge
22         Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
23         An employee is employed in an enterprise zone or
24         federally designated Foreign Trade Zone or Sub-Zone if
25         his services are rendered there or it is the base of
26         operations for the services performed.

 

 

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1             (D) A full-time employee working 30 or more hours
2         per week.
3         (4) For tax years ending on or after December 31, 1985
4     and prior to December 31, 1988, the credit shall be allowed
5     for the tax year in which the eligible employees are hired.
6     For tax years ending on or after December 31, 1988, the
7     credit shall be allowed for the tax year immediately
8     following the tax year in which the eligible employees are
9     hired. If the amount of the credit exceeds the tax
10     liability for that year, whether it exceeds the original
11     liability or the liability as later amended, such excess
12     may be carried forward and applied to the tax liability of
13     the 5 taxable years following the excess credit year. The
14     credit shall be applied to the earliest year for which
15     there is a liability. If there is credit from more than one
16     tax year that is available to offset a liability, earlier
17     credit shall be applied first.
18         (5) The Department of Revenue shall promulgate such
19     rules and regulations as may be deemed necessary to carry
20     out the purposes of this subsection (g).
21         (6) The credit shall be available for eligible
22     employees hired on or after January 1, 1986.
23     (h) Investment credit; High Impact Business.
24         (1) Subject to subsections (b) and (b-5) of Section 5.5
25     of the Illinois Enterprise Zone Act, a taxpayer shall be
26     allowed a credit against the tax imposed by subsections (a)

 

 

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

 

 

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

 

 

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

 

 

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1     redetermination of the purchase price shall be deemed a
2     disposition of qualified property to the extent of such
3     reduction.
4         (7) Beginning with tax years ending after December 31,
5     1996, if a taxpayer qualifies for the credit under this
6     subsection (h) and thereby is granted a tax abatement and
7     the taxpayer relocates its entire facility in violation of
8     the explicit terms and length of the contract under Section
9     18-183 of the Property Tax Code, the tax imposed under
10     subsections (a) and (b) of this Section shall be increased
11     for the taxable year in which the taxpayer relocated its
12     facility by an amount equal to the amount of credit
13     received by the taxpayer under this subsection (h).
14     (i) Credit for Personal Property Tax Replacement Income
15 Tax. For tax years ending prior to December 31, 2003, a credit
16 shall be allowed against the tax imposed by subsections (a) and
17 (b) of this Section for the tax imposed by subsections (c) and
18 (d) of this Section. This credit shall be computed by
19 multiplying the tax imposed by subsections (c) and (d) of this
20 Section by a fraction, the numerator of which is base income
21 allocable to Illinois and the denominator of which is Illinois
22 base income, and further multiplying the product by the tax
23 rate imposed by subsections (a) and (b) of this Section.
24     Any credit earned on or after December 31, 1986 under this
25 subsection which is unused in the year the credit is computed
26 because it exceeds the tax liability imposed by subsections (a)

 

 

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1 and (b) for that year (whether it exceeds the original
2 liability or the liability as later amended) may be carried
3 forward and applied to the tax liability imposed by subsections
4 (a) and (b) of the 5 taxable years following the excess credit
5 year, provided that no credit may be carried forward to any
6 year ending on or after December 31, 2003. This credit shall be
7 applied first to the earliest year for which there is a
8 liability. If there is a credit under this subsection from more
9 than one tax year that is available to offset a liability the
10 earliest credit arising under this subsection shall be applied
11 first.
12     If, during any taxable year ending on or after December 31,
13 1986, the tax imposed by subsections (c) and (d) of this
14 Section for which a taxpayer has claimed a credit under this
15 subsection (i) is reduced, the amount of credit for such tax
16 shall also be reduced. Such reduction shall be determined by
17 recomputing the credit to take into account the reduced tax
18 imposed by subsections (c) and (d). If any portion of the
19 reduced amount of credit has been carried to a different
20 taxable year, an amended return shall be filed for such taxable
21 year to reduce the amount of credit claimed.
22     (j) Training expense credit. Beginning with tax years
23 ending on or after December 31, 1986 and prior to December 31,
24 2003, a taxpayer shall be allowed a credit against the tax
25 imposed by subsections (a) and (b) under this Section for all
26 amounts paid or accrued, on behalf of all persons employed by

 

 

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1 the taxpayer in Illinois or Illinois residents employed outside
2 of Illinois by a taxpayer, for educational or vocational
3 training in semi-technical or technical fields or semi-skilled
4 or skilled fields, which were deducted from gross income in the
5 computation of taxable income. The credit against the tax
6 imposed by subsections (a) and (b) shall be 1.6% of such
7 training expenses. For partners, shareholders of subchapter S
8 corporations, and owners of limited liability companies, if the
9 liability company is treated as a partnership for purposes of
10 federal and State income taxation, there shall be allowed a
11 credit under this subsection (j) to be determined in accordance
12 with the determination of income and distributive share of
13 income under Sections 702 and 704 and subchapter S of the
14 Internal Revenue Code.
15     Any credit allowed under this subsection which is unused in
16 the year the credit is earned may be carried forward to each of
17 the 5 taxable years following the year for which the credit is
18 first computed until it is used. This credit shall be applied
19 first to the earliest year for which there is a liability. If
20 there is a credit under this subsection from more than one tax
21 year that is available to offset a liability the earliest
22 credit arising under this subsection shall be applied first. No
23 carryforward credit may be claimed in any tax year ending on or
24 after December 31, 2003.
25     (k) Research and development credit.
26     For tax years ending after July 1, 1990 and prior to

 

 

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1 December 31, 2003, and beginning again for tax years ending on
2 or after December 31, 2004, a taxpayer shall be allowed a
3 credit against the tax imposed by subsections (a) and (b) of
4 this Section for increasing research activities in this State.
5 The credit allowed against the tax imposed by subsections (a)
6 and (b) shall be equal to 6 1/2% of the qualifying expenditures
7 for increasing research activities in this State. For partners,
8 shareholders of subchapter S corporations, and owners of
9 limited liability companies, if the liability company is
10 treated as a partnership for purposes of federal and State
11 income taxation, there shall be allowed a credit under this
12 subsection to be determined in accordance with the
13 determination of income and distributive share of income under
14 Sections 702 and 704 and subchapter S of the Internal Revenue
15 Code.
16     For purposes of this subsection, "qualifying expenditures"
17 means the qualifying expenditures as defined for the federal
18 credit for increasing research activities which would be
19 allowable under Section 41 of the Internal Revenue Code and
20 which are conducted in this State, "qualifying expenditures for
21 increasing research activities in this State" means the excess
22 of qualifying expenditures for the taxable year in which
23 incurred over qualifying expenditures for the base period,
24 "qualifying expenditures for the base period" means the average
25 of the qualifying expenditures for each year in the base
26 period, and "base period" means the 3 taxable years immediately

 

 

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1 preceding the taxable year for which the determination is being
2 made.
3     Any credit in excess of the tax liability for the taxable
4 year may be carried forward. A taxpayer may elect to have the
5 unused credit shown on its final completed return carried over
6 as a credit against the tax liability for the following 5
7 taxable years or until it has been fully used, whichever occurs
8 first; provided that no credit earned in a tax year ending
9 prior to December 31, 2003 may be carried forward to any year
10 ending on or after December 31, 2003.
11     If an unused credit is carried forward to a given year from
12 2 or more earlier years, that credit arising in the earliest
13 year will be applied first against the tax liability for the
14 given year. If a tax liability for the given year still
15 remains, the credit from the next earliest year will then be
16 applied, and so on, until all credits have been used or no tax
17 liability for the given year remains. Any remaining unused
18 credit or credits then will be carried forward to the next
19 following year in which a tax liability is incurred, except
20 that no credit can be carried forward to a year which is more
21 than 5 years after the year in which the expense for which the
22 credit is given was incurred.
23     No inference shall be drawn from this amendatory Act of the
24 91st General Assembly in construing this Section for taxable
25 years beginning before January 1, 1999.
26     (l) Environmental Remediation Tax Credit.

 

 

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1         (i) For tax years ending after December 31, 1997 and on
2     or before December 31, 2001, a taxpayer shall be allowed a
3     credit against the tax imposed by subsections (a) and (b)
4     of this Section for certain amounts paid for unreimbursed
5     eligible remediation costs, as specified in this
6     subsection. For purposes of this Section, "unreimbursed
7     eligible remediation costs" means costs approved by the
8     Illinois Environmental Protection Agency ("Agency") under
9     Section 58.14 of the Environmental Protection Act that were
10     paid in performing environmental remediation at a site for
11     which a No Further Remediation Letter was issued by the
12     Agency and recorded under Section 58.10 of the
13     Environmental Protection Act. The credit must be claimed
14     for the taxable year in which Agency approval of the
15     eligible remediation costs is granted. The credit is not
16     available to any taxpayer if the taxpayer or any related
17     party caused or contributed to, in any material respect, a
18     release of regulated substances on, in, or under the site
19     that was identified and addressed by the remedial action
20     pursuant to the Site Remediation Program of the
21     Environmental Protection Act. After the Pollution Control
22     Board rules are adopted pursuant to the Illinois
23     Administrative Procedure Act for the administration and
24     enforcement of Section 58.9 of the Environmental
25     Protection Act, determinations as to credit availability
26     for purposes of this Section shall be made consistent with

 

 

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1     those rules. For purposes of this Section, "taxpayer"
2     includes a person whose tax attributes the taxpayer has
3     succeeded to under Section 381 of the Internal Revenue Code
4     and "related party" includes the persons disallowed a
5     deduction for losses by paragraphs (b), (c), and (f)(1) of
6     Section 267 of the Internal Revenue Code by virtue of being
7     a related taxpayer, as well as any of its partners. The
8     credit allowed against the tax imposed by subsections (a)
9     and (b) shall be equal to 25% of the unreimbursed eligible
10     remediation costs in excess of $100,000 per site, except
11     that the $100,000 threshold shall not apply to any site
12     contained in an enterprise zone as determined by the
13     Department of Commerce and Community Affairs (now
14     Department of Commerce and Economic Opportunity). The
15     total credit allowed shall not exceed $40,000 per year with
16     a maximum total of $150,000 per site. For partners and
17     shareholders of subchapter S corporations, there shall be
18     allowed a credit under this subsection to be determined in
19     accordance with the determination of income and
20     distributive share of income under Sections 702 and 704 and
21     subchapter S of the Internal Revenue Code.
22         (ii) A credit allowed under this subsection that is
23     unused in the year the credit is earned may be carried
24     forward to each of the 5 taxable years following the year
25     for which the credit is first earned until it is used. The
26     term "unused credit" does not include any amounts of

 

 

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1     unreimbursed eligible remediation costs in excess of the
2     maximum credit per site authorized under paragraph (i).
3     This credit shall be applied first to the earliest year for
4     which there is a liability. If there is a credit under this
5     subsection from more than one tax year that is available to
6     offset a liability, the earliest credit arising under this
7     subsection shall be applied first. A credit allowed under
8     this subsection may be sold to a buyer as part of a sale of
9     all or part of the remediation site for which the credit
10     was granted. The purchaser of a remediation site and the
11     tax credit shall succeed to the unused credit and remaining
12     carry-forward period of the seller. To perfect the
13     transfer, the assignor shall record the transfer in the
14     chain of title for the site and provide written notice to
15     the Director of the Illinois Department of Revenue of the
16     assignor's intent to sell the remediation site and the
17     amount of the tax credit to be transferred as a portion of
18     the sale. In no event may a credit be transferred to any
19     taxpayer if the taxpayer or a related party would not be
20     eligible under the provisions of subsection (i).
21         (iii) For purposes of this Section, the term "site"
22     shall have the same meaning as under Section 58.2 of the
23     Environmental Protection Act.
24     (m) Education expense credit. Beginning with tax years
25 ending after December 31, 1999, a taxpayer who is the custodian
26 of one or more qualifying pupils shall be allowed a credit

 

 

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

 

 

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1 attend any particular public or nonpublic school to qualify for
2 the credit under this Section.
3     "Custodian" means, with respect to qualifying pupils, an
4 Illinois resident who is a parent, the parents, a legal
5 guardian, or the legal guardians of the qualifying pupils.
6     (n) River Edge Redevelopment Zone site remediation tax
7 credit.
8         (i) For tax years ending on or after December 31, 2006,
9     a taxpayer shall be allowed a credit against the tax
10     imposed by subsections (a) and (b) of this Section for
11     certain amounts paid for unreimbursed eligible remediation
12     costs, as specified in this subsection. For purposes of
13     this Section, "unreimbursed eligible remediation costs"
14     means costs approved by the Illinois Environmental
15     Protection Agency ("Agency") under Section 58.14 of the
16     Environmental Protection Act that were paid in performing
17     environmental remediation at a site within a River Edge
18     Redevelopment Zone for which a No Further Remediation
19     Letter was issued by the Agency and recorded under Section
20     58.10 of the Environmental Protection Act. The credit must
21     be claimed for the taxable year in which Agency approval of
22     the eligible remediation costs is granted. The credit is
23     not available to any taxpayer if the taxpayer or any
24     related party caused or contributed to, in any material
25     respect, a release of regulated substances on, in, or under
26     the site that was identified and addressed by the remedial

 

 

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1     action pursuant to the Site Remediation Program of the
2     Environmental Protection Act. Determinations as to credit
3     availability for purposes of this Section shall be made
4     consistent with rules adopted by the Pollution Control
5     Board pursuant to the Illinois Administrative Procedure
6     Act for the administration and enforcement of Section 58.9
7     of the Environmental Protection Act. For purposes of this
8     Section, "taxpayer" includes a person whose tax attributes
9     the taxpayer has succeeded to under Section 381 of the
10     Internal Revenue Code and "related party" includes the
11     persons disallowed a deduction for losses by paragraphs
12     (b), (c), and (f)(1) of Section 267 of the Internal Revenue
13     Code by virtue of being a related taxpayer, as well as any
14     of its partners. The credit allowed against the tax imposed
15     by subsections (a) and (b) shall be equal to 25% of the
16     unreimbursed eligible remediation costs in excess of
17     $100,000 per site.
18         (ii) A credit allowed under this subsection that is
19     unused in the year the credit is earned may be carried
20     forward to each of the 5 taxable years following the year
21     for which the credit is first earned until it is used. This
22     credit shall be applied first to the earliest year for
23     which there is a liability. If there is a credit under this
24     subsection from more than one tax year that is available to
25     offset a liability, the earliest credit arising under this
26     subsection shall be applied first. A credit allowed under

 

 

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1     this subsection may be sold to a buyer as part of a sale of
2     all or part of the remediation site for which the credit
3     was granted. The purchaser of a remediation site and the
4     tax credit shall succeed to the unused credit and remaining
5     carry-forward period of the seller. To perfect the
6     transfer, the assignor shall record the transfer in the
7     chain of title for the site and provide written notice to
8     the Director of the Illinois Department of Revenue of the
9     assignor's intent to sell the remediation site and the
10     amount of the tax credit to be transferred as a portion of
11     the sale. In no event may a credit be transferred to any
12     taxpayer if the taxpayer or a related party would not be
13     eligible under the provisions of subsection (i).
14         (iii) For purposes of this Section, the term "site"
15     shall have the same meaning as under Section 58.2 of the
16     Environmental Protection Act.
17         (iv) This subsection is exempt from the provisions of
18     Section 250.
19 (Source: P.A. 93-29, eff. 6-20-03; 93-840, eff. 7-30-04;
20 93-871, eff. 8-6-04; 94-1021, eff. 7-12-06.)
 
21     (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
22     Sec. 203. Base income defined.
23     (a) Individuals.
24         (1) In general. In the case of an individual, base
25     income means an amount equal to the taxpayer's adjusted

 

 

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1     gross income for the taxable year as modified by paragraph
2     (2).
3         (2) Modifications. The adjusted gross income referred
4     to in paragraph (1) shall be modified by adding thereto the
5     sum of the following amounts:
6             (A) An amount equal to all amounts paid or accrued
7         to the taxpayer as interest or dividends during the
8         taxable year to the extent excluded from gross income
9         in the computation of adjusted gross income, except
10         stock dividends of qualified public utilities
11         described in Section 305(e) of the Internal Revenue
12         Code;
13             (B) An amount equal to the amount of tax imposed by
14         this Act to the extent deducted from gross income in
15         the computation of adjusted gross income for the
16         taxable year;
17             (C) An amount equal to the amount received during
18         the taxable year as a recovery or refund of real
19         property taxes paid with respect to the taxpayer's
20         principal residence under the Revenue Act of 1939 and
21         for which a deduction was previously taken under
22         subparagraph (L) of this paragraph (2) prior to July 1,
23         1991, the retrospective application date of Article 4
24         of Public Act 87-17. In the case of multi-unit or
25         multi-use structures and farm dwellings, the taxes on
26         the taxpayer's principal residence shall be that

 

 

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1         portion of the total taxes for the entire property
2         which is attributable to such principal residence;
3             (D) An amount equal to the amount of the capital
4         gain deduction allowable under the Internal Revenue
5         Code, to the extent deducted from gross income in the
6         computation of adjusted gross income;
7             (D-5) An amount, to the extent not included in
8         adjusted gross income, equal to the amount of money
9         withdrawn by the taxpayer in the taxable year from a
10         medical care savings account and the interest earned on
11         the account in the taxable year of a withdrawal
12         pursuant to subsection (b) of Section 20 of the Medical
13         Care Savings Account Act or subsection (b) of Section
14         20 of the Medical Care Savings Account Act of 2000;
15             (D-10) For taxable years ending after December 31,
16         1997, an amount equal to any eligible remediation costs
17         that the individual deducted in computing adjusted
18         gross income and for which the individual claims a
19         credit under subsection (l) of Section 201;
20             (D-15) For taxable years 2001 and thereafter, an
21         amount equal to the bonus depreciation deduction taken
22         on the taxpayer's federal income tax return for the
23         taxable year under subsection (k) of Section 168 of the
24         Internal Revenue Code;
25             (D-16) If the taxpayer sells, transfers, abandons,
26         or otherwise disposes of property for which the

 

 

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1         taxpayer was required in any taxable year to make an
2         addition modification under subparagraph (D-15), then
3         an amount equal to the aggregate amount of the
4         deductions taken in all taxable years under
5         subparagraph (Z) with respect to that property; .
6             If the taxpayer continues to own property through
7         the last day of the last tax year for which the
8         taxpayer may claim a depreciation deduction for
9         federal income tax purposes and for which the taxpayer
10         was allowed in any taxable year to make a subtraction
11         modification under subparagraph (Z), then an amount
12         equal to that subtraction modification.
13             The taxpayer is required to make the addition
14         modification under this subparagraph only once with
15         respect to any one piece of property;
16             (D-17) For taxable years ending on or after
17         December 31, 2004, an amount equal to the amount
18         otherwise allowed as a deduction in computing base
19         income for interest paid, accrued, or incurred,
20         directly or indirectly, to a foreign person who would
21         be a member of the same unitary business group but for
22         the fact that foreign person's business activity
23         outside the United States is 80% or more of the foreign
24         person's total business activity. The addition
25         modification required by this subparagraph shall be
26         reduced to the extent that dividends were included in

 

 

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1         base income of the unitary group for the same taxable
2         year and received by the taxpayer or by a member of the
3         taxpayer's unitary business group (including amounts
4         included in gross income under Sections 951 through 964
5         of the Internal Revenue Code and amounts included in
6         gross income under Section 78 of the Internal Revenue
7         Code) with respect to the stock of the same person to
8         whom the interest was paid, accrued, or incurred.
9             This paragraph shall not apply to the following:
10                 (i) an item of interest paid, accrued, or
11             incurred, directly or indirectly, to a foreign
12             person who is subject in a foreign country or
13             state, other than a state which requires mandatory
14             unitary reporting, to a tax on or measured by net
15             income with respect to such interest; or
16                 (ii) an item of interest paid, accrued, or
17             incurred, directly or indirectly, to a foreign
18             person if the taxpayer can establish, based on a
19             preponderance of the evidence, both of the
20             following:
21                     (a) the foreign person, during the same
22                 taxable year, paid, accrued, or incurred, the
23                 interest to a person that is not a related
24                 member, and
25                     (b) the transaction giving rise to the
26                 interest expense between the taxpayer and the

 

 

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1                 foreign person did not have as a principal
2                 purpose the avoidance of Illinois income tax,
3                 and is paid pursuant to a contract or agreement
4                 that reflects an arm's-length interest rate
5                 and terms; or
6                 (iii) the taxpayer can establish, based on
7             clear and convincing evidence, that the interest
8             paid, accrued, or incurred relates to a contract or
9             agreement entered into at arm's-length rates and
10             terms and the principal purpose for the payment is
11             not federal or Illinois tax avoidance; or
12                 (iv) an item of interest paid, accrued, or
13             incurred, directly or indirectly, to a foreign
14             person if the taxpayer establishes by clear and
15             convincing evidence that the adjustments are
16             unreasonable; or if the taxpayer and the Director
17             agree in writing to the application or use of an
18             alternative method of apportionment under Section
19             304(f).
20                 Nothing in this subsection shall preclude the
21             Director from making any other adjustment
22             otherwise allowed under Section 404 of this Act for
23             any tax year beginning after the effective date of
24             this amendment provided such adjustment is made
25             pursuant to regulation adopted by the Department
26             and such regulations provide methods and standards

 

 

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1             by which the Department will utilize its authority
2             under Section 404 of this Act;
3             (D-18) For taxable years ending on or after
4         December 31, 2004, an amount equal to the amount of
5         intangible expenses and costs otherwise allowed as a
6         deduction in computing base income, and that were paid,
7         accrued, or incurred, directly or indirectly, to a
8         foreign person who would be a member of the same
9         unitary business group but for the fact that the
10         foreign person's business activity outside the United
11         States is 80% or more of that person's total business
12         activity. The addition modification required by this
13         subparagraph shall be reduced to the extent that
14         dividends were included in base income of the unitary
15         group for the same taxable year and received by the
16         taxpayer or by a member of the taxpayer's unitary
17         business group (including amounts included in gross
18         income under Sections 951 through 964 of the Internal
19         Revenue Code and amounts included in gross income under
20         Section 78 of the Internal Revenue Code) with respect
21         to the stock of the same person to whom the intangible
22         expenses and costs were directly or indirectly paid,
23         incurred, or accrued. The preceding sentence does not
24         apply to the extent that the same dividends caused a
25         reduction to the addition modification required under
26         Section 203(a)(2)(D-17) of this Act. As used in this

 

 

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1         subparagraph, the term "intangible expenses and costs"
2         includes (1) expenses, losses, and costs for, or
3         related to, the direct or indirect acquisition, use,
4         maintenance or management, ownership, sale, exchange,
5         or any other disposition of intangible property; (2)
6         losses incurred, directly or indirectly, from
7         factoring transactions or discounting transactions;
8         (3) royalty, patent, technical, and copyright fees;
9         (4) licensing fees; and (5) other similar expenses and
10         costs. For purposes of this subparagraph, "intangible
11         property" includes patents, patent applications, trade
12         names, trademarks, service marks, copyrights, mask
13         works, trade secrets, and similar types of intangible
14         assets.
15             This paragraph shall not apply to the following:
16                 (i) any item of intangible expenses or costs
17             paid, accrued, or incurred, directly or
18             indirectly, from a transaction with a foreign
19             person who is subject in a foreign country or
20             state, other than a state which requires mandatory
21             unitary reporting, to a tax on or measured by net
22             income with respect to such item; or
23                 (ii) any item of intangible expense or cost
24             paid, accrued, or incurred, directly or
25             indirectly, if the taxpayer can establish, based
26             on a preponderance of the evidence, both of the

 

 

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1             following:
2                     (a) the foreign person during the same
3                 taxable year paid, accrued, or incurred, the
4                 intangible expense or cost to a person that is
5                 not a related member, and
6                     (b) the transaction giving rise to the
7                 intangible expense or cost between the
8                 taxpayer and the foreign person did not have as
9                 a principal purpose the avoidance of Illinois
10                 income tax, and is paid pursuant to a contract
11                 or agreement that reflects arm's-length terms;
12                 or
13                 (iii) any item of intangible expense or cost
14             paid, accrued, or incurred, directly or
15             indirectly, from a transaction with a foreign
16             person if the taxpayer establishes by clear and
17             convincing evidence, that the adjustments are
18             unreasonable; or if the taxpayer and the Director
19             agree in writing to the application or use of an
20             alternative method of apportionment under Section
21             304(f);
22                 Nothing in this subsection shall preclude the
23             Director from making any other adjustment
24             otherwise allowed under Section 404 of this Act for
25             any tax year beginning after the effective date of
26             this amendment provided such adjustment is made

 

 

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1             pursuant to regulation adopted by the Department
2             and such regulations provide methods and standards
3             by which the Department will utilize its authority
4             under Section 404 of this Act;
5             (D-20) For taxable years beginning on or after
6         January 1, 2002, in the case of a distribution from a
7         qualified tuition program under Section 529 of the
8         Internal Revenue Code, other than (i) a distribution
9         from a College Savings Pool created under Section 16.5
10         of the State Treasurer Act or (ii) a distribution from
11         the Illinois Prepaid Tuition Trust Fund, an amount
12         equal to the amount excluded from gross income under
13         Section 529(c)(3)(B);
14     and by deducting from the total so obtained the sum of the
15     following amounts:
16             (E) For taxable years ending before December 31,
17         2001, any amount included in such total in respect of
18         any compensation (including but not limited to any
19         compensation paid or accrued to a serviceman while a
20         prisoner of war or missing in action) paid to a
21         resident by reason of being on active duty in the Armed
22         Forces of the United States and in respect of any
23         compensation paid or accrued to a resident who as a
24         governmental employee was a prisoner of war or missing
25         in action, and in respect of any compensation paid to a
26         resident in 1971 or thereafter for annual training

 

 

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1         performed pursuant to Sections 502 and 503, Title 32,
2         United States Code as a member of the Illinois National
3         Guard. For taxable years ending on or after December
4         31, 2001, any amount included in such total in respect
5         of any compensation (including but not limited to any
6         compensation paid or accrued to a serviceman while a
7         prisoner of war or missing in action) paid to a
8         resident by reason of being a member of any component
9         of the Armed Forces of the United States and in respect
10         of any compensation paid or accrued to a resident who
11         as a governmental employee was a prisoner of war or
12         missing in action, and in respect of any compensation
13         paid to a resident in 2001 or thereafter by reason of
14         being a member of the Illinois National Guard. The
15         provisions of this amendatory Act of the 92nd General
16         Assembly are exempt from the provisions of Section 250;
17             (F) For taxable years beginning on or before
18         January 1, 2007, an An amount equal to all amounts
19         included in such total pursuant to the provisions of
20         Sections 402(a), 402(c), 403(a), 403(b), 406(a),
21         407(a), and 408 of the Internal Revenue Code, or
22         included in such total as distributions under the
23         provisions of any retirement or disability plan for
24         employees of any governmental agency or unit, or
25         retirement payments to retired partners, which
26         payments are excluded in computing net earnings from

 

 

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1         self employment by Section 1402 of the Internal Revenue
2         Code and regulations adopted pursuant thereto;
3             (F-5) For taxable years beginning after January 1,
4         2006, for those taxpayers who report an adjusted gross
5         income of $74,999 ("the retirement threshold amount")
6         or less, an amount equal to all amounts included in
7         such total pursuant to the provisions of Sections
8         402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
9         408 of the Internal Revenue Code, or included in such
10         total as distributions under the provisions of any
11         retirement or disability plan for employees of any
12         governmental agency or unit, or retirement payments to
13         retired partners, which payments are excluded in
14         computing net earnings from self employment by Section
15         1402 of the Internal Revenue Code and regulations
16         adopted pursuant thereto, provided that the retirement
17         threshold amount shall increase annually for each tax
18         year by the percentage increase, if any, in the
19         Consumer Price Index published by the U.S. Bureau of
20         Labor Statistics from July of the immediately
21         preceding tax year to June 30 of the then current tax
22         year;
23             (G) The valuation limitation amount;
24             (H) An amount equal to the amount of any tax
25         imposed by this Act which was refunded to the taxpayer
26         and included in such total for the taxable year;

 

 

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1             (I) An amount equal to all amounts included in such
2         total pursuant to the provisions of Section 111 of the
3         Internal Revenue Code as a recovery of items previously
4         deducted from adjusted gross income in the computation
5         of taxable income;
6             (J) An amount equal to those dividends included in
7         such total which were paid by a corporation which
8         conducts business operations in an Enterprise Zone or
9         zones created under the Illinois Enterprise Zone Act or
10         a River Edge Redevelopment Zone or zones created under
11         the River Edge Redevelopment Zone Act, and conducts
12         substantially all of its operations in an Enterprise
13         Zone or zones or a River Edge Redevelopment Zone or
14         zones. This subparagraph (J) is exempt from the
15         provisions of Section 250;
16             (K) An amount equal to those dividends included in
17         such total that were paid by a corporation that
18         conducts business operations in a federally designated
19         Foreign Trade Zone or Sub-Zone and that is designated a
20         High Impact Business located in Illinois; provided
21         that dividends eligible for the deduction provided in
22         subparagraph (J) of paragraph (2) of this subsection
23         shall not be eligible for the deduction provided under
24         this subparagraph (K);
25             (L) For taxable years ending after December 31,
26         1983, an amount equal to all social security benefits

 

 

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1         and railroad retirement benefits included in such
2         total pursuant to Sections 72(r) and 86 of the Internal
3         Revenue Code;
4             (M) With the exception of any amounts subtracted
5         under subparagraph (N), an amount equal to the sum of
6         all amounts disallowed as deductions by (i) Sections
7         171(a) (2), and 265(2) of the Internal Revenue Code of
8         1954, as now or hereafter amended, and all amounts of
9         expenses allocable to interest and disallowed as
10         deductions by Section 265(1) of the Internal Revenue
11         Code of 1954, as now or hereafter amended; and (ii) for
12         taxable years ending on or after August 13, 1999,
13         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
14         the Internal Revenue Code; the provisions of this
15         subparagraph are exempt from the provisions of Section
16         250;
17             (N) An amount equal to all amounts included in such
18         total which are exempt from taxation by this State
19         either by reason of its statutes or Constitution or by
20         reason of the Constitution, treaties or statutes of the
21         United States; provided that, in the case of any
22         statute of this State that exempts income derived from
23         bonds or other obligations from the tax imposed under
24         this Act, the amount exempted shall be the interest net
25         of bond premium amortization;
26             (O) An amount equal to any contribution made to a

 

 

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1         job training project established pursuant to the Tax
2         Increment Allocation Redevelopment Act;
3             (P) An amount equal to the amount of the deduction
4         used to compute the federal income tax credit for
5         restoration of substantial amounts held under claim of
6         right for the taxable year pursuant to Section 1341 of
7         the Internal Revenue Code of 1986;
8             (Q) An amount equal to any amounts included in such
9         total, received by the taxpayer as an acceleration in
10         the payment of life, endowment or annuity benefits in
11         advance of the time they would otherwise be payable as
12         an indemnity for a terminal illness;
13             (R) An amount equal to the amount of any federal or
14         State bonus paid to veterans of the Persian Gulf War;
15             (S) An amount, to the extent included in adjusted
16         gross income, equal to the amount of a contribution
17         made in the taxable year on behalf of the taxpayer to a
18         medical care savings account established under the
19         Medical Care Savings Account Act or the Medical Care
20         Savings Account Act of 2000 to the extent the
21         contribution is accepted by the account administrator
22         as provided in that Act;
23             (T) An amount, to the extent included in adjusted
24         gross income, equal to the amount of interest earned in
25         the taxable year on a medical care savings account
26         established under the Medical Care Savings Account Act

 

 

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1         or the Medical Care Savings Account Act of 2000 on
2         behalf of the taxpayer, other than interest added
3         pursuant to item (D-5) of this paragraph (2);
4             (U) For one taxable year beginning on or after
5         January 1, 1994, an amount equal to the total amount of
6         tax imposed and paid under subsections (a) and (b) of
7         Section 201 of this Act on grant amounts received by
8         the taxpayer under the Nursing Home Grant Assistance
9         Act during the taxpayer's taxable years 1992 and 1993;
10             (V) Beginning with tax years ending on or after
11         December 31, 1995 and ending with tax years ending on
12         or before December 31, 2004, an amount equal to the
13         amount paid by a taxpayer who is a self-employed
14         taxpayer, a partner of a partnership, or a shareholder
15         in a Subchapter S corporation for health insurance or
16         long-term care insurance for that taxpayer or that
17         taxpayer's spouse or dependents, to the extent that the
18         amount paid for that health insurance or long-term care
19         insurance may be deducted under Section 213 of the
20         Internal Revenue Code of 1986, has not been deducted on
21         the federal income tax return of the taxpayer, and does
22         not exceed the taxable income attributable to that
23         taxpayer's income, self-employment income, or
24         Subchapter S corporation income; except that no
25         deduction shall be allowed under this item (V) if the
26         taxpayer is eligible to participate in any health

 

 

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1         insurance or long-term care insurance plan of an
2         employer of the taxpayer or the taxpayer's spouse. The
3         amount of the health insurance and long-term care
4         insurance subtracted under this item (V) shall be
5         determined by multiplying total health insurance and
6         long-term care insurance premiums paid by the taxpayer
7         times a number that represents the fractional
8         percentage of eligible medical expenses under Section
9         213 of the Internal Revenue Code of 1986 not actually
10         deducted on the taxpayer's federal income tax return;
11             (W) For taxable years beginning on or after January
12         1, 1998, all amounts included in the taxpayer's federal
13         gross income in the taxable year from amounts converted
14         from a regular IRA to a Roth IRA. This paragraph is
15         exempt from the provisions of Section 250;
16             (X) For taxable year 1999 and thereafter, an amount
17         equal to the amount of any (i) distributions, to the
18         extent includible in gross income for federal income
19         tax purposes, made to the taxpayer because of his or
20         her status as a victim of persecution for racial or
21         religious reasons by Nazi Germany or any other Axis
22         regime or as an heir of the victim and (ii) items of
23         income, to the extent includible in gross income for
24         federal income tax purposes, attributable to, derived
25         from or in any way related to assets stolen from,
26         hidden from, or otherwise lost to a victim of

 

 

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1         persecution for racial or religious reasons by Nazi
2         Germany or any other Axis regime immediately prior to,
3         during, and immediately after World War II, including,
4         but not limited to, interest on the proceeds receivable
5         as insurance under policies issued to a victim of
6         persecution for racial or religious reasons by Nazi
7         Germany or any other Axis regime by European insurance
8         companies immediately prior to and during World War II;
9         provided, however, this subtraction from federal
10         adjusted gross income does not apply to assets acquired
11         with such assets or with the proceeds from the sale of
12         such assets; provided, further, this paragraph shall
13         only apply to a taxpayer who was the first recipient of
14         such assets after their recovery and who is a victim of
15         persecution for racial or religious reasons by Nazi
16         Germany or any other Axis regime or as an heir of the
17         victim. The amount of and the eligibility for any
18         public assistance, benefit, or similar entitlement is
19         not affected by the inclusion of items (i) and (ii) of
20         this paragraph in gross income for federal income tax
21         purposes. This paragraph is exempt from the provisions
22         of Section 250;
23             (Y) For taxable years beginning on or after January
24         1, 2002 and ending on or before December 31, 2004,
25         moneys contributed in the taxable year to a College
26         Savings Pool account under Section 16.5 of the State

 

 

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1         Treasurer Act, except that amounts excluded from gross
2         income under Section 529(c)(3)(C)(i) of the Internal
3         Revenue Code shall not be considered moneys
4         contributed under this subparagraph (Y). For taxable
5         years beginning on or after January 1, 2005, a maximum
6         of $10,000 contributed in the taxable year to (i) a
7         College Savings Pool account under Section 16.5 of the
8         State Treasurer Act or (ii) the Illinois Prepaid
9         Tuition Trust Fund, except that amounts excluded from
10         gross income under Section 529(c)(3)(C)(i) of the
11         Internal Revenue Code shall not be considered moneys
12         contributed under this subparagraph (Y). This
13         subparagraph (Y) is exempt from the provisions of
14         Section 250;
15             (Z) For taxable years 2001 and thereafter, for the
16         taxable year in which the bonus depreciation deduction
17         is taken on the taxpayer's federal income tax return
18         under subsection (k) of Section 168 of the Internal
19         Revenue Code and for each applicable taxable year
20         thereafter, an amount equal to "x", where:
21                 (1) "y" equals the amount of the depreciation
22             deduction taken for the taxable year on the
23             taxpayer's federal income tax return on property
24             for which the bonus depreciation deduction was
25             taken in any year under subsection (k) of Section
26             168 of the Internal Revenue Code, but not including

 

 

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1             the bonus depreciation deduction;
2                 (2) for taxable years ending on or before
3             December 31, 2005, "x" equals "y" multiplied by 30
4             and then divided by 70 (or "y" multiplied by
5             0.429); and
6                 (3) for taxable years ending after December
7             31, 2005:
8                     (i) for property on which a bonus
9                 depreciation deduction of 30% of the adjusted
10                 basis was taken, "x" equals "y" multiplied by
11                 30 and then divided by 70 (or "y" multiplied by
12                 0.429); and
13                     (ii) for property on which a bonus
14                 depreciation deduction of 50% of the adjusted
15                 basis was taken, "x" equals "y" multiplied by
16                 1.0.
17             The aggregate amount deducted under this
18         subparagraph in all taxable years for any one piece of
19         property may not exceed the amount of the bonus
20         depreciation deduction taken on that property on the
21         taxpayer's federal income tax return under subsection
22         (k) of Section 168 of the Internal Revenue Code. This
23         subparagraph (Z) is exempt from the provisions of
24         Section 250;
25             (AA) If the taxpayer sells, transfers, abandons,
26         or otherwise disposes of property for which the

 

 

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1         taxpayer was required in any taxable year to make an
2         addition modification under subparagraph (D-15), then
3         an amount equal to that addition modification.
4             If the taxpayer continues to own property through
5         the last day of the last tax year for which the
6         taxpayer may claim a depreciation deduction for
7         federal income tax purposes and for which the taxpayer
8         was required in any taxable year to make an addition
9         modification under subparagraph (D-15), then an amount
10         equal to that addition modification.
11             The taxpayer is allowed to take the deduction under
12         this subparagraph only once with respect to any one
13         piece of property.
14             This subparagraph (AA) is exempt from the
15         provisions of Section 250;
16             (BB) Any amount included in adjusted gross income,
17         other than salary, received by a driver in a
18         ridesharing arrangement using a motor vehicle;
19             (CC) The amount of (i) any interest income (net of
20         the deductions allocable thereto) taken into account
21         for the taxable year with respect to a transaction with
22         a taxpayer that is required to make an addition
23         modification with respect to such transaction under
24         Section 203(a)(2)(D-17), 203(b)(2)(E-12),
25         203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
26         the amount of that addition modification, and (ii) any

 

 

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1         income from intangible property (net of the deductions
2         allocable thereto) taken into account for the taxable
3         year with respect to a transaction with a taxpayer that
4         is required to make an addition modification with
5         respect to such transaction under Section
6         203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
7         203(d)(2)(D-8), but not to exceed the amount of that
8         addition modification;
9             (DD) An amount equal to the interest income taken
10         into account for the taxable year (net of the
11         deductions allocable thereto) with respect to
12         transactions with a foreign person who would be a
13         member of the taxpayer's unitary business group but for
14         the fact that the foreign person's business activity
15         outside the United States is 80% or more of that
16         person's total business activity, but not to exceed the
17         addition modification required to be made for the same
18         taxable year under Section 203(a)(2)(D-17) for
19         interest paid, accrued, or incurred, directly or
20         indirectly, to the same foreign person; and
21             (EE) An amount equal to the income from intangible
22         property taken into account for the taxable year (net
23         of the deductions allocable thereto) with respect to
24         transactions with a foreign person who would be a
25         member of the taxpayer's unitary business group but for
26         the fact that the foreign person's business activity

 

 

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1         outside the United States is 80% or more of that
2         person's total business activity, but not to exceed the
3         addition modification required to be made for the same
4         taxable year under Section 203(a)(2)(D-18) for
5         intangible expenses and costs paid, accrued, or
6         incurred, directly or indirectly, to the same foreign
7         person.
 
8     (b) Corporations.
9         (1) In general. In the case of a corporation, base
10     income means an amount equal to the taxpayer's taxable
11     income for the taxable year as modified by paragraph (2).
12         (2) Modifications. The taxable income referred to in
13     paragraph (1) shall be modified by adding thereto the sum
14     of the following amounts:
15             (A) An amount equal to all amounts paid or accrued
16         to the taxpayer as interest and all distributions
17         received from regulated investment companies during
18         the taxable year to the extent excluded from gross
19         income in the computation of taxable income;
20             (B) An amount equal to the amount of tax imposed by
21         this Act to the extent deducted from gross income in
22         the computation of taxable income for the taxable year;
23             (C) In the case of a regulated investment company,
24         an amount equal to the excess of (i) the net long-term
25         capital gain for the taxable year, over (ii) the amount

 

 

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1         of the capital gain dividends designated as such in
2         accordance with Section 852(b)(3)(C) of the Internal
3         Revenue Code and any amount designated under Section
4         852(b)(3)(D) of the Internal Revenue Code,
5         attributable to the taxable year (this amendatory Act
6         of 1995 (Public Act 89-89) is declarative of existing
7         law and is not a new enactment);
8             (D) The amount of any net operating loss deduction
9         taken in arriving at taxable income, other than a net
10         operating loss carried forward from a taxable year
11         ending prior to December 31, 1986;
12             (E) For taxable years in which a net operating loss
13         carryback or carryforward from a taxable year ending
14         prior to December 31, 1986 is an element of taxable
15         income under paragraph (1) of subsection (e) or
16         subparagraph (E) of paragraph (2) of subsection (e),
17         the amount by which addition modifications other than
18         those provided by this subparagraph (E) exceeded
19         subtraction modifications in such earlier taxable
20         year, with the following limitations applied in the
21         order that they are listed:
22                 (i) the addition modification relating to the
23             net operating loss carried back or forward to the
24             taxable year from any taxable year ending prior to
25             December 31, 1986 shall be reduced by the amount of
26             addition modification under this subparagraph (E)

 

 

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1             which related to that net operating loss and which
2             was taken into account in calculating the base
3             income of an earlier taxable year, and
4                 (ii) the addition modification relating to the
5             net operating loss carried back or forward to the
6             taxable year from any taxable year ending prior to
7             December 31, 1986 shall not exceed the amount of
8             such carryback or carryforward;
9             For taxable years in which there is a net operating
10         loss carryback or carryforward from more than one other
11         taxable year ending prior to December 31, 1986, the
12         addition modification provided in this subparagraph
13         (E) shall be the sum of the amounts computed
14         independently under the preceding provisions of this
15         subparagraph (E) for each such taxable year;
16             (E-5) For taxable years ending after December 31,
17         1997, an amount equal to any eligible remediation costs
18         that the corporation deducted in computing adjusted
19         gross income and for which the corporation claims a
20         credit under subsection (l) of Section 201;
21             (E-10) For taxable years 2001 and thereafter, an
22         amount equal to the bonus depreciation deduction taken
23         on the taxpayer's federal income tax return for the
24         taxable year under subsection (k) of Section 168 of the
25         Internal Revenue Code; and
26             (E-11) If the taxpayer sells, transfers, abandons,

 

 

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1         or otherwise disposes of property for which the
2         taxpayer was required in any taxable year to make an
3         addition modification under subparagraph (E-10), then
4         an amount equal to the aggregate amount of the
5         deductions taken in all taxable years under
6         subparagraph (T) with respect to that property.
7             If the taxpayer continues to own property through
8         the last day of the last tax year for which the
9         taxpayer may claim a depreciation deduction for
10         federal income tax purposes and for which the taxpayer
11         was allowed in any taxable year to make a subtraction
12         modification under subparagraph (T), then an amount
13         equal to that subtraction modification.
14             The taxpayer is required to make the addition
15         modification under this subparagraph only once with
16         respect to any one piece of property;
17             (E-12) For taxable years ending on or after
18         December 31, 2004, an amount equal to the amount
19         otherwise allowed as a deduction in computing base
20         income for interest paid, accrued, or incurred,
21         directly or indirectly, to a foreign person who would
22         be a member of the same unitary business group but for
23         the fact the foreign person's business activity
24         outside the United States is 80% or more of the foreign
25         person's total business activity. The addition
26         modification required by this subparagraph shall be

 

 

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1         reduced to the extent that dividends were included in
2         base income of the unitary group for the same taxable
3         year and received by the taxpayer or by a member of the
4         taxpayer's unitary business group (including amounts
5         included in gross income pursuant to Sections 951
6         through 964 of the Internal Revenue Code and amounts
7         included in gross income under Section 78 of the
8         Internal Revenue Code) with respect to the stock of the
9         same person to whom the interest was paid, accrued, or
10         incurred.
11             This paragraph shall not apply to the following:
12                 (i) an item of interest paid, accrued, or
13             incurred, directly or indirectly, to a foreign
14             person who is subject in a foreign country or
15             state, other than a state which requires mandatory
16             unitary reporting, to a tax on or measured by net
17             income with respect to such interest; or
18                 (ii) an item of interest paid, accrued, or
19             incurred, directly or indirectly, to a foreign
20             person if the taxpayer can establish, based on a
21             preponderance of the evidence, both of the
22             following:
23                     (a) the foreign person, during the same
24                 taxable year, paid, accrued, or incurred, the
25                 interest to a person that is not a related
26                 member, and

 

 

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1                     (b) the transaction giving rise to the
2                 interest expense between the taxpayer and the
3                 foreign person did not have as a principal
4                 purpose the avoidance of Illinois income tax,
5                 and is paid pursuant to a contract or agreement
6                 that reflects an arm's-length interest rate
7                 and terms; or
8                 (iii) the taxpayer can establish, based on
9             clear and convincing evidence, that the interest
10             paid, accrued, or incurred relates to a contract or
11             agreement entered into at arm's-length rates and
12             terms and the principal purpose for the payment is
13             not federal or Illinois tax avoidance; or
14                 (iv) an item of interest paid, accrued, or
15             incurred, directly or indirectly, to a foreign
16             person if the taxpayer establishes by clear and
17             convincing evidence that the adjustments are
18             unreasonable; or if the taxpayer and the Director
19             agree in writing to the application or use of an
20             alternative method of apportionment under Section
21             304(f).
22                 Nothing in this subsection shall preclude the
23             Director from making any other adjustment
24             otherwise allowed under Section 404 of this Act for
25             any tax year beginning after the effective date of
26             this amendment provided such adjustment is made

 

 

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1             pursuant to regulation adopted by the Department
2             and such regulations provide methods and standards
3             by which the Department will utilize its authority
4             under Section 404 of this Act;
5             (E-13) For taxable years ending on or after
6         December 31, 2004, an amount equal to the amount of
7         intangible expenses and costs otherwise allowed as a
8         deduction in computing base income, and that were paid,
9         accrued, or incurred, directly or indirectly, to a
10         foreign person who would be a member of the same
11         unitary business group but for the fact that the
12         foreign person's business activity outside the United
13         States is 80% or more of that person's total business
14         activity. The addition modification required by this
15         subparagraph shall be reduced to the extent that
16         dividends were included in base income of the unitary
17         group for the same taxable year and received by the
18         taxpayer or by a member of the taxpayer's unitary
19         business group (including amounts included in gross
20         income pursuant to Sections 951 through 964 of the
21         Internal Revenue Code and amounts included in gross
22         income under Section 78 of the Internal Revenue Code)
23         with respect to the stock of the same person to whom
24         the intangible expenses and costs were directly or
25         indirectly paid, incurred, or accrued. The preceding
26         sentence shall not apply to the extent that the same

 

 

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1         dividends caused a reduction to the addition
2         modification required under Section 203(b)(2)(E-12) of
3         this Act. As used in this subparagraph, the term
4         "intangible expenses and costs" includes (1) expenses,
5         losses, and costs for, or related to, the direct or
6         indirect acquisition, use, maintenance or management,
7         ownership, sale, exchange, or any other disposition of
8         intangible property; (2) losses incurred, directly or
9         indirectly, from factoring transactions or discounting
10         transactions; (3) royalty, patent, technical, and
11         copyright fees; (4) licensing fees; and (5) other
12         similar expenses and costs. For purposes of this
13         subparagraph, "intangible property" includes patents,
14         patent applications, trade names, trademarks, service
15         marks, copyrights, mask works, trade secrets, and
16         similar types of intangible assets.
17             This paragraph shall not apply to the following:
18                 (i) any item of intangible expenses or costs
19             paid, accrued, or incurred, directly or
20             indirectly, from a transaction with a foreign
21             person who is subject in a foreign country or
22             state, other than a state which requires mandatory
23             unitary reporting, to a tax on or measured by net
24             income with respect to such item; or
25                 (ii) any item of intangible expense or cost
26             paid, accrued, or incurred, directly or

 

 

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1             indirectly, if the taxpayer can establish, based
2             on a preponderance of the evidence, both of the
3             following:
4                     (a) the foreign person during the same
5                 taxable year paid, accrued, or incurred, the
6                 intangible expense or cost to a person that is
7                 not a related member, and
8                     (b) the transaction giving rise to the
9                 intangible expense or cost between the
10                 taxpayer and the foreign person did not have as
11                 a principal purpose the avoidance of Illinois
12                 income tax, and is paid pursuant to a contract
13                 or agreement that reflects arm's-length terms;
14                 or
15                 (iii) any item of intangible expense or cost
16             paid, accrued, or incurred, directly or
17             indirectly, from a transaction with a foreign
18             person if the taxpayer establishes by clear and
19             convincing evidence, that the adjustments are
20             unreasonable; or if the taxpayer and the Director
21             agree in writing to the application or use of an
22             alternative method of apportionment under Section
23             304(f);
24                 Nothing in this subsection shall preclude the
25             Director from making any other adjustment
26             otherwise allowed under Section 404 of this Act for

 

 

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1             any tax year beginning after the effective date of
2             this amendment provided such adjustment is made
3             pursuant to regulation adopted by the Department
4             and such regulations provide methods and standards
5             by which the Department will utilize its authority
6             under Section 404 of this Act;
7     and by deducting from the total so obtained the sum of the
8     following amounts:
9             (F) An amount equal to the amount of any tax
10         imposed by this Act which was refunded to the taxpayer
11         and included in such total for the taxable year;
12             (G) An amount equal to any amount included in such
13         total under Section 78 of the Internal Revenue Code;
14             (H) In the case of a regulated investment company,
15         an amount equal to the amount of exempt interest
16         dividends as defined in subsection (b) (5) of Section
17         852 of the Internal Revenue Code, paid to shareholders
18         for the taxable year;
19             (I) With the exception of any amounts subtracted
20         under subparagraph (J), an amount equal to the sum of
21         all amounts disallowed as deductions by (i) Sections
22         171(a) (2), and 265(a)(2) and amounts disallowed as
23         interest expense by Section 291(a)(3) of the Internal
24         Revenue Code, as now or hereafter amended, and all
25         amounts of expenses allocable to interest and
26         disallowed as deductions by Section 265(a)(1) of the

 

 

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1         Internal Revenue Code, as now or hereafter amended; and
2         (ii) for taxable years ending on or after August 13,
3         1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
4         832(b)(5)(B)(i) of the Internal Revenue Code; the
5         provisions of this subparagraph are exempt from the
6         provisions of Section 250;
7             (J) An amount equal to all amounts included in such
8         total which are exempt from taxation by this State
9         either by reason of its statutes or Constitution or by
10         reason of the Constitution, treaties or statutes of the
11         United States; provided that, in the case of any
12         statute of this State that exempts income derived from
13         bonds or other obligations from the tax imposed under
14         this Act, the amount exempted shall be the interest net
15         of bond premium amortization;
16             (K) (Blank); An amount equal to those dividends
17         included in such total which were paid by a corporation
18         which conducts business operations in an Enterprise
19         Zone or zones created under the Illinois Enterprise
20         Zone Act or a River Edge Redevelopment Zone or zones
21         created under the River Edge Redevelopment Zone Act and
22         conducts substantially all of its operations in an
23         Enterprise Zone or zones or a River Edge Redevelopment
24         Zone or zones. This subparagraph (K) is exempt from the
25         provisions of Section 250;
26             (L) (Blank); An amount equal to those dividends

 

 

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1         included in such total that were paid by a corporation
2         that conducts business operations in a federally
3         designated Foreign Trade Zone or Sub-Zone and that is
4         designated a High Impact Business located in Illinois;
5         provided that dividends eligible for the deduction
6         provided in subparagraph (K) of paragraph 2 of this
7         subsection shall not be eligible for the deduction
8         provided under this subparagraph (L);
9             (M) For any taxpayer that is a financial
10         organization within the meaning of Section 304(c) of
11         this Act, an amount included in such total as interest
12         income from a loan or loans made by such taxpayer to a
13         borrower, to the extent that such a loan is secured by
14         property which is eligible for the Enterprise Zone
15         Investment Credit or the River Edge Redevelopment Zone
16         Investment Credit. To determine the portion of a loan
17         or loans that is secured by property eligible for a
18         Section 201(f) investment credit to the borrower, the
19         entire principal amount of the loan or loans between
20         the taxpayer and the borrower should be divided into
21         the basis of the Section 201(f) investment credit
22         property which secures the loan or loans, using for
23         this purpose the original basis of such property on the
24         date that it was placed in service in the Enterprise
25         Zone or the River Edge Redevelopment Zone. The
26         subtraction modification available to taxpayer in any

 

 

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1         year under this subsection shall be that portion of the
2         total interest paid by the borrower with respect to
3         such loan attributable to the eligible property as
4         calculated under the previous sentence. This
5         subparagraph (M) is exempt from the provisions of
6         Section 250;
7             (M-1) For any taxpayer that is a financial
8         organization within the meaning of Section 304(c) of
9         this Act, an amount included in such total as interest
10         income from a loan or loans made by such taxpayer to a
11         borrower, to the extent that such a loan is secured by
12         property which is eligible for the High Impact Business
13         Investment Credit. To determine the portion of a loan
14         or loans that is secured by property eligible for a
15         Section 201(h) investment credit to the borrower, the
16         entire principal amount of the loan or loans between
17         the taxpayer and the borrower should be divided into
18         the basis of the Section 201(h) investment credit
19         property which secures the loan or loans, using for
20         this purpose the original basis of such property on the
21         date that it was placed in service in a federally
22         designated Foreign Trade Zone or Sub-Zone located in
23         Illinois. No taxpayer that is eligible for the
24         deduction provided in subparagraph (M) of paragraph
25         (2) of this subsection shall be eligible for the
26         deduction provided under this subparagraph (M-1). The

 

 

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1         subtraction modification available to taxpayers in any
2         year under this subsection shall be that portion of the
3         total interest paid by the borrower with respect to
4         such loan attributable to the eligible property as
5         calculated under the previous sentence;
6             (N) Two times any contribution made during the
7         taxable year to a designated zone organization to the
8         extent that the contribution (i) qualifies as a
9         charitable contribution under subsection (c) of
10         Section 170 of the Internal Revenue Code and (ii) must,
11         by its terms, be used for a project approved by the
12         Department of Commerce and Economic Opportunity under
13         Section 11 of the Illinois Enterprise Zone Act or under
14         Section 10-10 of the Illinois River Edge Redevelopment
15         Zone Act. This subparagraph (N) is exempt from the
16         provisions of Section 250;
17             (O) An amount equal to: (i) 85% for taxable years
18         ending on or before December 31, 1992, or, a percentage
19         equal to the percentage allowable under Section
20         243(a)(1) of the Internal Revenue Code of 1986 for
21         taxable years ending after December 31, 1992, of the
22         amount by which dividends included in taxable income
23         and received from a corporation that is not created or
24         organized under the laws of the United States or any
25         state or political subdivision thereof, including, for
26         taxable years ending on or after December 31, 1988,

 

 

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1         dividends received or deemed received or paid or deemed
2         paid under Sections 951 through 964 of the Internal
3         Revenue Code, exceed the amount of the modification
4         provided under subparagraph (G) of paragraph (2) of
5         this subsection (b) which is related to such dividends;
6         plus (ii) 100% of the amount by which dividends,
7         included in taxable income and received, including,
8         for taxable years ending on or after December 31, 1988,
9         dividends received or deemed received or paid or deemed
10         paid under Sections 951 through 964 of the Internal
11         Revenue Code, from any such corporation specified in
12         clause (i) that would but for the provisions of Section
13         1504 (b) (3) of the Internal Revenue Code be treated as
14         a member of the affiliated group which includes the
15         dividend recipient, exceed the amount of the
16         modification provided under subparagraph (G) of
17         paragraph (2) of this subsection (b) which is related
18         to such dividends;
19             (P) An amount equal to any contribution made to a
20         job training project established pursuant to the Tax
21         Increment Allocation Redevelopment Act;
22             (Q) An amount equal to the amount of the deduction
23         used to compute the federal income tax credit for
24         restoration of substantial amounts held under claim of
25         right for the taxable year pursuant to Section 1341 of
26         the Internal Revenue Code of 1986;

 

 

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1             (R) On and after July 20, 1999, in the case of an
2         attorney-in-fact with respect to whom an interinsurer
3         or a reciprocal insurer has made the election under
4         Section 835 of the Internal Revenue Code, 26 U.S.C.
5         835, an amount equal to the excess, if any, of the
6         amounts paid or incurred by that interinsurer or
7         reciprocal insurer in the taxable year to the
8         attorney-in-fact over the deduction allowed to that
9         interinsurer or reciprocal insurer with respect to the
10         attorney-in-fact under Section 835(b) of the Internal
11         Revenue Code for the taxable year; the provisions of
12         this subparagraph are exempt from the provisions of
13         Section 250;
14             (S) For taxable years ending on or after December
15         31, 1997, in the case of a Subchapter S corporation, an
16         amount equal to all amounts of income allocable to a
17         shareholder subject to the Personal Property Tax
18         Replacement Income Tax imposed by subsections (c) and
19         (d) of Section 201 of this Act, including amounts
20         allocable to organizations exempt from federal income
21         tax by reason of Section 501(a) of the Internal Revenue
22         Code. This subparagraph (S) is exempt from the
23         provisions of Section 250;
24             (T) For taxable years 2001 and thereafter, for the
25         taxable year in which the bonus depreciation deduction
26         is taken on the taxpayer's federal income tax return

 

 

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1         under subsection (k) of Section 168 of the Internal
2         Revenue Code and for each applicable taxable year
3         thereafter, an amount equal to "x", where:
4                 (1) "y" equals the amount of the depreciation
5             deduction taken for the taxable year on the
6             taxpayer's federal income tax return on property
7             for which the bonus depreciation deduction was
8             taken in any year under subsection (k) of Section
9             168 of the Internal Revenue Code, but not including
10             the bonus depreciation deduction;
11                 (2) for taxable years ending on or before
12             December 31, 2005, "x" equals "y" multiplied by 30
13             and then divided by 70 (or "y" multiplied by
14             0.429); and
15                 (3) for taxable years ending after December
16             31, 2005:
17                     (i) for property on which a bonus
18                 depreciation deduction of 30% of the adjusted
19                 basis was taken, "x" equals "y" multiplied by
20                 30 and then divided by 70 (or "y" multiplied by
21                 0.429); and
22                     (ii) for property on which a bonus
23                 depreciation deduction of 50% of the adjusted
24                 basis was taken, "x" equals "y" multiplied by
25                 1.0.
26             The aggregate amount deducted under this

 

 

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1         subparagraph in all taxable years for any one piece of
2         property may not exceed the amount of the bonus
3         depreciation deduction taken on that property on the
4         taxpayer's federal income tax return under subsection
5         (k) of Section 168 of the Internal Revenue Code. This
6         subparagraph (T) is exempt from the provisions of
7         Section 250;
8             (U) If the taxpayer sells, transfers, abandons, or
9         otherwise disposes of property for which the taxpayer
10         was required in any taxable year to make an addition
11         modification under subparagraph (E-10), then an amount
12         equal to that addition modification.
13             If the taxpayer continues to own property through
14         the last day of the last tax year for which the
15         taxpayer may claim a depreciation deduction for
16         federal income tax purposes and for which the taxpayer
17         was required in any taxable year to make an addition
18         modification under subparagraph (E-10), then an amount
19         equal to that addition modification.
20             The taxpayer is allowed to take the deduction under
21         this subparagraph only once with respect to any one
22         piece of property.
23             This subparagraph (U) is exempt from the
24         provisions of Section 250;
25             (V) The amount of: (i) any interest income (net of
26         the deductions allocable thereto) taken into account

 

 

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1         for the taxable year with respect to a transaction with
2         a taxpayer that is required to make an addition
3         modification with respect to such transaction under
4         Section 203(a)(2)(D-17), 203(b)(2)(E-12),
5         203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
6         the amount of such addition modification and (ii) any
7         income from intangible property (net of the deductions
8         allocable thereto) taken into account for the taxable
9         year with respect to a transaction with a taxpayer that
10         is required to make an addition modification with
11         respect to such transaction under Section
12         203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
13         203(d)(2)(D-8), but not to exceed the amount of such
14         addition modification;
15             (W) An amount equal to the interest income taken
16         into account for the taxable year (net of the
17         deductions allocable thereto) with respect to
18         transactions with a foreign person who would be a
19         member of the taxpayer's unitary business group but for
20         the fact that the foreign person's business activity
21         outside the United States is 80% or more of that
22         person's total business activity, but not to exceed the
23         addition modification required to be made for the same
24         taxable year under Section 203(b)(2)(E-12) for
25         interest paid, accrued, or incurred, directly or
26         indirectly, to the same foreign person; and

 

 

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1             (X) An amount equal to the income from intangible
2         property taken into account for the taxable year (net
3         of the deductions allocable thereto) with respect to
4         transactions with a foreign person who would be a
5         member of the taxpayer's unitary business group but for
6         the fact that the foreign person's business activity
7         outside the United States is 80% or more of that
8         person's total business activity, but not to exceed the
9         addition modification required to be made for the same
10         taxable year under Section 203(b)(2)(E-13) for
11         intangible expenses and costs paid, accrued, or
12         incurred, directly or indirectly, to the same foreign
13         person.
14         (3) Special rule. For purposes of paragraph (2) (A),
15     "gross income" in the case of a life insurance company, for
16     tax years ending on and after December 31, 1994, shall mean
17     the gross investment income for the taxable year.
 
18     (c) Trusts and estates.
19         (1) In general. In the case of a trust or estate, base
20     income means an amount equal to the taxpayer's taxable
21     income for the taxable year as modified by paragraph (2).
22         (2) Modifications. Subject to the provisions of
23     paragraph (3), the taxable income referred to in paragraph
24     (1) shall be modified by adding thereto the sum of the
25     following amounts:

 

 

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1             (A) An amount equal to all amounts paid or accrued
2         to the taxpayer as interest or dividends during the
3         taxable year to the extent excluded from gross income
4         in the computation of taxable income;
5             (B) In the case of (i) an estate, $600; (ii) a
6         trust which, under its governing instrument, is
7         required to distribute all of its income currently,
8         $300; and (iii) any other trust, $100, but in each such
9         case, only to the extent such amount was deducted in
10         the computation of taxable income;
11             (C) An amount equal to the amount of tax imposed by
12         this Act to the extent deducted from gross income in
13         the computation of taxable income for the taxable year;
14             (D) The amount of any net operating loss deduction
15         taken in arriving at taxable income, other than a net
16         operating loss carried forward from a taxable year
17         ending prior to December 31, 1986;
18             (E) For taxable years in which a net operating loss
19         carryback or carryforward from a taxable year ending
20         prior to December 31, 1986 is an element of taxable
21         income under paragraph (1) of subsection (e) or
22         subparagraph (E) of paragraph (2) of subsection (e),
23         the amount by which addition modifications other than
24         those provided by this subparagraph (E) exceeded
25         subtraction modifications in such taxable year, with
26         the following limitations applied in the order that

 

 

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1         they are listed:
2                 (i) the addition modification relating to the
3             net operating loss carried back or forward to the
4             taxable year from any taxable year ending prior to
5             December 31, 1986 shall be reduced by the amount of
6             addition modification under this subparagraph (E)
7             which related to that net operating loss and which
8             was taken into account in calculating the base
9             income of an earlier taxable year, and
10                 (ii) the addition modification relating to the
11             net operating loss carried back or forward to the
12             taxable year from any taxable year ending prior to
13             December 31, 1986 shall not exceed the amount of
14             such carryback or carryforward;
15             For taxable years in which there is a net operating
16         loss carryback or carryforward from more than one other
17         taxable year ending prior to December 31, 1986, the
18         addition modification provided in this subparagraph
19         (E) shall be the sum of the amounts computed
20         independently under the preceding provisions of this
21         subparagraph (E) for each such taxable year;
22             (F) For taxable years ending on or after January 1,
23         1989, an amount equal to the tax deducted pursuant to
24         Section 164 of the Internal Revenue Code if the trust
25         or estate is claiming the same tax for purposes of the
26         Illinois foreign tax credit under Section 601 of this

 

 

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1         Act;
2             (G) An amount equal to the amount of the capital
3         gain deduction allowable under the Internal Revenue
4         Code, to the extent deducted from gross income in the
5         computation of taxable income;
6             (G-5) For taxable years ending after December 31,
7         1997, an amount equal to any eligible remediation costs
8         that the trust or estate deducted in computing adjusted
9         gross income and for which the trust or estate claims a
10         credit under subsection (l) of Section 201;
11             (G-10) For taxable years 2001 and thereafter, an
12         amount equal to the bonus depreciation deduction taken
13         on the taxpayer's federal income tax return for the
14         taxable year under subsection (k) of Section 168 of the
15         Internal Revenue Code; and
16             (G-11) If the taxpayer sells, transfers, abandons,
17         or otherwise disposes of property for which the
18         taxpayer was required in any taxable year to make an
19         addition modification under subparagraph (G-10), then
20         an amount equal to the aggregate amount of the
21         deductions taken in all taxable years under
22         subparagraph (R) with respect to that property.
23             If the taxpayer continues to own property through
24         the last day of the last tax year for which the
25         taxpayer may claim a depreciation deduction for
26         federal income tax purposes and for which the taxpayer

 

 

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1         was allowed in any taxable year to make a subtraction
2         modification under subparagraph (R), then an amount
3         equal to that subtraction modification.
4             The taxpayer is required to make the addition
5         modification under this subparagraph only once with
6         respect to any one piece of property;
7             (G-12) For taxable years ending on or after
8         December 31, 2004, an amount equal to the amount
9         otherwise allowed as a deduction in computing base
10         income for interest paid, accrued, or incurred,
11         directly or indirectly, to a foreign person who would
12         be a member of the same unitary business group but for
13         the fact that the foreign person's business activity
14         outside the United States is 80% or more of the foreign
15         person's total business activity. The addition
16         modification required by this subparagraph shall be
17         reduced to the extent that dividends were included in
18         base income of the unitary group for the same taxable
19         year and received by the taxpayer or by a member of the
20         taxpayer's unitary business group (including amounts
21         included in gross income pursuant to Sections 951
22         through 964 of the Internal Revenue Code and amounts
23         included in gross income under Section 78 of the
24         Internal Revenue Code) with respect to the stock of the
25         same person to whom the interest was paid, accrued, or
26         incurred.

 

 

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1             This paragraph shall not apply to the following:
2                 (i) an item of interest paid, accrued, or
3             incurred, directly or indirectly, to a foreign
4             person who is subject in a foreign country or
5             state, other than a state which requires mandatory
6             unitary reporting, to a tax on or measured by net
7             income with respect to such interest; or
8                 (ii) an item of interest paid, accrued, or
9             incurred, directly or indirectly, to a foreign
10             person if the taxpayer can establish, based on a
11             preponderance of the evidence, both of the
12             following:
13                     (a) the foreign person, during the same
14                 taxable year, paid, accrued, or incurred, the
15                 interest to a person that is not a related
16                 member, and
17                     (b) the transaction giving rise to the
18                 interest expense between the taxpayer and the
19                 foreign person did not have as a principal
20                 purpose the avoidance of Illinois income tax,
21                 and is paid pursuant to a contract or agreement
22                 that reflects an arm's-length interest rate
23                 and terms; or
24                 (iii) the taxpayer can establish, based on
25             clear and convincing evidence, that the interest
26             paid, accrued, or incurred relates to a contract or

 

 

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1             agreement entered into at arm's-length rates and
2             terms and the principal purpose for the payment is
3             not federal or Illinois tax avoidance; or
4                 (iv) an item of interest paid, accrued, or
5             incurred, directly or indirectly, to a foreign
6             person if the taxpayer establishes by clear and
7             convincing evidence that the adjustments are
8             unreasonable; or if the taxpayer and the Director
9             agree in writing to the application or use of an
10             alternative method of apportionment under Section
11             304(f).
12                 Nothing in this subsection shall preclude the
13             Director from making any other adjustment
14             otherwise allowed under Section 404 of this Act for
15             any tax year beginning after the effective date of
16             this amendment provided such adjustment is made
17             pursuant to regulation adopted by the Department
18             and such regulations provide methods and standards
19             by which the Department will utilize its authority
20             under Section 404 of this Act;
21             (G-13) For taxable years ending on or after
22         December 31, 2004, an amount equal to the amount of
23         intangible expenses and costs otherwise allowed as a
24         deduction in computing base income, and that were paid,
25         accrued, or incurred, directly or indirectly, to a
26         foreign person who would be a member of the same

 

 

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1         unitary business group but for the fact that the
2         foreign person's business activity outside the United
3         States is 80% or more of that person's total business
4         activity. The addition modification required by this
5         subparagraph shall be reduced to the extent that
6         dividends were included in base income of the unitary
7         group for the same taxable year and received by the
8         taxpayer or by a member of the taxpayer's unitary
9         business group (including amounts included in gross
10         income pursuant to Sections 951 through 964 of the
11         Internal Revenue Code and amounts included in gross
12         income under Section 78 of the Internal Revenue Code)
13         with respect to the stock of the same person to whom
14         the intangible expenses and costs were directly or
15         indirectly paid, incurred, or accrued. The preceding
16         sentence shall not apply to the extent that the same
17         dividends caused a reduction to the addition
18         modification required under Section 203(c)(2)(G-12) of
19         this Act. As used in this subparagraph, the term
20         "intangible expenses and costs" includes: (1)
21         expenses, losses, and costs for or related to the
22         direct or indirect acquisition, use, maintenance or
23         management, ownership, sale, exchange, or any other
24         disposition of intangible property; (2) losses
25         incurred, directly or indirectly, from factoring
26         transactions or discounting transactions; (3) royalty,

 

 

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1         patent, technical, and copyright fees; (4) licensing
2         fees; and (5) other similar expenses and costs. For
3         purposes of this subparagraph, "intangible property"
4         includes patents, patent applications, trade names,
5         trademarks, service marks, copyrights, mask works,
6         trade secrets, and similar types of intangible assets.
7             This paragraph shall not apply to the following:
8                 (i) any item of intangible expenses or costs
9             paid, accrued, or incurred, directly or
10             indirectly, from a transaction with a foreign
11             person who is subject in a foreign country or
12             state, other than a state which requires mandatory
13             unitary reporting, to a tax on or measured by net
14             income with respect to such item; or
15                 (ii) any item of intangible expense or cost
16             paid, accrued, or incurred, directly or
17             indirectly, if the taxpayer can establish, based
18             on a preponderance of the evidence, both of the
19             following:
20                     (a) the foreign person during the same
21                 taxable year paid, accrued, or incurred, the
22                 intangible expense or cost to a person that is
23                 not a related member, and
24                     (b) the transaction giving rise to the
25                 intangible expense or cost between the
26                 taxpayer and the foreign person did not have as

 

 

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1                 a principal purpose the avoidance of Illinois
2                 income tax, and is paid pursuant to a contract
3                 or agreement that reflects arm's-length terms;
4                 or
5                 (iii) any item of intangible expense or cost
6             paid, accrued, or incurred, directly or
7             indirectly, from a transaction with a foreign
8             person if the taxpayer establishes by clear and
9             convincing evidence, that the adjustments are
10             unreasonable; or if the taxpayer and the Director
11             agree in writing to the application or use of an
12             alternative method of apportionment under Section
13             304(f);
14                 Nothing in this subsection shall preclude the
15             Director from making any other adjustment
16             otherwise allowed under Section 404 of this Act for
17             any tax year beginning after the effective date of
18             this amendment provided such adjustment is made
19             pursuant to regulation adopted by the Department
20             and such regulations provide methods and standards
21             by which the Department will utilize its authority
22             under Section 404 of this Act;
23     and by deducting from the total so obtained the sum of the
24     following amounts:
25             (H) An amount equal to all amounts included in such
26         total pursuant to the provisions of Sections 402(a),

 

 

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1         402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
2         Internal Revenue Code or included in such total as
3         distributions under the provisions of any retirement
4         or disability plan for employees of any governmental
5         agency or unit, or retirement payments to retired
6         partners, which payments are excluded in computing net
7         earnings from self employment by Section 1402 of the
8         Internal Revenue Code and regulations adopted pursuant
9         thereto;
10             (I) The valuation limitation amount;
11             (J) An amount equal to the amount of any tax
12         imposed by this Act which was refunded to the taxpayer
13         and included in such total for the taxable year;
14             (K) An amount equal to all amounts included in
15         taxable income as modified by subparagraphs (A), (B),
16         (C), (D), (E), (F) and (G) which are exempt from
17         taxation by this State either by reason of its statutes
18         or Constitution or by reason of the Constitution,
19         treaties or statutes of the United States; provided
20         that, in the case of any statute of this State that
21         exempts income derived from bonds or other obligations
22         from the tax imposed under this Act, the amount
23         exempted shall be the interest net of bond premium
24         amortization;
25             (L) With the exception of any amounts subtracted
26         under subparagraph (K), an amount equal to the sum of

 

 

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1         all amounts disallowed as deductions by (i) Sections
2         171(a) (2) and 265(a)(2) of the Internal Revenue Code,
3         as now or hereafter amended, and all amounts of
4         expenses allocable to interest and disallowed as
5         deductions by Section 265(1) of the Internal Revenue
6         Code of 1954, as now or hereafter amended; and (ii) for
7         taxable years ending on or after August 13, 1999,
8         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
9         the Internal Revenue Code; the provisions of this
10         subparagraph are exempt from the provisions of Section
11         250;
12             (M) An amount equal to those dividends included in
13         such total which were paid by a corporation which
14         conducts business operations in an Enterprise Zone or
15         zones created under the Illinois Enterprise Zone Act or
16         a River Edge Redevelopment Zone or zones created under
17         the River Edge Redevelopment Zone Act and conducts
18         substantially all of its operations in an Enterprise
19         Zone or Zones or a River Edge Redevelopment Zone or
20         zones. This subparagraph (M) is exempt from the
21         provisions of Section 250;
22             (N) An amount equal to any contribution made to a
23         job training project established pursuant to the Tax
24         Increment Allocation Redevelopment Act;
25             (O) An amount equal to those dividends included in
26         such total that were paid by a corporation that

 

 

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1         conducts business operations in a federally designated
2         Foreign Trade Zone or Sub-Zone and that is designated a
3         High Impact Business located in Illinois; provided
4         that dividends eligible for the deduction provided in
5         subparagraph (M) of paragraph (2) of this subsection
6         shall not be eligible for the deduction provided under
7         this subparagraph (O);
8             (P) An amount equal to the amount of the deduction
9         used to compute the federal income tax credit for
10         restoration of substantial amounts held under claim of
11         right for the taxable year pursuant to Section 1341 of
12         the Internal Revenue Code of 1986;
13             (Q) For taxable year 1999 and thereafter, an amount
14         equal to the amount of any (i) distributions, to the
15         extent includible in gross income for federal income
16         tax purposes, made to the taxpayer because of his or
17         her status as a victim of persecution for racial or
18         religious reasons by Nazi Germany or any other Axis
19         regime or as an heir of the victim and (ii) items of
20         income, to the extent includible in gross income for
21         federal income tax purposes, attributable to, derived
22         from or in any way related to assets stolen from,
23         hidden from, or otherwise lost to a victim of
24         persecution for racial or religious reasons by Nazi
25         Germany or any other Axis regime immediately prior to,
26         during, and immediately after World War II, including,

 

 

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1         but not limited to, interest on the proceeds receivable
2         as insurance under policies issued to a victim of
3         persecution for racial or religious reasons by Nazi
4         Germany or any other Axis regime by European insurance
5         companies immediately prior to and during World War II;
6         provided, however, this subtraction from federal
7         adjusted gross income does not apply to assets acquired
8         with such assets or with the proceeds from the sale of
9         such assets; provided, further, this paragraph shall
10         only apply to a taxpayer who was the first recipient of
11         such assets after their recovery and who is a victim of
12         persecution for racial or religious reasons by Nazi
13         Germany or any other Axis regime or as an heir of the
14         victim. The amount of and the eligibility for any
15         public assistance, benefit, or similar entitlement is
16         not affected by the inclusion of items (i) and (ii) of
17         this paragraph in gross income for federal income tax
18         purposes. This paragraph is exempt from the provisions
19         of Section 250;
20             (R) For taxable years 2001 and thereafter, for the
21         taxable year in which the bonus depreciation deduction
22         is taken on the taxpayer's federal income tax return
23         under subsection (k) of Section 168 of the Internal
24         Revenue Code and for each applicable taxable year
25         thereafter, an amount equal to "x", where:
26                 (1) "y" equals the amount of the depreciation

 

 

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1             deduction taken for the taxable year on the
2             taxpayer's federal income tax return on property
3             for which the bonus depreciation deduction was
4             taken in any year under subsection (k) of Section
5             168 of the Internal Revenue Code, but not including
6             the bonus depreciation deduction;
7                 (2) for taxable years ending on or before
8             December 31, 2005, "x" equals "y" multiplied by 30
9             and then divided by 70 (or "y" multiplied by
10             0.429); and
11                 (3) for taxable years ending after December
12             31, 2005:
13                     (i) for property on which a bonus
14                 depreciation deduction of 30% of the adjusted
15                 basis was taken, "x" equals "y" multiplied by
16                 30 and then divided by 70 (or "y" multiplied by
17                 0.429); and
18                     (ii) for property on which a bonus
19                 depreciation deduction of 50% of the adjusted
20                 basis was taken, "x" equals "y" multiplied by
21                 1.0.
22             The aggregate amount deducted under this
23         subparagraph in all taxable years for any one piece of
24         property may not exceed the amount of the bonus
25         depreciation deduction taken on that property on the
26         taxpayer's federal income tax return under subsection

 

 

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1         (k) of Section 168 of the Internal Revenue Code. This
2         subparagraph (R) is exempt from the provisions of
3         Section 250;
4             (S) If the taxpayer sells, transfers, abandons, or
5         otherwise disposes of property for which the taxpayer
6         was required in any taxable year to make an addition
7         modification under subparagraph (G-10), then an amount
8         equal to that addition modification.
9             If the taxpayer continues to own property through
10         the last day of the last tax year for which the
11         taxpayer may claim a depreciation deduction for
12         federal income tax purposes and for which the taxpayer
13         was required in any taxable year to make an addition
14         modification under subparagraph (G-10), then an amount
15         equal to that addition modification.
16             The taxpayer is allowed to take the deduction under
17         this subparagraph only once with respect to any one
18         piece of property.
19             This subparagraph (S) is exempt from the
20         provisions of Section 250;
21             (T) The amount of (i) any interest income (net of
22         the deductions allocable thereto) taken into account
23         for the taxable year with respect to a transaction with
24         a taxpayer that is required to make an addition
25         modification with respect to such transaction under
26         Section 203(a)(2)(D-17), 203(b)(2)(E-12),

 

 

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1         203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
2         the amount of such addition modification and (ii) any
3         income from intangible property (net of the deductions
4         allocable thereto) taken into account for the taxable
5         year with respect to a transaction with a taxpayer that
6         is required to make an addition modification with
7         respect to such transaction under Section
8         203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
9         203(d)(2)(D-8), but not to exceed the amount of such
10         addition modification;
11             (U) An amount equal to the interest income taken
12         into account for the taxable year (net of the
13         deductions allocable thereto) with respect to
14         transactions with a foreign person who would be a
15         member of the taxpayer's unitary business group but for
16         the fact the foreign person's business activity
17         outside the United States is 80% or more of that
18         person's total business activity, but not to exceed the
19         addition modification required to be made for the same
20         taxable year under Section 203(c)(2)(G-12) for
21         interest paid, accrued, or incurred, directly or
22         indirectly, to the same foreign person; and
23             (V) An amount equal to the income from intangible
24         property taken into account for the taxable year (net
25         of the deductions allocable thereto) with respect to
26         transactions with a foreign person who would be a

 

 

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1         member of the taxpayer's unitary business group but for
2         the fact that the foreign person's business activity
3         outside the United States is 80% or more of that
4         person's total business activity, but not to exceed the
5         addition modification required to be made for the same
6         taxable year under Section 203(c)(2)(G-13) for
7         intangible expenses and costs paid, accrued, or
8         incurred, directly or indirectly, to the same foreign
9         person.
10         (3) Limitation. The amount of any modification
11     otherwise required under this subsection shall, under
12     regulations prescribed by the Department, be adjusted by
13     any amounts included therein which were properly paid,
14     credited, or required to be distributed, or permanently set
15     aside for charitable purposes pursuant to Internal Revenue
16     Code Section 642(c) during the taxable year.
 
17     (d) Partnerships.
18         (1) In general. In the case of a partnership, base
19     income means an amount equal to the taxpayer's taxable
20     income for the taxable year as modified by paragraph (2).
21         (2) Modifications. The taxable income referred to in
22     paragraph (1) shall be modified by adding thereto the sum
23     of the following amounts:
24             (A) An amount equal to all amounts paid or accrued
25         to the taxpayer as interest or dividends during the

 

 

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1         taxable year to the extent excluded from gross income
2         in the computation of taxable income;
3             (B) An amount equal to the amount of tax imposed by
4         this Act to the extent deducted from gross income for
5         the taxable year;
6             (C) The amount of deductions allowed to the
7         partnership pursuant to Section 707 (c) of the Internal
8         Revenue Code in calculating its taxable income;
9             (D) An amount equal to the amount of the capital
10         gain deduction allowable under the Internal Revenue
11         Code, to the extent deducted from gross income in the
12         computation of taxable income;
13             (D-5) For taxable years 2001 and thereafter, an
14         amount equal to the bonus depreciation deduction taken
15         on the taxpayer's federal income tax return for the
16         taxable year under subsection (k) of Section 168 of the
17         Internal Revenue Code;
18             (D-6) If the taxpayer sells, transfers, abandons,
19         or otherwise disposes of property for which the
20         taxpayer was required in any taxable year to make an
21         addition modification under subparagraph (D-5), then
22         an amount equal to the aggregate amount of the
23         deductions taken in all taxable years under
24         subparagraph (O) with respect to that property.
25             If the taxpayer continues to own property through
26         the last day of the last tax year for which the

 

 

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1         taxpayer may claim a depreciation deduction for
2         federal income tax purposes and for which the taxpayer
3         was allowed in any taxable year to make a subtraction
4         modification under subparagraph (O), then an amount
5         equal to that subtraction modification.
6             The taxpayer is required to make the addition
7         modification under this subparagraph only once with
8         respect to any one piece of property;
9             (D-7) For taxable years ending on or after December
10         31, 2004, an amount equal to the amount otherwise
11         allowed as a deduction in computing base income for
12         interest paid, accrued, or incurred, directly or
13         indirectly, to a foreign person who would be a member
14         of the same unitary business group but for the fact the
15         foreign person's business activity outside the United
16         States is 80% or more of the foreign person's total
17         business activity. The addition modification required
18         by this subparagraph shall be reduced to the extent
19         that dividends were included in base income of the
20         unitary group for the same taxable year and received by
21         the taxpayer or by a member of the taxpayer's unitary
22         business group (including amounts included in gross
23         income pursuant to Sections 951 through 964 of the
24         Internal Revenue Code and amounts included in gross
25         income under Section 78 of the Internal Revenue Code)
26         with respect to the stock of the same person to whom

 

 

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1         the interest was paid, accrued, or incurred.
2             This paragraph shall not apply to the following:
3                 (i) an item of interest paid, accrued, or
4             incurred, directly or indirectly, to a foreign
5             person who is subject in a foreign country or
6             state, other than a state which requires mandatory
7             unitary reporting, to a tax on or measured by net
8             income with respect to such interest; or
9                 (ii) an item of interest paid, accrued, or
10             incurred, directly or indirectly, to a foreign
11             person if the taxpayer can establish, based on a
12             preponderance of the evidence, both of the
13             following:
14                     (a) the foreign person, during the same
15                 taxable year, paid, accrued, or incurred, the
16                 interest to a person that is not a related
17                 member, and
18                     (b) the transaction giving rise to the
19                 interest expense between the taxpayer and the
20                 foreign person did not have as a principal
21                 purpose the avoidance of Illinois income tax,
22                 and is paid pursuant to a contract or agreement
23                 that reflects an arm's-length interest rate
24                 and terms; or
25                 (iii) the taxpayer can establish, based on
26             clear and convincing evidence, that the interest

 

 

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1             paid, accrued, or incurred relates to a contract or
2             agreement entered into at arm's-length rates and
3             terms and the principal purpose for the payment is
4             not federal or Illinois tax avoidance; or
5                 (iv) an item of interest paid, accrued, or
6             incurred, directly or indirectly, to a foreign
7             person if the taxpayer establishes by clear and
8             convincing evidence that the adjustments are
9             unreasonable; or if the taxpayer and the Director
10             agree in writing to the application or use of an
11             alternative method of apportionment under Section
12             304(f).
13                 Nothing in this subsection shall preclude the
14             Director from making any other adjustment
15             otherwise allowed under Section 404 of this Act for
16             any tax year beginning after the effective date of
17             this amendment provided such adjustment is made
18             pursuant to regulation adopted by the Department
19             and such regulations provide methods and standards
20             by which the Department will utilize its authority
21             under Section 404 of this Act; and
22             (D-8) For taxable years ending on or after December
23         31, 2004, an amount equal to the amount of intangible
24         expenses and costs otherwise allowed as a deduction in
25         computing base income, and that were paid, accrued, or
26         incurred, directly or indirectly, to a foreign person

 

 

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1         who would be a member of the same unitary business
2         group but for the fact that the foreign person's
3         business activity outside the United States is 80% or
4         more of that person's total business activity. The
5         addition modification required by this subparagraph
6         shall be reduced to the extent that dividends were
7         included in base income of the unitary group for the
8         same taxable year and received by the taxpayer or by a
9         member of the taxpayer's unitary business group
10         (including amounts included in gross income pursuant
11         to Sections 951 through 964 of the Internal Revenue
12         Code and amounts included in gross income under Section
13         78 of the Internal Revenue Code) with respect to the
14         stock of the same person to whom the intangible
15         expenses and costs were directly or indirectly paid,
16         incurred or accrued. The preceding sentence shall not
17         apply to the extent that the same dividends caused a
18         reduction to the addition modification required under
19         Section 203(d)(2)(D-7) of this Act. As used in this
20         subparagraph, the term "intangible expenses and costs"
21         includes (1) expenses, losses, and costs for, or
22         related to, the direct or indirect acquisition, use,
23         maintenance or management, ownership, sale, exchange,
24         or any other disposition of intangible property; (2)
25         losses incurred, directly or indirectly, from
26         factoring transactions or discounting transactions;

 

 

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1         (3) royalty, patent, technical, and copyright fees;
2         (4) licensing fees; and (5) other similar expenses and
3         costs. For purposes of this subparagraph, "intangible
4         property" includes patents, patent applications, trade
5         names, trademarks, service marks, copyrights, mask
6         works, trade secrets, and similar types of intangible
7         assets;
8             This paragraph shall not apply to the following:
9                 (i) any item of intangible expenses or costs
10             paid, accrued, or incurred, directly or
11             indirectly, from a transaction with a foreign
12             person who is subject in a foreign country or
13             state, other than a state which requires mandatory
14             unitary reporting, to a tax on or measured by net
15             income with respect to such item; or
16                 (ii) any item of intangible expense or cost
17             paid, accrued, or incurred, directly or
18             indirectly, if the taxpayer can establish, based
19             on a preponderance of the evidence, both of the
20             following:
21                     (a) the foreign person during the same
22                 taxable year paid, accrued, or incurred, the
23                 intangible expense or cost to a person that is
24                 not a related member, and
25                     (b) the transaction giving rise to the
26                 intangible expense or cost between the

 

 

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1                 taxpayer and the foreign person did not have as
2                 a principal purpose the avoidance of Illinois
3                 income tax, and is paid pursuant to a contract
4                 or agreement that reflects arm's-length terms;
5                 or
6                 (iii) any item of intangible expense or cost
7             paid, accrued, or incurred, directly or
8             indirectly, from a transaction with a foreign
9             person if the taxpayer establishes by clear and
10             convincing evidence, that the adjustments are
11             unreasonable; or if the taxpayer and the Director
12             agree in writing to the application or use of an
13             alternative method of apportionment under Section
14             304(f);
15                 Nothing in this subsection shall preclude the
16             Director from making any other adjustment
17             otherwise allowed under Section 404 of this Act for
18             any tax year beginning after the effective date of
19             this amendment provided such adjustment is made
20             pursuant to regulation adopted by the Department
21             and such regulations provide methods and standards
22             by which the Department will utilize its authority
23             under Section 404 of this Act;
24     and by deducting from the total so obtained the following
25     amounts:
26             (E) The valuation limitation amount;

 

 

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1             (F) An amount equal to the amount of any tax
2         imposed by this Act which was refunded to the taxpayer
3         and included in such total for the taxable year;
4             (G) An amount equal to all amounts included in
5         taxable income as modified by subparagraphs (A), (B),
6         (C) and (D) which are exempt from taxation by this
7         State either by reason of its statutes or Constitution
8         or by reason of the Constitution, treaties or statutes
9         of the United States; provided that, in the case of any
10         statute of this State that exempts income derived from
11         bonds or other obligations from the tax imposed under
12         this Act, the amount exempted shall be the interest net
13         of bond premium amortization;
14             (H) Any income of the partnership which
15         constitutes personal service income as defined in
16         Section 1348 (b) (1) of the Internal Revenue Code (as
17         in effect December 31, 1981) or a reasonable allowance
18         for compensation paid or accrued for services rendered
19         by partners to the partnership, whichever is greater;
20             (I) An amount equal to all amounts of income
21         distributable to an entity subject to the Personal
22         Property Tax Replacement Income Tax imposed by
23         subsections (c) and (d) of Section 201 of this Act
24         including amounts distributable to organizations
25         exempt from federal income tax by reason of Section
26         501(a) of the Internal Revenue Code;

 

 

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1             (J) With the exception of any amounts subtracted
2         under subparagraph (G), an amount equal to the sum of
3         all amounts disallowed as deductions by (i) Sections
4         171(a) (2), and 265(2) of the Internal Revenue Code of
5         1954, as now or hereafter amended, and all amounts of
6         expenses allocable to interest and disallowed as
7         deductions by Section 265(1) of the Internal Revenue
8         Code, as now or hereafter amended; and (ii) for taxable
9         years ending on or after August 13, 1999, Sections
10         171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
11         Internal Revenue Code; the provisions of this
12         subparagraph are exempt from the provisions of Section
13         250;
14             (K) An amount equal to those dividends included in
15         such total which were paid by a corporation which
16         conducts business operations in an Enterprise Zone or
17         zones created under the Illinois Enterprise Zone Act,
18         enacted by the 82nd General Assembly, or a River Edge
19         Redevelopment Zone or zones created under the River
20         Edge Redevelopment Zone Act and conducts substantially
21         all of its operations in an Enterprise Zone or Zones or
22         from a River Edge Redevelopment Zone or zones. This
23         subparagraph (K) is exempt from the provisions of
24         Section 250;
25             (L) An amount equal to any contribution made to a
26         job training project established pursuant to the Real

 

 

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1         Property Tax Increment Allocation Redevelopment Act;
2             (M) An amount equal to those dividends included in
3         such total that were paid by a corporation that
4         conducts business operations in a federally designated
5         Foreign Trade Zone or Sub-Zone and that is designated a
6         High Impact Business located in Illinois; provided
7         that dividends eligible for the deduction provided in
8         subparagraph (K) of paragraph (2) of this subsection
9         shall not be eligible for the deduction provided under
10         this subparagraph (M);
11             (N) An amount equal to the amount of the deduction
12         used to compute the federal income tax credit for
13         restoration of substantial amounts held under claim of
14         right for the taxable year pursuant to Section 1341 of
15         the Internal Revenue Code of 1986;
16             (O) For taxable years 2001 and thereafter, for the
17         taxable year in which the bonus depreciation deduction
18         is taken on the taxpayer's federal income tax return
19         under subsection (k) of Section 168 of the Internal
20         Revenue Code and for each applicable taxable year
21         thereafter, an amount equal to "x", where:
22                 (1) "y" equals the amount of the depreciation
23             deduction taken for the taxable year on the
24             taxpayer's federal income tax return on property
25             for which the bonus depreciation deduction was
26             taken in any year under subsection (k) of Section

 

 

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1             168 of the Internal Revenue Code, but not including
2             the bonus depreciation deduction;
3                 (2) for taxable years ending on or before
4             December 31, 2005, "x" equals "y" multiplied by 30
5             and then divided by 70 (or "y" multiplied by
6             0.429); and
7                 (3) for taxable years ending after December
8             31, 2005:
9                     (i) for property on which a bonus
10                 depreciation deduction of 30% of the adjusted
11                 basis was taken, "x" equals "y" multiplied by
12                 30 and then divided by 70 (or "y" multiplied by
13                 0.429); and
14                     (ii) for property on which a bonus
15                 depreciation deduction of 50% of the adjusted
16                 basis was taken, "x" equals "y" multiplied by
17                 1.0.
18             The aggregate amount deducted under this
19         subparagraph in all taxable years for any one piece of
20         property may not exceed the amount of the bonus
21         depreciation deduction taken on that property on the
22         taxpayer's federal income tax return under subsection
23         (k) of Section 168 of the Internal Revenue Code. This
24         subparagraph (O) is exempt from the provisions of
25         Section 250;
26             (P) If the taxpayer sells, transfers, abandons, or

 

 

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1         otherwise disposes of property for which the taxpayer
2         was required in any taxable year to make an addition
3         modification under subparagraph (D-5), then an amount
4         equal to that addition modification.
5             If the taxpayer continues to own property through
6         the last day of the last tax year for which the
7         taxpayer may claim a depreciation deduction for
8         federal income tax purposes and for which the taxpayer
9         was required in any taxable year to make an addition
10         modification under subparagraph (D-5), then an amount
11         equal to that addition modification.
12             The taxpayer is allowed to take the deduction under
13         this subparagraph only once with respect to any one
14         piece of property.
15             This subparagraph (P) is exempt from the
16         provisions of Section 250;
17             (Q) The amount of (i) any interest income (net of
18         the deductions allocable thereto) taken into account
19         for the taxable year with respect to a transaction with
20         a taxpayer that is required to make an addition
21         modification with respect to such transaction under
22         Section 203(a)(2)(D-17), 203(b)(2)(E-12),
23         203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
24         the amount of such addition modification and (ii) any
25         income from intangible property (net of the deductions
26         allocable thereto) taken into account for the taxable

 

 

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1         year with respect to a transaction with a taxpayer that
2         is required to make an addition modification with
3         respect to such transaction under Section
4         203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
5         203(d)(2)(D-8), but not to exceed the amount of such
6         addition modification;
7             (R) An amount equal to the interest income taken
8         into account for the taxable year (net of the
9         deductions allocable thereto) with respect to
10         transactions with a foreign person who would be a
11         member of the taxpayer's unitary business group but for
12         the fact that the foreign person's business activity
13         outside the United States is 80% or more of that
14         person's total business activity, but not to exceed the
15         addition modification required to be made for the same
16         taxable year under Section 203(d)(2)(D-7) for interest
17         paid, accrued, or incurred, directly or indirectly, to
18         the same foreign person; and
19             (S) An amount equal to the income from intangible
20         property taken into account for the taxable year (net
21         of the deductions allocable thereto) with respect to
22         transactions with a foreign person who would be a
23         member of the taxpayer's unitary business group but for
24         the fact that the foreign person's business activity
25         outside the United States is 80% or more of that
26         person's total business activity, but not to exceed the

 

 

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1         addition modification required to be made for the same
2         taxable year under Section 203(d)(2)(D-8) for
3         intangible expenses and costs paid, accrued, or
4         incurred, directly or indirectly, to the same foreign
5         person.
 
6     (e) Gross income; adjusted gross income; taxable income.
7         (1) In general. Subject to the provisions of paragraph
8     (2) and subsection (b) (3), for purposes of this Section
9     and Section 803(e), a taxpayer's gross income, adjusted
10     gross income, or taxable income for the taxable year shall
11     mean the amount of gross income, adjusted gross income or
12     taxable income properly reportable for federal income tax
13     purposes for the taxable year under the provisions of the
14     Internal Revenue Code. Taxable income may be less than
15     zero. However, for taxable years ending on or after
16     December 31, 1986, net operating loss carryforwards from
17     taxable years ending prior to December 31, 1986, may not
18     exceed the sum of federal taxable income for the taxable
19     year before net operating loss deduction, plus the excess
20     of addition modifications over subtraction modifications
21     for the taxable year. For taxable years ending prior to
22     December 31, 1986, taxable income may never be an amount in
23     excess of the net operating loss for the taxable year as
24     defined in subsections (c) and (d) of Section 172 of the
25     Internal Revenue Code, provided that when taxable income of

 

 

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1     a corporation (other than a Subchapter S corporation),
2     trust, or estate is less than zero and addition
3     modifications, other than those provided by subparagraph
4     (E) of paragraph (2) of subsection (b) for corporations or
5     subparagraph (E) of paragraph (2) of subsection (c) for
6     trusts and estates, exceed subtraction modifications, an
7     addition modification must be made under those
8     subparagraphs for any other taxable year to which the
9     taxable income less than zero (net operating loss) is
10     applied under Section 172 of the Internal Revenue Code or
11     under subparagraph (E) of paragraph (2) of this subsection
12     (e) applied in conjunction with Section 172 of the Internal
13     Revenue Code.
14         (2) Special rule. For purposes of paragraph (1) of this
15     subsection, the taxable income properly reportable for
16     federal income tax purposes shall mean:
17             (A) Certain life insurance companies. In the case
18         of a life insurance company subject to the tax imposed
19         by Section 801 of the Internal Revenue Code, life
20         insurance company taxable income, plus the amount of
21         distribution from pre-1984 policyholder surplus
22         accounts as calculated under Section 815a of the
23         Internal Revenue Code;
24             (B) Certain other insurance companies. In the case
25         of mutual insurance companies subject to the tax
26         imposed by Section 831 of the Internal Revenue Code,

 

 

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1         insurance company taxable income;
2             (C) Regulated investment companies. In the case of
3         a regulated investment company subject to the tax
4         imposed by Section 852 of the Internal Revenue Code,
5         investment company taxable income;
6             (D) Real estate investment trusts. In the case of a
7         real estate investment trust subject to the tax imposed
8         by Section 857 of the Internal Revenue Code, real
9         estate investment trust taxable income;
10             (E) Consolidated corporations. In the case of a
11         corporation which is a member of an affiliated group of
12         corporations filing a consolidated income tax return
13         for the taxable year for federal income tax purposes,
14         taxable income determined as if such corporation had
15         filed a separate return for federal income tax purposes
16         for the taxable year and each preceding taxable year
17         for which it was a member of an affiliated group. For
18         purposes of this subparagraph, the taxpayer's separate
19         taxable income shall be determined as if the election
20         provided by Section 243(b) (2) of the Internal Revenue
21         Code had been in effect for all such years;
22             (F) Cooperatives. In the case of a cooperative
23         corporation or association, the taxable income of such
24         organization determined in accordance with the
25         provisions of Section 1381 through 1388 of the Internal
26         Revenue Code;

 

 

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1             (G) Subchapter S corporations. In the case of: (i)
2         a Subchapter S corporation for which there is in effect
3         an election for the taxable year under Section 1362 of
4         the Internal Revenue Code, the taxable income of such
5         corporation determined in accordance with Section
6         1363(b) of the Internal Revenue Code, except that
7         taxable income shall take into account those items
8         which are required by Section 1363(b)(1) of the
9         Internal Revenue Code to be separately stated; and (ii)
10         a Subchapter S corporation for which there is in effect
11         a federal election to opt out of the provisions of the
12         Subchapter S Revision Act of 1982 and have applied
13         instead the prior federal Subchapter S rules as in
14         effect on July 1, 1982, the taxable income of such
15         corporation determined in accordance with the federal
16         Subchapter S rules as in effect on July 1, 1982; and
17             (H) Partnerships. In the case of a partnership,
18         taxable income determined in accordance with Section
19         703 of the Internal Revenue Code, except that taxable
20         income shall take into account those items which are
21         required by Section 703(a)(1) to be separately stated
22         but which would be taken into account by an individual
23         in calculating his taxable income.
24         (3) Recapture of business expenses on disposition of
25     asset or business. Notwithstanding any other law to the
26     contrary, if in prior years income from an asset or

 

 

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1     business has been classified as business income and in a
2     later year is demonstrated to be non-business income, then
3     all expenses, without limitation, deducted in such later
4     year and in the 2 immediately preceding taxable years
5     related to that asset or business that generated the
6     non-business income shall be added back and recaptured as
7     business income in the year of the disposition of the asset
8     or business. Such amount shall be apportioned to Illinois
9     using the greater of the apportionment fraction computed
10     for the business under Section 304 of this Act for the
11     taxable year or the average of the apportionment fractions
12     computed for the business under Section 304 of this Act for
13     the taxable year and for the 2 immediately preceding
14     taxable years.
15     (f) Valuation limitation amount.
16         (1) In general. The valuation limitation amount
17     referred to in subsections (a) (2) (G), (c) (2) (I) and
18     (d)(2) (E) is an amount equal to:
19             (A) The sum of the pre-August 1, 1969 appreciation
20         amounts (to the extent consisting of gain reportable
21         under the provisions of Section 1245 or 1250 of the
22         Internal Revenue Code) for all property in respect of
23         which such gain was reported for the taxable year; plus
24             (B) The lesser of (i) the sum of the pre-August 1,
25         1969 appreciation amounts (to the extent consisting of
26         capital gain) for all property in respect of which such

 

 

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1         gain was reported for federal income tax purposes for
2         the taxable year, or (ii) the net capital gain for the
3         taxable year, reduced in either case by any amount of
4         such gain included in the amount determined under
5         subsection (a) (2) (F) or (c) (2) (H).
6         (2) Pre-August 1, 1969 appreciation amount.
7             (A) If the fair market value of property referred
8         to in paragraph (1) was readily ascertainable on August
9         1, 1969, the pre-August 1, 1969 appreciation amount for
10         such property is the lesser of (i) the excess of such
11         fair market value over the taxpayer's basis (for
12         determining gain) for such property on that date
13         (determined under the Internal Revenue Code as in
14         effect on that date), or (ii) the total gain realized
15         and reportable for federal income tax purposes in
16         respect of the sale, exchange or other disposition of
17         such property.
18             (B) If the fair market value of property referred
19         to in paragraph (1) was not readily ascertainable on
20         August 1, 1969, the pre-August 1, 1969 appreciation
21         amount for such property is that amount which bears the
22         same ratio to the total gain reported in respect of the
23         property for federal income tax purposes for the
24         taxable year, as the number of full calendar months in
25         that part of the taxpayer's holding period for the
26         property ending July 31, 1969 bears to the number of

 

 

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1         full calendar months in the taxpayer's entire holding
2         period for the property.
3             (C) The Department shall prescribe such
4         regulations as may be necessary to carry out the
5         purposes of this paragraph.
 
6     (g) Double deductions. Unless specifically provided
7 otherwise, nothing in this Section shall permit the same item
8 to be deducted more than once.
 
9     (h) Legislative intention. Except as expressly provided by
10 this Section there shall be no modifications or limitations on
11 the amounts of income, gain, loss or deduction taken into
12 account in determining gross income, adjusted gross income or
13 taxable income for federal income tax purposes for the taxable
14 year, or in the amount of such items entering into the
15 computation of base income and net income under this Act for
16 such taxable year, whether in respect of property values as of
17 August 1, 1969 or otherwise.
18 (Source: P.A. 93-812, eff. 7-26-04; 93-840, eff. 7-30-04;
19 94-776, eff. 5-19-06; 94-789, eff. 5-19-06; 94-1021, eff.
20 7-12-06; 94-1074, eff. 12-26-06; revised 1-2-07.)
 
21     (35 ILCS 5/247 new)
22     Sec. 247. Family Tax Credit.
23     (a) For taxable years beginning after January 1, 2007, each

 

 

 

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1 taxpayer who is a natural person or is a married couple filing
2 jointly that reports total annual income of $47,000 or less
3 (the "eligibility cap"), is entitled to a refundable tax credit
4 known as the Family Tax Credit in those amounts identified in
5 subsection (b) of this Section. The Family Tax Credit may be
6 claimed only upon proper filing of an Illinois State income tax
7 return by an eligible taxpayer. The eligibility cap shall
8 increase for each tax year beginning after December 31, 2007,
9 by an amount equal to the percentage increase, if any, in the
10 Consumer Price Index ("CPI") published by the U.S. Bureau of
11 Labor Statistics for the immediately preceding tax year,
12 multiplied by the eligibility cap for that immediately
13 preceding tax year.
14     (b) The amount of Family Tax Credit an eligible taxpayer
15 may claim will vary in amount, based on the following table:
 
16
17Total Annual Income Credit
18Less than $16,000 $200
19$16,000 or more but less than $29,000 $350
20$29,000 or more but less than $47,001 $230
21 The dollar ranges of Total Annual Income identified in each
22 category, as well as the value of the credit for that category,
23 shall increase in each tax year beginning after December 31,
24 2007 by an amount equal to the applicable Total Annual Income

 

 

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1 category or credit amount, as the case may be, increased by the
2 percentage increase, if any, in the CPI for the immediately
3 preceding tax year. The Department of Revenue shall update the
4 Total Annual Income category and credit amounts for the Family
5 Tax Credit annually and distribute the updated table with the
6 Illinois personal income tax returns.
7     (c) If the amount of the Family Tax Credit exceeds the
8 income tax liability of an eligible taxpayer, the State shall
9 refund to the taxpayer the difference between the Family Tax
10 Credit and the taxpayer's income tax liability.
11     (d) This Section is exempt from the provisions of Section
12 250 of this Act.
 
13     Section 15. The Use Tax Act is amended by changing Section
14 2 as follows:
 
15     (35 ILCS 105/2)  (from Ch. 120, par. 439.2)
16     Sec. 2. "Use" means the exercise by any person of any right
17 or power over tangible personal property incident to the
18 ownership of that property, except that it does not include the
19 sale of such property in any form as tangible personal property
20 in the regular course of business to the extent that such
21 property is not first subjected to a use for which it was
22 purchased, and does not include the use of such property by its
23 owner for demonstration purposes: Provided that the property
24 purchased is deemed to be purchased for the purpose of resale,

 

 

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1 despite first being used, to the extent to which it is resold
2 as an ingredient of an intentionally produced product or
3 by-product of manufacturing. "Use" does not mean the
4 demonstration use or interim use of tangible personal property
5 by a retailer before he sells that tangible personal property.
6 For watercraft or aircraft, if the period of demonstration use
7 or interim use by the retailer exceeds 18 months, the retailer
8 shall pay on the retailers' original cost price the tax imposed
9 by this Act, and no credit for that tax is permitted if the
10 watercraft or aircraft is subsequently sold by the retailer.
11 "Use" does not mean the physical incorporation of tangible
12 personal property, to the extent not first subjected to a use
13 for which it was purchased, as an ingredient or constituent,
14 into other tangible personal property (a) which is sold in the
15 regular course of business or (b) which the person
16 incorporating such ingredient or constituent therein has
17 undertaken at the time of such purchase to cause to be
18 transported in interstate commerce to destinations outside the
19 State of Illinois: Provided that the property purchased is
20 deemed to be purchased for the purpose of resale, despite first
21 being used, to the extent to which it is resold as an
22 ingredient of an intentionally produced product or by-product
23 of manufacturing.
24     "Watercraft" means a Class 2, Class 3, or Class 4
25 watercraft as defined in Section 3-2 of the Boat Registration
26 and Safety Act, a personal watercraft, or any boat equipped

 

 

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1 with an inboard motor.
2     "Purchase at retail" means the acquisition of the ownership
3 of or title to tangible personal property through a sale at
4 retail.
5     "Purchaser" means anyone who, through a sale at retail,
6 acquires the ownership of tangible personal property for a
7 valuable consideration.
8     "Sale at retail" means any transfer of the ownership of or
9 title to tangible personal property to a purchaser, for the
10 purpose of use, and not for the purpose of resale in any form
11 as tangible personal property to the extent not first subjected
12 to a use for which it was purchased, for a valuable
13 consideration: Provided that the property purchased is deemed
14 to be purchased for the purpose of resale, despite first being
15 used, to the extent to which it is resold as an ingredient of
16 an intentionally produced product or by-product of
17 manufacturing. For this purpose, slag produced as an incident
18 to manufacturing pig iron or steel and sold is considered to be
19 an intentionally produced by-product of manufacturing. "Sale
20 at retail" includes any such transfer made for resale unless
21 made in compliance with Section 2c of the Retailers' Occupation
22 Tax Act, as incorporated by reference into Section 12 of this
23 Act. Transactions whereby the possession of the property is
24 transferred but the seller retains the title as security for
25 payment of the selling price are sales.
26     "Sale at retail" shall also be construed to include any

 

 

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1 Illinois florist's sales transaction in which the purchase
2 order is received in Illinois by a florist and the sale is for
3 use or consumption, but the Illinois florist has a florist in
4 another state deliver the property to the purchaser or the
5 purchaser's donee in such other state.
6     Nonreusable tangible personal property that is used by
7 persons engaged in the business of operating a restaurant,
8 cafeteria, or drive-in is a sale for resale when it is
9 transferred to customers in the ordinary course of business as
10 part of the sale of food or beverages and is used to deliver,
11 package, or consume food or beverages, regardless of where
12 consumption of the food or beverages occurs. Examples of those
13 items include, but are not limited to nonreusable, paper and
14 plastic cups, plates, baskets, boxes, sleeves, buckets or other
15 containers, utensils, straws, placemats, napkins, doggie bags,
16 and wrapping or packaging materials that are transferred to
17 customers as part of the sale of food or beverages in the
18 ordinary course of business.
19     The purchase, employment and transfer of such tangible
20 personal property as newsprint and ink for the primary purpose
21 of conveying news (with or without other information) is not a
22 purchase, use or sale of tangible personal property.
23     "Selling price" means the consideration for a sale valued
24 in money whether received in money or otherwise, including
25 cash, credits, property other than as hereinafter provided, and
26 services, but not including the value of or credit given for

 

 

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1 traded-in tangible personal property where the item that is
2 traded-in is of like kind and character as that which is being
3 sold, and shall be determined without any deduction on account
4 of the cost of the property sold, the cost of materials used,
5 labor or service cost or any other expense whatsoever, but does
6 not include interest or finance charges which appear as
7 separate items on the bill of sale or sales contract nor
8 charges that are added to prices by sellers on account of the
9 seller's tax liability under the "Retailers' Occupation Tax
10 Act", or on account of the seller's duty to collect, from the
11 purchaser, the tax that is imposed by this Act, or on account
12 of the seller's tax liability under Section 8-11-1 of the
13 Illinois Municipal Code, as heretofore and hereafter amended,
14 or on account of the seller's tax liability under the "County
15 Retailers' Occupation Tax Act". Effective December 1, 1985,
16 "selling price" shall include charges that are added to prices
17 by sellers on account of the seller's tax liability under the
18 Cigarette Tax Act, on account of the seller's duty to collect,
19 from the purchaser, the tax imposed under the Cigarette Use Tax
20 Act, and on account of the seller's duty to collect, from the
21 purchaser, any cigarette tax imposed by a home rule unit.
22     The phrase "like kind and character" shall be liberally
23 construed (including but not limited to any form of motor
24 vehicle for any form of motor vehicle, or any kind of farm or
25 agricultural implement for any other kind of farm or
26 agricultural implement), while not including a kind of item

 

 

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1 which, if sold at retail by that retailer, would be exempt from
2 retailers' occupation tax and use tax as an isolated or
3 occasional sale.
4     "Department" means the Department of Revenue.
5     "Person" means any natural individual, firm, partnership,
6 association, joint stock company, joint adventure, public or
7 private corporation, limited liability company, or a receiver,
8 executor, trustee, guardian or other representative appointed
9 by order of any court.
10     "Retailer" means and includes every person engaged in the
11 business of making sales at retail as defined in this Section.
12     A person who holds himself or herself out as being engaged
13 (or who habitually engages) in selling tangible personal
14 property at retail is a retailer hereunder with respect to such
15 sales (and not primarily in a service occupation)
16 notwithstanding the fact that such person designs and produces
17 such tangible personal property on special order for the
18 purchaser and in such a way as to render the property of value
19 only to such purchaser, if such tangible personal property so
20 produced on special order serves substantially the same
21 function as stock or standard items of tangible personal
22 property that are sold at retail.
23     A person whose activities are organized and conducted
24 primarily as a not-for-profit service enterprise, and who
25 engages in selling tangible personal property at retail
26 (whether to the public or merely to members and their guests)

 

 

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1 is a retailer with respect to such transactions, excepting only
2 a person organized and operated exclusively for charitable,
3 religious or educational purposes either (1), to the extent of
4 sales by such person to its members, students, patients or
5 inmates of tangible personal property to be used primarily for
6 the purposes of such person, or (2), to the extent of sales by
7 such person of tangible personal property which is not sold or
8 offered for sale by persons organized for profit. The selling
9 of school books and school supplies by schools at retail to
10 students is not "primarily for the purposes of" the school
11 which does such selling. This paragraph does not apply to nor
12 subject to taxation occasional dinners, social or similar
13 activities of a person organized and operated exclusively for
14 charitable, religious or educational purposes, whether or not
15 such activities are open to the public.
16     A person who is the recipient of a grant or contract under
17 Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
18 serves meals to participants in the federal Nutrition Program
19 for the Elderly in return for contributions established in
20 amount by the individual participant pursuant to a schedule of
21 suggested fees as provided for in the federal Act is not a
22 retailer under this Act with respect to such transactions.
23     Persons who engage in the business of transferring tangible
24 personal property upon the redemption of trading stamps are
25 retailers hereunder when engaged in such business.
26     The isolated or occasional sale of tangible personal

 

 

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1 property at retail by a person who does not hold himself out as
2 being engaged (or who does not habitually engage) in selling
3 such tangible personal property at retail or a sale through a
4 bulk vending machine does not make such person a retailer
5 hereunder. However, any person who is engaged in a business
6 which is not subject to the tax imposed by the "Retailers'
7 Occupation Tax Act" because of involving the sale of or a
8 contract to sell real estate or a construction contract to
9 improve real estate, but who, in the course of conducting such
10 business, transfers tangible personal property to users or
11 consumers in the finished form in which it was purchased, and
12 which does not become real estate, under any provision of a
13 construction contract or real estate sale or real estate sales
14 agreement entered into with some other person arising out of or
15 because of such nontaxable business, is a retailer to the
16 extent of the value of the tangible personal property so
17 transferred. If, in such transaction, a separate charge is made
18 for the tangible personal property so transferred, the value of
19 such property, for the purposes of this Act, is the amount so
20 separately charged, but not less than the cost of such property
21 to the transferor; if no separate charge is made, the value of
22 such property, for the purposes of this Act, is the cost to the
23 transferor of such tangible personal property.
24     "Retailer maintaining a place of business in this State",
25 or any like term, means and includes any of the following
26 retailers:

 

 

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1         1. A retailer having or maintaining within this State,
2     directly or by a subsidiary, an office, distribution house,
3     sales house, warehouse or other place of business, or any
4     agent or other representative operating within this State
5     under the authority of the retailer or its subsidiary,
6     irrespective of whether such place of business or agent or
7     other representative is located here permanently or
8     temporarily, or whether such retailer or subsidiary is
9     licensed to do business in this State. However, the
10     ownership of property that is located at the premises of a
11     printer with which the retailer has contracted for printing
12     and that consists of the final printed product, property
13     that becomes a part of the final printed product, or copy
14     from which the printed product is produced shall not result
15     in the retailer being deemed to have or maintain an office,
16     distribution house, sales house, warehouse, or other place
17     of business within this State.
18         2. A retailer soliciting orders for tangible personal
19     property by means of a telecommunication or television
20     shopping system (which utilizes toll free numbers) which is
21     intended by the retailer to be broadcast by cable
22     television or other means of broadcasting, to consumers
23     located in this State.
24         3. A retailer, pursuant to a contract with a
25     broadcaster or publisher located in this State, soliciting
26     orders for tangible personal property by means of

 

 

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1     advertising which is disseminated primarily to consumers
2     located in this State and only secondarily to bordering
3     jurisdictions.
4         4. A retailer soliciting orders for tangible personal
5     property by mail if the solicitations are substantial and
6     recurring and if the retailer benefits from any banking,
7     financing, debt collection, telecommunication, or
8     marketing activities occurring in this State or benefits
9     from the location in this State of authorized installation,
10     servicing, or repair facilities.
11         5. A retailer that is owned or controlled by the same
12     interests that own or control any retailer engaging in
13     business in the same or similar line of business in this
14     State.
15         6. A retailer having a franchisee or licensee operating
16     under its trade name if the franchisee or licensee is
17     required to collect the tax under this Section.
18         7. A retailer, pursuant to a contract with a cable
19     television operator located in this State, soliciting
20     orders for tangible personal property by means of
21     advertising which is transmitted or distributed over a
22     cable television system in this State.
23         8. A retailer engaging in activities in Illinois, which
24     activities in the state in which the retail business
25     engaging in such activities is located would constitute
26     maintaining a place of business in that state.

 

 

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1     "Bulk vending machine" means a vending machine, containing
2 unsorted confections, nuts, toys, or other items designed
3 primarily to be used or played with by children which, when a
4 coin or coins of a denomination not larger than $0.50 are
5 inserted, are dispensed in equal portions, at random and
6 without selection by the customer.
7 (Source: P.A. 94-1074, eff. 12-26-06.)
 
8     (35 ILCS 105/3-50 rep.)  (from Ch. 120, par. 439.3-50)
9     Section 17. The Use Tax Act is amended by repealing Section
10 3-50.
 
11     Section 20. The Service Use Tax Act is amended by changing
12 Section 2 as follows:
 
13     (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
14     Sec. 2. "Use" means the exercise by any person of any right
15 or power over tangible personal property incident to the
16 ownership of that property, but does not include the sale or
17 use for demonstration by him of that property in any form as
18 tangible personal property in the regular course of business.
19 "Use" does not mean the interim use of tangible personal
20 property nor the physical incorporation of tangible personal
21 property, as an ingredient or constituent, into other tangible
22 personal property, (a) which is sold in the regular course of
23 business or (b) which the person incorporating such ingredient

 

 

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1 or constituent therein has undertaken at the time of such
2 purchase to cause to be transported in interstate commerce to
3 destinations outside the State of Illinois.
4     "Purchased from a serviceman" means the acquisition of the
5 ownership of, or title to, tangible personal property through a
6 sale of service.
7     "Purchaser" means any person who, through a sale of
8 service, acquires the ownership of, or title to, any tangible
9 personal property.
10     "Cost price" means the consideration paid by the serviceman
11 for a purchase valued in money, whether paid in money or
12 otherwise, including cash, credits and services, and shall be
13 determined without any deduction on account of the supplier's
14 cost of the property sold or on account of any other expense
15 incurred by the supplier. When a serviceman contracts out part
16 or all of the services required in his sale of service, it
17 shall be presumed that the cost price to the serviceman of the
18 property transferred to him or her by his or her subcontractor
19 is equal to 50% of the subcontractor's charges to the
20 serviceman in the absence of proof of the consideration paid by
21 the subcontractor for the purchase of such property.
22     "Selling price" means the consideration for a sale valued
23 in money whether received in money or otherwise, including
24 cash, credits and service, and shall be determined without any
25 deduction on account of the serviceman's cost of the property
26 sold, the cost of materials used, labor or service cost or any

 

 

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1 other expense whatsoever, but does not include interest or
2 finance charges which appear as separate items on the bill of
3 sale or sales contract nor charges that are added to prices by
4 sellers on account of the seller's duty to collect, from the
5 purchaser, the tax that is imposed by this Act.
6     "Department" means the Department of Revenue.
7     "Person" means any natural individual, firm, partnership,
8 association, joint stock company, joint venture, public or
9 private corporation, limited liability company, and any
10 receiver, executor, trustee, guardian or other representative
11 appointed by order of any court.
12     "Sale of service" means any transaction except:
13         (1) a retail sale of tangible personal property taxable
14     under the Retailers' Occupation Tax Act or under the Use
15     Tax Act.
16         (2) a sale of tangible personal property for the
17     purpose of resale made in compliance with Section 2c of the
18     Retailers' Occupation Tax Act.
19         (3) except as hereinafter provided, a sale or transfer
20     of tangible personal property as an incident to the
21     rendering of service for or by any governmental body, or
22     for or by any corporation, society, association,
23     foundation or institution organized and operated
24     exclusively for charitable, religious or educational
25     purposes or any not-for-profit corporation, society,
26     association, foundation, institution or organization which

 

 

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1     has no compensated officers or employees and which is
2     organized and operated primarily for the recreation of
3     persons 55 years of age or older. A limited liability
4     company may qualify for the exemption under this paragraph
5     only if the limited liability company is organized and
6     operated exclusively for educational purposes.
7         (4) a sale or transfer of tangible personal property as
8     an incident to the rendering of service for interstate
9     carriers for hire for use as rolling stock moving in
10     interstate commerce or by lessors under a lease of one year
11     or longer, executed or in effect at the time of purchase of
12     personal property, to interstate carriers for hire for use
13     as rolling stock moving in interstate commerce so long as
14     so used by such interstate carriers for hire, and equipment
15     operated by a telecommunications provider, licensed as a
16     common carrier by the Federal Communications Commission,
17     which is permanently installed in or affixed to aircraft
18     moving in interstate commerce.
19         (4a) a sale or transfer of tangible personal property
20     as an incident to the rendering of service for owners,
21     lessors, or shippers of tangible personal property which is
22     utilized by interstate carriers for hire for use as rolling
23     stock moving in interstate commerce so long as so used by
24     interstate carriers for hire, and equipment operated by a
25     telecommunications provider, licensed as a common carrier
26     by the Federal Communications Commission, which is

 

 

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1     permanently installed in or affixed to aircraft moving in
2     interstate commerce.
3         (4a-5) on and after July 1, 2003 and through June 30,
4     2004, a sale or transfer of a motor vehicle of the second
5     division with a gross vehicle weight in excess of 8,000
6     pounds as an incident to the rendering of service if that
7     motor vehicle is subject to the commercial distribution fee
8     imposed under Section 3-815.1 of the Illinois Vehicle Code.
9     Beginning on July 1, 2004 and through June 30, 2005, the
10     use in this State of motor vehicles of the second division:
11     (i) with a gross vehicle weight rating in excess of 8,000
12     pounds; (ii) that are subject to the commercial
13     distribution fee imposed under Section 3-815.1 of the
14     Illinois Vehicle Code; and (iii) that are primarily used
15     for commercial purposes. Through June 30, 2005, this
16     exemption applies to repair and replacement parts added
17     after the initial purchase of such a motor vehicle if that
18     motor vehicle is used in a manner that would qualify for
19     the rolling stock exemption otherwise provided for in this
20     Act. For purposes of this paragraph, "used for commercial
21     purposes" means the transportation of persons or property
22     in furtherance of any commercial or industrial enterprise
23     whether for-hire or not.
24         (5) a sale or transfer of machinery and equipment used
25     primarily in the process of the manufacturing or
26     assembling, either in an existing, an expanded or a new

 

 

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1     manufacturing facility, of tangible personal property for
2     wholesale or retail sale or lease, whether such sale or
3     lease is made directly by the manufacturer or by some other
4     person, whether the materials used in the process are owned
5     by the manufacturer or some other person, or whether such
6     sale or lease is made apart from or as an incident to the
7     seller's engaging in a service occupation and the
8     applicable tax is a Service Use Tax or Service Occupation
9     Tax, rather than Use Tax or Retailers' Occupation Tax.
10         (5a) the repairing, reconditioning or remodeling, for
11     a common carrier by rail, of tangible personal property
12     which belongs to such carrier for hire, and as to which
13     such carrier receives the physical possession of the
14     repaired, reconditioned or remodeled item of tangible
15     personal property in Illinois, and which such carrier
16     transports, or shares with another common carrier in the
17     transportation of such property, out of Illinois on a
18     standard uniform bill of lading showing the person who
19     repaired, reconditioned or remodeled the property to a
20     destination outside Illinois, for use outside Illinois.
21         (5b) a sale or transfer of tangible personal property
22     which is produced by the seller thereof on special order in
23     such a way as to have made the applicable tax the Service
24     Occupation Tax or the Service Use Tax, rather than the
25     Retailers' Occupation Tax or the Use Tax, for an interstate
26     carrier by rail which receives the physical possession of

 

 

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1     such property in Illinois, and which transports such
2     property, or shares with another common carrier in the
3     transportation of such property, out of Illinois on a
4     standard uniform bill of lading showing the seller of the
5     property as the shipper or consignor of such property to a
6     destination outside Illinois, for use outside Illinois.
7         (6) until July 1, 2003, a sale or transfer of
8     distillation machinery and equipment, sold as a unit or kit
9     and assembled or installed by the retailer, which machinery
10     and equipment is certified by the user to be used only for
11     the production of ethyl alcohol that will be used for
12     consumption as motor fuel or as a component of motor fuel
13     for the personal use of such user and not subject to sale
14     or resale.
15         (7) at the election of any serviceman not required to
16     be otherwise registered as a retailer under Section 2a of
17     the Retailers' Occupation Tax Act, made for each fiscal
18     year sales of service in which the aggregate annual cost
19     price of tangible personal property transferred as an
20     incident to the sales of service is less than 35%, or 75%
21     in the case of servicemen transferring prescription drugs
22     or servicemen engaged in graphic arts production, of the
23     aggregate annual total gross receipts from all sales of
24     service. The purchase of such tangible personal property by
25     the serviceman shall be subject to tax under the Retailers'
26     Occupation Tax Act and the Use Tax Act. However, if a

 

 

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1     primary serviceman who has made the election described in
2     this paragraph subcontracts service work to a secondary
3     serviceman who has also made the election described in this
4     paragraph, the primary serviceman does not incur a Use Tax
5     liability if the secondary serviceman (i) has paid or will
6     pay Use Tax on his or her cost price of any tangible
7     personal property transferred to the primary serviceman
8     and (ii) certifies that fact in writing to the primary
9     serviceman.
10     Tangible personal property transferred incident to the
11 completion of a maintenance agreement is exempt from the tax
12 imposed pursuant to this Act.
13     Exemption (5) also includes machinery and equipment used in
14 the general maintenance or repair of such exempt machinery and
15 equipment or for in-house manufacture of exempt machinery and
16 equipment. For the purposes of exemption (5), each of these
17 terms shall have the following meanings: (1) "manufacturing
18 process" shall mean the production of any article of tangible
19 personal property, whether such article is a finished product
20 or an article for use in the process of manufacturing or
21 assembling a different article of tangible personal property,
22 by procedures commonly regarded as manufacturing, processing,
23 fabricating, or refining which changes some existing material
24 or materials into a material with a different form, use or
25 name. In relation to a recognized integrated business composed
26 of a series of operations which collectively constitute

 

 

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1 manufacturing, or individually constitute manufacturing
2 operations, the manufacturing process shall be deemed to
3 commence with the first operation or stage of production in the
4 series, and shall not be deemed to end until the completion of
5 the final product in the last operation or stage of production
6 in the series; and further, for purposes of exemption (5),
7 photoprocessing is deemed to be a manufacturing process of
8 tangible personal property for wholesale or retail sale; (2)
9 "assembling process" shall mean the production of any article
10 of tangible personal property, whether such article is a
11 finished product or an article for use in the process of
12 manufacturing or assembling a different article of tangible
13 personal property, by the combination of existing materials in
14 a manner commonly regarded as assembling which results in a
15 material of a different form, use or name; (3) "machinery"
16 shall mean major mechanical machines or major components of
17 such machines contributing to a manufacturing or assembling
18 process; and (4) "equipment" shall include any independent
19 device or tool separate from any machinery but essential to an
20 integrated manufacturing or assembly process; including
21 computers used primarily in a manufacturer's computer assisted
22 design, computer assisted manufacturing (CAD/CAM) system; or
23 any subunit or assembly comprising a component of any machinery
24 or auxiliary, adjunct or attachment parts of machinery, such as
25 tools, dies, jigs, fixtures, patterns and molds; or any parts
26 which require periodic replacement in the course of normal

 

 

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1 operation; but shall not include hand tools. Equipment includes
2 chemicals or chemicals acting as catalysts but only if the
3 chemicals or chemicals acting as catalysts effect a direct and
4 immediate change upon a product being manufactured or assembled
5 for wholesale or retail sale or lease. The purchaser of such
6 machinery and equipment who has an active resale registration
7 number shall furnish such number to the seller at the time of
8 purchase. The user of such machinery and equipment and tools
9 without an active resale registration number shall prepare a
10 certificate of exemption for each transaction stating facts
11 establishing the exemption for that transaction, which
12 certificate shall be available to the Department for inspection
13 or audit. The Department shall prescribe the form of the
14 certificate.
15     Any informal rulings, opinions or letters issued by the
16 Department in response to an inquiry or request for any opinion
17 from any person regarding the coverage and applicability of
18 exemption (5) to specific devices shall be published,
19 maintained as a public record, and made available for public
20 inspection and copying. If the informal ruling, opinion or
21 letter contains trade secrets or other confidential
22 information, where possible the Department shall delete such
23 information prior to publication. Whenever such informal
24 rulings, opinions, or letters contain any policy of general
25 applicability, the Department shall formulate and adopt such
26 policy as a rule in accordance with the provisions of the

 

 

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1 Illinois Administrative Procedure Act.
2     On and after July 1, 1987, no entity otherwise eligible
3 under exemption (3) of this Section shall make tax free
4 purchases unless it has an active exemption identification
5 number issued by the Department.
6     The purchase, employment and transfer of such tangible
7 personal property as newsprint and ink for the primary purpose
8 of conveying news (with or without other information) is not a
9 purchase, use or sale of service or of tangible personal
10 property within the meaning of this Act.
11     "Serviceman" means any person who is engaged in the
12 occupation of making sales of service.
13     "Sale at retail" means "sale at retail" as defined in the
14 Retailers' Occupation Tax Act.
15     "Supplier" means any person who makes sales of tangible
16 personal property to servicemen for the purpose of resale as an
17 incident to a sale of service.
18     "Serviceman maintaining a place of business in this State",
19 or any like term, means and includes any serviceman:
20         1. having or maintaining within this State, directly or
21     by a subsidiary, an office, distribution house, sales
22     house, warehouse or other place of business, or any agent
23     or other representative operating within this State under
24     the authority of the serviceman or its subsidiary,
25     irrespective of whether such place of business or agent or
26     other representative is located here permanently or

 

 

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1     temporarily, or whether such serviceman or subsidiary is
2     licensed to do business in this State;
3         2. soliciting orders for tangible personal property by
4     means of a telecommunication or television shopping system
5     (which utilizes toll free numbers) which is intended by the
6     retailer to be broadcast by cable television or other means
7     of broadcasting, to consumers located in this State;
8         3. pursuant to a contract with a broadcaster or
9     publisher located in this State, soliciting orders for
10     tangible personal property by means of advertising which is
11     disseminated primarily to consumers located in this State
12     and only secondarily to bordering jurisdictions;
13         4. soliciting orders for tangible personal property by
14     mail if the solicitations are substantial and recurring and
15     if the retailer benefits from any banking, financing, debt
16     collection, telecommunication, or marketing activities
17     occurring in this State or benefits from the location in
18     this State of authorized installation, servicing, or
19     repair facilities;
20         5. being owned or controlled by the same interests
21     which own or control any retailer engaging in business in
22     the same or similar line of business in this State;
23         6. having a franchisee or licensee operating under its
24     trade name if the franchisee or licensee is required to
25     collect the tax under this Section;
26         7. pursuant to a contract with a cable television

 

 

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1     operator located in this State, soliciting orders for
2     tangible personal property by means of advertising which is
3     transmitted or distributed over a cable television system
4     in this State; or
5         8. engaging in activities in Illinois, which
6     activities in the state in which the supply business
7     engaging in such activities is located would constitute
8     maintaining a place of business in that state.
9 (Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24,
10 eff. 6-20-03; 93-1033, eff. 9-3-04.)
 
11     Section 25. The Service Occupation Tax Act is amended by
12 changing Section 2 as follows:
 
13     (35 ILCS 115/2)  (from Ch. 120, par. 439.102)
14     Sec. 2. "Transfer" means any transfer of the title to
15 property or of the ownership of property whether or not the
16 transferor retains title as security for the payment of amounts
17 due him from the transferee.
18     "Cost Price" means the consideration paid by the serviceman
19 for a purchase valued in money, whether paid in money or
20 otherwise, including cash, credits and services, and shall be
21 determined without any deduction on account of the supplier's
22 cost of the property sold or on account of any other expense
23 incurred by the supplier. When a serviceman contracts out part
24 or all of the services required in his sale of service, it

 

 

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1 shall be presumed that the cost price to the serviceman of the
2 property transferred to him by his or her subcontractor is
3 equal to 50% of the subcontractor's charges to the serviceman
4 in the absence of proof of the consideration paid by the
5 subcontractor for the purchase of such property.
6     "Department" means the Department of Revenue.
7     "Person" means any natural individual, firm, partnership,
8 association, joint stock company, joint venture, public or
9 private corporation, limited liability company, and any
10 receiver, executor, trustee, guardian or other representative
11 appointed by order of any court.
12     "Sale of Service" means any transaction except:
13     (a) A retail sale of tangible personal property taxable
14 under the Retailers' Occupation Tax Act or under the Use Tax
15 Act.
16     (b) A sale of tangible personal property for the purpose of
17 resale made in compliance with Section 2c of the Retailers'
18 Occupation Tax Act.
19     (c) Except as hereinafter provided, a sale or transfer of
20 tangible personal property as an incident to the rendering of
21 service for or by any governmental body or for or by any
22 corporation, society, association, foundation or institution
23 organized and operated exclusively for charitable, religious
24 or educational purposes or any not-for-profit corporation,
25 society, association, foundation, institution or organization
26 which has no compensated officers or employees and which is

 

 

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1 organized and operated primarily for the recreation of persons
2 55 years of age or older. A limited liability company may
3 qualify for the exemption under this paragraph only if the
4 limited liability company is organized and operated
5 exclusively for educational purposes.
6     (d) A sale or transfer of tangible personal property as an
7 incident to the rendering of service for interstate carriers
8 for hire for use as rolling stock moving in interstate commerce
9 or lessors under leases of one year or longer, executed or in
10 effect at the time of purchase, to interstate carriers for hire
11 for use as rolling stock moving in interstate commerce, and
12 equipment operated by a telecommunications provider, licensed
13 as a common carrier by the Federal Communications Commission,
14 which is permanently installed in or affixed to aircraft moving
15 in interstate commerce.
16     (d-1) A sale or transfer of tangible personal property as
17 an incident to the rendering of service for owners, lessors or
18 shippers of tangible personal property which is utilized by
19 interstate carriers for hire for use as rolling stock moving in
20 interstate commerce, and equipment operated by a
21 telecommunications provider, licensed as a common carrier by
22 the Federal Communications Commission, which is permanently
23 installed in or affixed to aircraft moving in interstate
24 commerce.
25     (d-1.1) On and after July 1, 2003 and through June 30,
26 2004, a sale or transfer of a motor vehicle of the second

 

 

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1 division with a gross vehicle weight in excess of 8,000 pounds
2 as an incident to the rendering of service if that motor
3 vehicle is subject to the commercial distribution fee imposed
4 under Section 3-815.1 of the Illinois Vehicle Code. Beginning
5 on July 1, 2004 and through June 30, 2005, the use in this
6 State of motor vehicles of the second division: (i) with a
7 gross vehicle weight rating in excess of 8,000 pounds; (ii)
8 that are subject to the commercial distribution fee imposed
9 under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
10 that are primarily used for commercial purposes. Through June
11 30, 2005, this exemption applies to repair and replacement
12 parts added after the initial purchase of such a motor vehicle
13 if that motor vehicle is used in a manner that would qualify
14 for the rolling stock exemption otherwise provided for in this
15 Act. For purposes of this paragraph, "used for commercial
16 purposes" means the transportation of persons or property in
17 furtherance of any commercial or industrial enterprise whether
18 for-hire or not.
19     (d-2) The repairing, reconditioning or remodeling, for a
20 common carrier by rail, of tangible personal property which
21 belongs to such carrier for hire, and as to which such carrier
22 receives the physical possession of the repaired,
23 reconditioned or remodeled item of tangible personal property
24 in Illinois, and which such carrier transports, or shares with
25 another common carrier in the transportation of such property,
26 out of Illinois on a standard uniform bill of lading showing

 

 

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1 the person who repaired, reconditioned or remodeled the
2 property as the shipper or consignor of such property to a
3 destination outside Illinois, for use outside Illinois.
4     (d-3) A sale or transfer of tangible personal property
5 which is produced by the seller thereof on special order in
6 such a way as to have made the applicable tax the Service
7 Occupation Tax or the Service Use Tax, rather than the
8 Retailers' Occupation Tax or the Use Tax, for an interstate
9 carrier by rail which receives the physical possession of such
10 property in Illinois, and which transports such property, or
11 shares with another common carrier in the transportation of
12 such property, out of Illinois on a standard uniform bill of
13 lading showing the seller of the property as the shipper or
14 consignor of such property to a destination outside Illinois,
15 for use outside Illinois.
16     (d-4) Until January 1, 1997, a sale, by a registered
17 serviceman paying tax under this Act to the Department, of
18 special order printed materials delivered outside Illinois and
19 which are not returned to this State, if delivery is made by
20 the seller or agent of the seller, including an agent who
21 causes the product to be delivered outside Illinois by a common
22 carrier or the U.S. postal service.
23     (e) A sale or transfer of machinery and equipment used
24 primarily in the process of the manufacturing or assembling,
25 either in an existing, an expanded or a new manufacturing
26 facility, of tangible personal property for wholesale or retail

 

 

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1 sale or lease, whether such sale or lease is made directly by
2 the manufacturer or by some other person, whether the materials
3 used in the process are owned by the manufacturer or some other
4 person, or whether such sale or lease is made apart from or as
5 an incident to the seller's engaging in a service occupation
6 and the applicable tax is a Service Occupation Tax or Service
7 Use Tax, rather than Retailers' Occupation Tax or Use Tax.
8     (f) Until July 1, 2003, the sale or transfer of
9 distillation machinery and equipment, sold as a unit or kit and
10 assembled or installed by the retailer, which machinery and
11 equipment is certified by the user to be used only for the
12 production of ethyl alcohol that will be used for consumption
13 as motor fuel or as a component of motor fuel for the personal
14 use of such user and not subject to sale or resale.
15     (g) At the election of any serviceman not required to be
16 otherwise registered as a retailer under Section 2a of the
17 Retailers' Occupation Tax Act, made for each fiscal year sales
18 of service in which the aggregate annual cost price of tangible
19 personal property transferred as an incident to the sales of
20 service is less than 35% (75% in the case of servicemen
21 transferring prescription drugs or servicemen engaged in
22 graphic arts production) of the aggregate annual total gross
23 receipts from all sales of service. The purchase of such
24 tangible personal property by the serviceman shall be subject
25 to tax under the Retailers' Occupation Tax Act and the Use Tax
26 Act. However, if a primary serviceman who has made the election

 

 

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1 described in this paragraph subcontracts service work to a
2 secondary serviceman who has also made the election described
3 in this paragraph, the primary serviceman does not incur a Use
4 Tax liability if the secondary serviceman (i) has paid or will
5 pay Use Tax on his or her cost price of any tangible personal
6 property transferred to the primary serviceman and (ii)
7 certifies that fact in writing to the primary serviceman.
8     Tangible personal property transferred incident to the
9 completion of a maintenance agreement is exempt from the tax
10 imposed pursuant to this Act.
11     Exemption (e) also includes machinery and equipment used in
12 the general maintenance or repair of such exempt machinery and
13 equipment or for in-house manufacture of exempt machinery and
14 equipment. For the purposes of exemption (e), each of these
15 terms shall have the following meanings: (1) "manufacturing
16 process" shall mean the production of any article of tangible
17 personal property, whether such article is a finished product
18 or an article for use in the process of manufacturing or
19 assembling a different article of tangible personal property,
20 by procedures commonly regarded as manufacturing, processing,
21 fabricating, or refining which changes some existing material
22 or materials into a material with a different form, use or
23 name. In relation to a recognized integrated business composed
24 of a series of operations which collectively constitute
25 manufacturing, or individually constitute manufacturing
26 operations, the manufacturing process shall be deemed to

 

 

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1 commence with the first operation or stage of production in the
2 series, and shall not be deemed to end until the completion of
3 the final product in the last operation or stage of production
4 in the series; and further for purposes of exemption (e),
5 photoprocessing is deemed to be a manufacturing process of
6 tangible personal property for wholesale or retail sale; (2)
7 "assembling process" shall mean the production of any article
8 of tangible personal property, whether such article is a
9 finished product or an article for use in the process of
10 manufacturing or assembling a different article of tangible
11 personal property, by the combination of existing materials in
12 a manner commonly regarded as assembling which results in a
13 material of a different form, use or name; (3) "machinery"
14 shall mean major mechanical machines or major components of
15 such machines contributing to a manufacturing or assembling
16 process; and (4) "equipment" shall include any independent
17 device or tool separate from any machinery but essential to an
18 integrated manufacturing or assembly process; including
19 computers used primarily in a manufacturer's computer assisted
20 design, computer assisted manufacturing (CAD/CAM) system; or
21 any subunit or assembly comprising a component of any machinery
22 or auxiliary, adjunct or attachment parts of machinery, such as
23 tools, dies, jigs, fixtures, patterns and molds; or any parts
24 which require periodic replacement in the course of normal
25 operation; but shall not include hand tools. Equipment includes
26 chemicals or chemicals acting as catalysts but only if the

 

 

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1 chemicals or chemicals acting as catalysts effect a direct and
2 immediate change upon a product being manufactured or assembled
3 for wholesale or retail sale or lease. The purchaser of such
4 machinery and equipment who has an active resale registration
5 number shall furnish such number to the seller at the time of
6 purchase. The purchaser of such machinery and equipment and
7 tools without an active resale registration number shall
8 furnish to the seller a certificate of exemption for each
9 transaction stating facts establishing the exemption for that
10 transaction, which certificate shall be available to the
11 Department for inspection or audit.
12     Except as provided in Section 2d of this Act, the rolling
13 stock exemption applies to rolling stock used by an interstate
14 carrier for hire, even just between points in Illinois, if such
15 rolling stock transports, for hire, persons whose journeys or
16 property whose shipments originate or terminate outside
17 Illinois.
18     Any informal rulings, opinions or letters issued by the
19 Department in response to an inquiry or request for any opinion
20 from any person regarding the coverage and applicability of
21 exemption (e) to specific devices shall be published,
22 maintained as a public record, and made available for public
23 inspection and copying. If the informal ruling, opinion or
24 letter contains trade secrets or other confidential
25 information, where possible the Department shall delete such
26 information prior to publication. Whenever such informal

 

 

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1 rulings, opinions, or letters contain any policy of general
2 applicability, the Department shall formulate and adopt such
3 policy as a rule in accordance with the provisions of the
4 Illinois Administrative Procedure Act.
5     On and after July 1, 1987, no entity otherwise eligible
6 under exemption (c) of this Section shall make tax free
7 purchases unless it has an active exemption identification
8 number issued by the Department.
9     "Serviceman" means any person who is engaged in the
10 occupation of making sales of service.
11     "Sale at Retail" means "sale at retail" as defined in the
12 Retailers' Occupation Tax Act.
13     "Supplier" means any person who makes sales of tangible
14 personal property to servicemen for the purpose of resale as an
15 incident to a sale of service.
16 (Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24,
17 eff. 6-20-03; 93-1033, eff. 9-3-04.)
 
18     Section 30. The Retailers' Occupation Tax Act is amended by
19 changing Sections 1 and 2-5 as follows:
 
20     (35 ILCS 120/1)  (from Ch. 120, par. 440)
21     Sec. 1. Definitions. "Sale at retail" means any transfer of
22 the ownership of or title to tangible personal property to a
23 purchaser, for the purpose of use or consumption, and not for
24 the purpose of resale in any form as tangible personal property

 

 

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1 to the extent not first subjected to a use for which it was
2 purchased, for a valuable consideration: Provided that the
3 property purchased is deemed to be purchased for the purpose of
4 resale, despite first being used, to the extent to which it is
5 resold as an ingredient of an intentionally produced product or
6 byproduct of manufacturing. For this purpose, slag produced as
7 an incident to manufacturing pig iron or steel and sold is
8 considered to be an intentionally produced byproduct of
9 manufacturing. Transactions whereby the possession of the
10 property is transferred but the seller retains the title as
11 security for payment of the selling price shall be deemed to be
12 sales.
13     "Sale at retail" shall be construed to include any transfer
14 of the ownership of or title to tangible personal property to a
15 purchaser, for use or consumption by any other person to whom
16 such purchaser may transfer the tangible personal property
17 without a valuable consideration, and to include any transfer,
18 whether made for or without a valuable consideration, for
19 resale in any form as tangible personal property unless made in
20 compliance with Section 2c of this Act.
21     Sales of tangible personal property, which property, to the
22 extent not first subjected to a use for which it was purchased,
23 as an ingredient or constituent, goes into and forms a part of
24 tangible personal property subsequently the subject of a "Sale
25 at retail", are not sales at retail as defined in this Act:
26 Provided that the property purchased is deemed to be purchased

 

 

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1 for the purpose of resale, despite first being used, to the
2 extent to which it is resold as an ingredient of an
3 intentionally produced product or byproduct of manufacturing.
4     "Sale at retail" includes all of the following services, as
5 enumerated in the North American Industry Classification
6 System Manual (NAICS), 1997, prepared by the United States
7 Office of Management and Budget:
8         (1) Specialized good warehousing and storage
9     (4931902).
10         (2) Household goods warehousing and storage (4931901).
11         (3) Marinas (7131901).
12         (4) Travel arrangement reservation services (5615).
13         (5) Consumer electronics repair and maintenance
14     (811211).
15         (6) Personal and household goods.
16         (7) Carpet and upholstery cleaning services (56174).
17         (8) Dating services (8129902).
18         (9) Hair, nail, and skin care (81211).
19         (10) Other personal services other than hair, nail,
20     facial, or nonpermanent makeup services (81219).
21         (11) Dry cleaning and laundry, except coin-operated
22     (81232).
23         (12) Consumer goods rental (5322).
24         (13) General goods rental (5323).
25         (14) Diet and weight reducing services (812191).
26         (15) Investigation services (561611).

 

 

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1         (16) Bail bonding (8129901).
2         (17) Telephone answering services (561421).
3         (18) Photographic studios, portrait (541921).
4         (19) Linen supply (812331).
5         (20) Industrial launderers (812332).
6         (21) Interior design services (54141).
7         (22) Computer systems design and related services
8     (5415).
9         (23) Credit bureaus (56145).
10         (24) Collection agencies (56144).
11         (25) Other business services, including copy shops
12     (561439).
13         (26) Automotive repair and maintenance (8111).
14         (27) Parking lots and garages (81293).
15         (28) Motor vehicle towing (48841).
16         (29) Racetracks (711212).
17         (30) Amusement parks and arcades (7131).
18         (31) Bowling Centers (71395).
19         (32) Cable and other program distribution (51322).
20         (33) Circuses (7111901).
21         (34) Coin operated amusement devices, except slots
22     (7139905).
23         (35) Golf courses and country clubs (71391).
24         (36) Fitness and recreational sports centers (711211).
25         (37) Sports teams and clubs (711211).
26         (38) Performing arts companies (7111).

 

 

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1         (39) Miniature golf courses (7139904).
2         (40) Scenic and sightseeing transportation (487).
3         (41) Limousine services (48532).
4         (42) Unscheduled chartered passenger air
5     transportation (481211).
6         (43) Motion picture theaters, except drive-in theaters
7     (512131).
8         (44) Drive-in motion picture theaters (512132).
9     "Sale at retail" shall be construed to include any Illinois
10 florist's sales transaction in which the purchase order is
11 received in Illinois by a florist and the sale is for use or
12 consumption, but the Illinois florist has a florist in another
13 state deliver the property to the purchaser or the purchaser's
14 donee in such other state.
15     Nonreusable tangible personal property that is used by
16 persons engaged in the business of operating a restaurant,
17 cafeteria, or drive-in is a sale for resale when it is
18 transferred to customers in the ordinary course of business as
19 part of the sale of food or beverages and is used to deliver,
20 package, or consume food or beverages, regardless of where
21 consumption of the food or beverages occurs. Examples of those
22 items include, but are not limited to nonreusable, paper and
23 plastic cups, plates, baskets, boxes, sleeves, buckets or other
24 containers, utensils, straws, placemats, napkins, doggie bags,
25 and wrapping or packaging materials that are transferred to
26 customers as part of the sale of food or beverages in the

 

 

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1 ordinary course of business.
2     The purchase, employment and transfer of such tangible
3 personal property as newsprint and ink for the primary purpose
4 of conveying news (with or without other information) is not a
5 purchase, use or sale of tangible personal property.
6     A person whose activities are organized and conducted
7 primarily as a not-for-profit service enterprise, and who
8 engages in selling tangible personal property at retail
9 (whether to the public or merely to members and their guests)
10 is engaged in the business of selling tangible personal
11 property at retail with respect to such transactions, excepting
12 only a person organized and operated exclusively for
13 charitable, religious or educational purposes either (1), to
14 the extent of sales by such person to its members, students,
15 patients or inmates of tangible personal property to be used
16 primarily for the purposes of such person, or (2), to the
17 extent of sales by such person of tangible personal property
18 which is not sold or offered for sale by persons organized for
19 profit. The selling of school books and school supplies by
20 schools at retail to students is not "primarily for the
21 purposes of" the school which does such selling. The provisions
22 of this paragraph shall not apply to nor subject to taxation
23 occasional dinners, socials or similar activities of a person
24 organized and operated exclusively for charitable, religious
25 or educational purposes, whether or not such activities are
26 open to the public.

 

 

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1     A person who is the recipient of a grant or contract under
2 Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
3 serves meals to participants in the federal Nutrition Program
4 for the Elderly in return for contributions established in
5 amount by the individual participant pursuant to a schedule of
6 suggested fees as provided for in the federal Act is not
7 engaged in the business of selling tangible personal property
8 at retail with respect to such transactions.
9     "Purchaser" means anyone who, through a sale at retail,
10 acquires the ownership of or title to tangible personal
11 property for a valuable consideration.
12     "Reseller of motor fuel" means any person engaged in the
13 business of selling or delivering or transferring title of
14 motor fuel to another person other than for use or consumption.
15 No person shall act as a reseller of motor fuel within this
16 State without first being registered as a reseller pursuant to
17 Section 2c or a retailer pursuant to Section 2a.
18     "Selling price" or the "amount of sale" means the
19 consideration for a sale valued in money whether received in
20 money or otherwise, including cash, credits, property, other
21 than as hereinafter provided, and services, but not including
22 the value of or credit given for traded-in tangible personal
23 property where the item that is traded-in is of like kind and
24 character as that which is being sold, and shall be determined
25 without any deduction on account of the cost of the property
26 sold, the cost of materials used, labor or service cost or any

 

 

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1 other expense whatsoever, but does not include charges that are
2 added to prices by sellers on account of the seller's tax
3 liability under this Act, or on account of the seller's duty to
4 collect, from the purchaser, the tax that is imposed by the Use
5 Tax Act, or on account of the seller's tax liability under
6 Section 8-11-1 of the Illinois Municipal Code, as heretofore
7 and hereafter amended, or on account of the seller's tax
8 liability under the County Retailers' Occupation Tax Act, or on
9 account of the seller's tax liability under the Home Rule
10 Municipal Soft Drink Retailers' Occupation Tax, or on account
11 of the seller's tax liability under any tax imposed under the
12 "Regional Transportation Authority Act", approved December 12,
13 1973. Effective December 1, 1985, "selling price" shall include
14 charges that are added to prices by sellers on account of the
15 seller's tax liability under the Cigarette Tax Act, on account
16 of the sellers' duty to collect, from the purchaser, the tax
17 imposed under the Cigarette Use Tax Act, and on account of the
18 seller's duty to collect, from the purchaser, any cigarette tax
19 imposed by a home rule unit.
20     The phrase "like kind and character" shall be liberally
21 construed (including but not limited to any form of motor
22 vehicle for any form of motor vehicle, or any kind of farm or
23 agricultural implement for any other kind of farm or
24 agricultural implement), while not including a kind of item
25 which, if sold at retail by that retailer, would be exempt from
26 retailers' occupation tax and use tax as an isolated or

 

 

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1 occasional sale.
2     "Gross receipts" from the sales of tangible personal
3 property at retail means the total selling price or the amount
4 of such sales, as hereinbefore defined. In the case of charge
5 and time sales, the amount thereof shall be included only as
6 and when payments are received by the seller. Receipts or other
7 consideration derived by a seller from the sale, transfer or
8 assignment of accounts receivable to a wholly owned subsidiary
9 will not be deemed payments prior to the time the purchaser
10 makes payment on such accounts.
11     "Department" means the Department of Revenue.
12     "Person" means any natural individual, firm, partnership,
13 association, joint stock company, joint adventure, public or
14 private corporation, limited liability company, or a receiver,
15 executor, trustee, guardian or other representative appointed
16 by order of any court.
17     The isolated or occasional sale of tangible personal
18 property at retail by a person who does not hold himself out as
19 being engaged (or who does not habitually engage) in selling
20 such tangible personal property at retail, or a sale through a
21 bulk vending machine, does not constitute engaging in a
22 business of selling such tangible personal property at retail
23 within the meaning of this Act; provided that any person who is
24 engaged in a business which is not subject to the tax imposed
25 by this Act because of involving the sale of or a contract to
26 sell real estate or a construction contract to improve real

 

 

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1 estate or a construction contract to engineer, install, and
2 maintain an integrated system of products, but who, in the
3 course of conducting such business, transfers tangible
4 personal property to users or consumers in the finished form in
5 which it was purchased, and which does not become real estate
6 or was not engineered and installed, under any provision of a
7 construction contract or real estate sale or real estate sales
8 agreement entered into with some other person arising out of or
9 because of such nontaxable business, is engaged in the business
10 of selling tangible personal property at retail to the extent
11 of the value of the tangible personal property so transferred.
12 If, in such a transaction, a separate charge is made for the
13 tangible personal property so transferred, the value of such
14 property, for the purpose of this Act, shall be the amount so
15 separately charged, but not less than the cost of such property
16 to the transferor; if no separate charge is made, the value of
17 such property, for the purposes of this Act, is the cost to the
18 transferor of such tangible personal property. Construction
19 contracts for the improvement of real estate consisting of
20 engineering, installation, and maintenance of voice, data,
21 video, security, and all telecommunication systems do not
22 constitute engaging in a business of selling tangible personal
23 property at retail within the meaning of this Act if they are
24 sold at one specified contract price.
25     A person who holds himself or herself out as being engaged
26 (or who habitually engages) in selling tangible personal

 

 

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1 property at retail is a person engaged in the business of
2 selling tangible personal property at retail hereunder with
3 respect to such sales (and not primarily in a service
4 occupation) notwithstanding the fact that such person designs
5 and produces such tangible personal property on special order
6 for the purchaser and in such a way as to render the property
7 of value only to such purchaser, if such tangible personal
8 property so produced on special order serves substantially the
9 same function as stock or standard items of tangible personal
10 property that are sold at retail.
11     Persons who engage in the business of transferring tangible
12 personal property upon the redemption of trading stamps are
13 engaged in the business of selling such property at retail and
14 shall be liable for and shall pay the tax imposed by this Act
15 on the basis of the retail value of the property transferred
16 upon redemption of such stamps.
17     "Bulk vending machine" means a vending machine, containing
18 unsorted confections, nuts, toys, or other items designed
19 primarily to be used or played with by children which, when a
20 coin or coins of a denomination not larger than $0.50 are
21 inserted, are dispensed in equal portions, at random and
22 without selection by the customer.
23 (Source: P.A. 92-213, eff. 1-1-02.)
 
24     (35 ILCS 120/2-5)  (from Ch. 120, par. 441-5)
25     Sec. 2-5. Exemptions. Gross receipts from proceeds from the

 

 

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1 sale of the following tangible personal property are exempt
2 from the tax imposed by this Act:
3     (1) Farm chemicals.
4     (2) Farm machinery and equipment, both new and used,
5 including that manufactured on special order, certified by the
6 purchaser to be used primarily for production agriculture or
7 State or federal agricultural programs, including individual
8 replacement parts for the machinery and equipment, including
9 machinery and equipment purchased for lease, and including
10 implements of husbandry defined in Section 1-130 of the
11 Illinois Vehicle Code, farm machinery and agricultural
12 chemical and fertilizer spreaders, and nurse wagons required to
13 be registered under Section 3-809 of the Illinois Vehicle Code,
14 but excluding other motor vehicles required to be registered
15 under the Illinois Vehicle Code. Horticultural polyhouses or
16 hoop houses used for propagating, growing, or overwintering
17 plants shall be considered farm machinery and equipment under
18 this item (2). Agricultural chemical tender tanks and dry boxes
19 shall include units sold separately from a motor vehicle
20 required to be licensed and units sold mounted on a motor
21 vehicle required to be licensed, if the selling price of the
22 tender is separately stated.
23     Farm machinery and equipment shall include precision
24 farming equipment that is installed or purchased to be
25 installed on farm machinery and equipment including, but not
26 limited to, tractors, harvesters, sprayers, planters, seeders,

 

 

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1 or spreaders. Precision farming equipment includes, but is not
2 limited to, soil testing sensors, computers, monitors,
3 software, global positioning and mapping systems, and other
4 such equipment.
5     Farm machinery and equipment also includes computers,
6 sensors, software, and related equipment used primarily in the
7 computer-assisted operation of production agriculture
8 facilities, equipment, and activities such as, but not limited
9 to, the collection, monitoring, and correlation of animal and
10 crop data for the purpose of formulating animal diets and
11 agricultural chemicals. This item (7) is exempt from the
12 provisions of Section 2-70.
13     (3) Until July 1, 2003, distillation machinery and
14 equipment, sold as a unit or kit, assembled or installed by the
15 retailer, certified by the user to be used only for the
16 production of ethyl alcohol that will be used for consumption
17 as motor fuel or as a component of motor fuel for the personal
18 use of the user, and not subject to sale or resale.
19     (4) Until July 1, 2003 and beginning again September 1,
20 2004, graphic arts machinery and equipment, including repair
21 and replacement parts, both new and used, and including that
22 manufactured on special order or purchased for lease, certified
23 by the purchaser to be used primarily for graphic arts
24 production. Equipment includes chemicals or chemicals acting
25 as catalysts but only if the chemicals or chemicals acting as
26 catalysts effect a direct and immediate change upon a graphic

 

 

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1 arts product.
2     (5) (Blank). A motor vehicle of the first division, a motor
3 vehicle of the second division that is a self-contained motor
4 vehicle designed or permanently converted to provide living
5 quarters for recreational, camping, or travel use, with direct
6 walk through access to the living quarters from the driver's
7 seat, or a motor vehicle of the second division that is of the
8 van configuration designed for the transportation of not less
9 than 7 nor more than 16 passengers, as defined in Section 1-146
10 of the Illinois Vehicle Code, that is used for automobile
11 renting, as defined in the Automobile Renting Occupation and
12 Use Tax Act.
13     (6) Personal property sold by a teacher-sponsored student
14 organization affiliated with an elementary or secondary school
15 located in Illinois.
16     (7) Until July 1, 2003, proceeds of that portion of the
17 selling price of a passenger car the sale of which is subject
18 to the Replacement Vehicle Tax.
19     (8) Personal property sold to an Illinois county fair
20 association for use in conducting, operating, or promoting the
21 county fair.
22     (9) Personal property sold to a not-for-profit arts or
23 cultural organization that establishes, by proof required by
24 the Department by rule, that it has received an exemption under
25 Section 501(c)(3) of the Internal Revenue Code and that is
26 organized and operated primarily for the presentation or

 

 

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1 support of arts or cultural programming, activities, or
2 services. These organizations include, but are not limited to,
3 music and dramatic arts organizations such as symphony
4 orchestras and theatrical groups, arts and cultural service
5 organizations, local arts councils, visual arts organizations,
6 and media arts organizations. On and after the effective date
7 of this amendatory Act of the 92nd General Assembly, however,
8 an entity otherwise eligible for this exemption shall not make
9 tax-free purchases unless it has an active identification
10 number issued by the Department.
11     (10) Personal property sold by a corporation, society,
12 association, foundation, institution, or organization, other
13 than a limited liability company, that is organized and
14 operated as a not-for-profit service enterprise for the benefit
15 of persons 65 years of age or older if the personal property
16 was not purchased by the enterprise for the purpose of resale
17 by the enterprise.
18     (11) Personal property sold to a governmental body, to a
19 corporation, society, association, foundation, or institution
20 organized and operated exclusively for charitable, religious,
21 or educational purposes, or to a not-for-profit corporation,
22 society, association, foundation, institution, or organization
23 that has no compensated officers or employees and that is
24 organized and operated primarily for the recreation of persons
25 55 years of age or older. A limited liability company may
26 qualify for the exemption under this paragraph only if the

 

 

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1 limited liability company is organized and operated
2 exclusively for educational purposes. On and after July 1,
3 1987, however, no entity otherwise eligible for this exemption
4 shall make tax-free purchases unless it has an active
5 identification number issued by the Department.
6     (12) Tangible personal property sold to interstate
7 carriers for hire for use as rolling stock moving in interstate
8 commerce or to lessors under leases of one year or longer
9 executed or in effect at the time of purchase by interstate
10 carriers for hire for use as rolling stock moving in interstate
11 commerce and equipment operated by a telecommunications
12 provider, licensed as a common carrier by the Federal
13 Communications Commission, which is permanently installed in
14 or affixed to aircraft moving in interstate commerce.
15     (12-5) On and after July 1, 2003 and through June 30, 2004,
16 motor vehicles of the second division with a gross vehicle
17 weight in excess of 8,000 pounds that are subject to the
18 commercial distribution fee imposed under Section 3-815.1 of
19 the Illinois Vehicle Code. Beginning on July 1, 2004 and
20 through June 30, 2005, the use in this State of motor vehicles
21 of the second division: (i) with a gross vehicle weight rating
22 in excess of 8,000 pounds; (ii) that are subject to the
23 commercial distribution fee imposed under Section 3-815.1 of
24 the Illinois Vehicle Code; and (iii) that are primarily used
25 for commercial purposes. Through June 30, 2005, this exemption
26 applies to repair and replacement parts added after the initial

 

 

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1 purchase of such a motor vehicle if that motor vehicle is used
2 in a manner that would qualify for the rolling stock exemption
3 otherwise provided for in this Act. For purposes of this
4 paragraph, "used for commercial purposes" means the
5 transportation of persons or property in furtherance of any
6 commercial or industrial enterprise whether for-hire or not.
7     (13) Proceeds from sales to owners, lessors, or shippers of
8 tangible personal property that is utilized by interstate
9 carriers for hire for use as rolling stock moving in interstate
10 commerce and equipment operated by a telecommunications
11 provider, licensed as a common carrier by the Federal
12 Communications Commission, which is permanently installed in
13 or affixed to aircraft moving in interstate commerce.
14     (14) (Blank). Machinery and equipment that will be used by
15 the purchaser, or a lessee of the purchaser, primarily in the
16 process of manufacturing or assembling tangible personal
17 property for wholesale or retail sale or lease, whether the
18 sale or lease is made directly by the manufacturer or by some
19 other person, whether the materials used in the process are
20 owned by the manufacturer or some other person, or whether the
21 sale or lease is made apart from or as an incident to the
22 seller's engaging in the service occupation of producing
23 machines, tools, dies, jigs, patterns, gauges, or other similar
24 items of no commercial value on special order for a particular
25 purchaser.
26     (15) Proceeds of mandatory service charges separately

 

 

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1 stated on customers' bills for purchase and consumption of food
2 and beverages, to the extent that the proceeds of the service
3 charge are in fact turned over as tips or as a substitute for
4 tips to the employees who participate directly in preparing,
5 serving, hosting or cleaning up the food or beverage function
6 with respect to which the service charge is imposed.
7     (16) Petroleum products sold to a purchaser if the seller
8 is prohibited by federal law from charging tax to the
9 purchaser.
10     (17) Tangible personal property sold to a common carrier by
11 rail or motor that receives the physical possession of the
12 property in Illinois and that transports the property, or
13 shares with another common carrier in the transportation of the
14 property, out of Illinois on a standard uniform bill of lading
15 showing the seller of the property as the shipper or consignor
16 of the property to a destination outside Illinois, for use
17 outside Illinois.
18     (18) Legal tender, currency, medallions, or gold or silver
19 coinage issued by the State of Illinois, the government of the
20 United States of America, or the government of any foreign
21 country, and bullion.
22     (19) Until July 1 2003, oil field exploration, drilling,
23 and production equipment, including (i) rigs and parts of rigs,
24 rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
25 tubular goods, including casing and drill strings, (iii) pumps
26 and pump-jack units, (iv) storage tanks and flow lines, (v) any

 

 

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1 individual replacement part for oil field exploration,
2 drilling, and production equipment, and (vi) machinery and
3 equipment purchased for lease; but excluding motor vehicles
4 required to be registered under the Illinois Vehicle Code.
5     (20) Photoprocessing machinery and equipment, including
6 repair and replacement parts, both new and used, including that
7 manufactured on special order, certified by the purchaser to be
8 used primarily for photoprocessing, and including
9 photoprocessing machinery and equipment purchased for lease.
10     (21) Until July 1, 2003, coal exploration, mining,
11 offhighway hauling, processing, maintenance, and reclamation
12 equipment, including replacement parts and equipment, and
13 including equipment purchased for lease, but excluding motor
14 vehicles required to be registered under the Illinois Vehicle
15 Code.
16     (22) Fuel and petroleum products sold to or used by an air
17 carrier, certified by the carrier to be used for consumption,
18 shipment, or storage in the conduct of its business as an air
19 common carrier, for a flight destined for or returning from a
20 location or locations outside the United States without regard
21 to previous or subsequent domestic stopovers.
22     (23) A transaction in which the purchase order is received
23 by a florist who is located outside Illinois, but who has a
24 florist located in Illinois deliver the property to the
25 purchaser or the purchaser's donee in Illinois.
26     (24) Fuel consumed or used in the operation of ships,

 

 

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1 barges, or vessels that are used primarily in or for the
2 transportation of property or the conveyance of persons for
3 hire on rivers bordering on this State if the fuel is delivered
4 by the seller to the purchaser's barge, ship, or vessel while
5 it is afloat upon that bordering river.
6     (25) Except as provided in item (25-5) of this Section, a
7 motor vehicle sold in this State to a nonresident even though
8 the motor vehicle is delivered to the nonresident in this
9 State, if the motor vehicle is not to be titled in this State,
10 and if a drive-away permit is issued to the motor vehicle as
11 provided in Section 3-603 of the Illinois Vehicle Code or if
12 the nonresident purchaser has vehicle registration plates to
13 transfer to the motor vehicle upon returning to his or her home
14 state. The issuance of the drive-away permit or having the
15 out-of-state registration plates to be transferred is prima
16 facie evidence that the motor vehicle will not be titled in
17 this State.
18     (25-5) The exemption under item (25) does not apply if the
19 state in which the motor vehicle will be titled does not allow
20 a reciprocal exemption for a motor vehicle sold and delivered
21 in that state to an Illinois resident but titled in Illinois.
22 The tax collected under this Act on the sale of a motor vehicle
23 in this State to a resident of another state that does not
24 allow a reciprocal exemption shall be imposed at a rate equal
25 to the state's rate of tax on taxable property in the state in
26 which the purchaser is a resident, except that the tax shall

 

 

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1 not exceed the tax that would otherwise be imposed under this
2 Act. At the time of the sale, the purchaser shall execute a
3 statement, signed under penalty of perjury, of his or her
4 intent to title the vehicle in the state in which the purchaser
5 is a resident within 30 days after the sale and of the fact of
6 the payment to the State of Illinois of tax in an amount
7 equivalent to the state's rate of tax on taxable property in
8 his or her state of residence and shall submit the statement to
9 the appropriate tax collection agency in his or her state of
10 residence. In addition, the retailer must retain a signed copy
11 of the statement in his or her records. Nothing in this item
12 shall be construed to require the removal of the vehicle from
13 this state following the filing of an intent to title the
14 vehicle in the purchaser's state of residence if the purchaser
15 titles the vehicle in his or her state of residence within 30
16 days after the date of sale. The tax collected under this Act
17 in accordance with this item (25-5) shall be proportionately
18 distributed as if the tax were collected at the 6.25% general
19 rate imposed under this Act.
20     (26) Semen used for artificial insemination of livestock
21 for direct agricultural production.
22     (27) Horses, or interests in horses, registered with and
23 meeting the requirements of any of the Arabian Horse Club
24 Registry of America, Appaloosa Horse Club, American Quarter
25 Horse Association, United States Trotting Association, or
26 Jockey Club, as appropriate, used for purposes of breeding or

 

 

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1 racing for prizes.
2     (28) Computers and communications equipment utilized for
3 any hospital purpose and equipment used in the diagnosis,
4 analysis, or treatment of hospital patients sold to a lessor
5 who leases the equipment, under a lease of one year or longer
6 executed or in effect at the time of the purchase, to a
7 hospital that has been issued an active tax exemption
8 identification number by the Department under Section 1g of
9 this Act.
10     (29) Personal property sold to a lessor who leases the
11 property, under a lease of one year or longer executed or in
12 effect at the time of the purchase, to a governmental body that
13 has been issued an active tax exemption identification number
14 by the Department under Section 1g of this Act.
15     (30) Beginning with taxable years ending on or after
16 December 31, 1995 and ending with taxable years ending on or
17 before December 31, 2004, personal property that is donated for
18 disaster relief to be used in a State or federally declared
19 disaster area in Illinois or bordering Illinois by a
20 manufacturer or retailer that is registered in this State to a
21 corporation, society, association, foundation, or institution
22 that has been issued a sales tax exemption identification
23 number by the Department that assists victims of the disaster
24 who reside within the declared disaster area.
25     (31) Beginning with taxable years ending on or after
26 December 31, 1995 and ending with taxable years ending on or

 

 

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1 before December 31, 2004, personal property that is used in the
2 performance of infrastructure repairs in this State, including
3 but not limited to municipal roads and streets, access roads,
4 bridges, sidewalks, waste disposal systems, water and sewer
5 line extensions, water distribution and purification
6 facilities, storm water drainage and retention facilities, and
7 sewage treatment facilities, resulting from a State or
8 federally declared disaster in Illinois or bordering Illinois
9 when such repairs are initiated on facilities located in the
10 declared disaster area within 6 months after the disaster.
11     (32) Beginning July 1, 1999, game or game birds sold at a
12 "game breeding and hunting preserve area" or an "exotic game
13 hunting area" as those terms are used in the Wildlife Code or
14 at a hunting enclosure approved through rules adopted by the
15 Department of Natural Resources. This paragraph is exempt from
16 the provisions of Section 2-70.
17     (33) A motor vehicle, as that term is defined in Section
18 1-146 of the Illinois Vehicle Code, that is donated to a
19 corporation, limited liability company, society, association,
20 foundation, or institution that is determined by the Department
21 to be organized and operated exclusively for educational
22 purposes. For purposes of this exemption, "a corporation,
23 limited liability company, society, association, foundation,
24 or institution organized and operated exclusively for
25 educational purposes" means all tax-supported public schools,
26 private schools that offer systematic instruction in useful

 

 

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1 branches of learning by methods common to public schools and
2 that compare favorably in their scope and intensity with the
3 course of study presented in tax-supported schools, and
4 vocational or technical schools or institutes organized and
5 operated exclusively to provide a course of study of not less
6 than 6 weeks duration and designed to prepare individuals to
7 follow a trade or to pursue a manual, technical, mechanical,
8 industrial, business, or commercial occupation.
9     (34) Beginning January 1, 2000, personal property,
10 including food, purchased through fundraising events for the
11 benefit of a public or private elementary or secondary school,
12 a group of those schools, or one or more school districts if
13 the events are sponsored by an entity recognized by the school
14 district that consists primarily of volunteers and includes
15 parents and teachers of the school children. This paragraph
16 does not apply to fundraising events (i) for the benefit of
17 private home instruction or (ii) for which the fundraising
18 entity purchases the personal property sold at the events from
19 another individual or entity that sold the property for the
20 purpose of resale by the fundraising entity and that profits
21 from the sale to the fundraising entity. This paragraph is
22 exempt from the provisions of Section 2-70.
23     (35) Beginning January 1, 2000 and through December 31,
24 2001, new or used automatic vending machines that prepare and
25 serve hot food and beverages, including coffee, soup, and other
26 items, and replacement parts for these machines. Beginning

 

 

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1 January 1, 2002 and through June 30, 2003, machines and parts
2 for machines used in commercial, coin-operated amusement and
3 vending business if a use or occupation tax is paid on the
4 gross receipts derived from the use of the commercial,
5 coin-operated amusement and vending machines. This paragraph
6 is exempt from the provisions of Section 2-70.
7     (35-5) Beginning August 23, 2001 and through June 30, 2011,
8 food for human consumption that is to be consumed off the
9 premises where it is sold (other than alcoholic beverages, soft
10 drinks, and food that has been prepared for immediate
11 consumption) and prescription and nonprescription medicines,
12 drugs, medical appliances, and insulin, urine testing
13 materials, syringes, and needles used by diabetics, for human
14 use, when purchased for use by a person receiving medical
15 assistance under Article 5 of the Illinois Public Aid Code who
16 resides in a licensed long-term care facility, as defined in
17 the Nursing Home Care Act.
18     (36) Beginning August 2, 2001, computers and
19 communications equipment utilized for any hospital purpose and
20 equipment used in the diagnosis, analysis, or treatment of
21 hospital patients sold to a lessor who leases the equipment,
22 under a lease of one year or longer executed or in effect at
23 the time of the purchase, to a hospital that has been issued an
24 active tax exemption identification number by the Department
25 under Section 1g of this Act. This paragraph is exempt from the
26 provisions of Section 2-70.

 

 

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1     (37) Beginning August 2, 2001, personal property sold to a
2 lessor who leases the property, under a lease of one year or
3 longer executed or in effect at the time of the purchase, to a
4 governmental body that has been issued an active tax exemption
5 identification number by the Department under Section 1g of
6 this Act. This paragraph is exempt from the provisions of
7 Section 2-70.
8     (38) Beginning on January 1, 2002 and through June 30,
9 2011, tangible personal property purchased from an Illinois
10 retailer by a taxpayer engaged in centralized purchasing
11 activities in Illinois who will, upon receipt of the property
12 in Illinois, temporarily store the property in Illinois (i) for
13 the purpose of subsequently transporting it outside this State
14 for use or consumption thereafter solely outside this State or
15 (ii) for the purpose of being processed, fabricated, or
16 manufactured into, attached to, or incorporated into other
17 tangible personal property to be transported outside this State
18 and thereafter used or consumed solely outside this State. The
19 Director of Revenue shall, pursuant to rules adopted in
20 accordance with the Illinois Administrative Procedure Act,
21 issue a permit to any taxpayer in good standing with the
22 Department who is eligible for the exemption under this
23 paragraph (38). The permit issued under this paragraph (38)
24 shall authorize the holder, to the extent and in the manner
25 specified in the rules adopted under this Act, to purchase
26 tangible personal property from a retailer exempt from the

 

 

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1 taxes imposed by this Act. Taxpayers shall maintain all
2 necessary books and records to substantiate the use and
3 consumption of all such tangible personal property outside of
4 the State of Illinois.
5 (Source: P.A. 93-23, eff. 6-20-03; 93-24, eff. 6-20-03; 93-840,
6 eff. 7-30-04; 93-1033, eff. 9-3-04; 93-1068, eff. 1-15-05;
7 94-1002, eff. 7-3-06.)
 
8     (35 ILCS 120/1d rep.)  (from Ch. 120, par. 440d)
9     (35 ILCS 120/1f rep.)  (from Ch. 120, par. 440f)
10     Section 33. The Retailers' Occupation Tax Act is amended by
11 repealing Sections 1d and 1f.
 
12     Section 35. The Property Tax Code is amended by changing
13 Sections 18-255, 20-15, and 21-30 and by adding Section 18-178
14 as follows:
 
15     (35 ILCS 200/18-178 new)
16     Sec. 18-178. Education tax abatement. Beginning with taxes
17 levied for 2007 (payable in 2008), the county clerk must
18 determine the final extension for educational purposes for all
19 taxable property in a school district located in the county or
20 for the taxable property of that part of a school district
21 located in the county, taking into account the maximum rate,
22 levy, and extension authorized under the Property Tax Extension
23 Limitation Law, the Truth in Taxation Law, and any other

 

 

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1 statute. The county clerk must then abate the extension for
2 educational purposes for each school district or part of a
3 school district in the county by the amount of the minimum
4 property tax relief grant and, if applicable, the supplemental
5 property tax relief grant, certified to the county clerk for
6 that school district or part of a school district by the
7 Department of Revenue under Section 6z-65 of the State Finance
8 Act. When the final extension for educational purposes has been
9 determined and abated, the county clerk must notify the
10 Department of Revenue. The county clerk must determine the
11 prorated portion of the certified minimum and, if applicable,
12 supplemental property tax relief grants allocable to each
13 taxpayer in a given school district based on the tax rate for
14 educational purposes for that school district and the aggregate
15 relief granted to that school district. The extension amount
16 for educational purposes, as originally calculated before
17 abatement, is the official, final extension for educational
18 purposes and must be used for all other purposes, including
19 determining the maximum rate, levy, and extension authorized
20 under the Property Tax Extension Limitation Law, the Truth in
21 Taxation Law, and any other statute and the maximum amount of
22 tax anticipation warrants under Sections 17-16 and 34-23 of the
23 School Code.
 
24     (35 ILCS 200/18-255)
25     Sec. 18-255. Abstract of assessments and extensions. When

 

 

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1 the collector's books are completed, the county clerk shall
2 make a complete statement of the assessment and extensions, in
3 conformity to the instructions of the Department. The clerk
4 shall certify the statement to the Department. Beginning with
5 the 2007 levy year, the Department shall require the statement
6 to include a separate listing of the amount of any extension
7 that is abated under Section 18-178 of this Act.
8 (Source: Laws 1943, vol. 1, p. 1136; P.A. 88-455.)
 
9     (35 ILCS 200/20-15)
10     Sec. 20-15. Information on bill or separate statement. The
11 amount of tax due and rates shown on the tax bill pursuant to
12 this Section shall be net of any abatement under Section
13 18-178. There shall be printed on each bill, or on a separate
14 slip which shall be mailed with the bill:
15         (a) a statement itemizing the rate at which taxes have
16     been extended for each of the taxing districts in the
17     county in whose district the property is located, and in
18     those counties utilizing electronic data processing
19     equipment the dollar amount of tax due from the person
20     assessed allocable to each of those taxing districts,
21     including a separate statement of the dollar amount of tax
22     due which is allocable to a tax levied under the Illinois
23     Local Library Act or to any other tax levied by a
24     municipality or township for public library purposes,
25         (b) a separate statement for each of the taxing

 

 

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1     districts of the dollar amount of tax due which is
2     allocable to a tax levied under the Illinois Pension Code
3     or to any other tax levied by a municipality or township
4     for public pension or retirement purposes,
5         (c) the total tax rate,
6         (d) the total amount of tax due, and
7         (e) the amount by which the total tax and the tax
8     allocable to each taxing district differs from the
9     taxpayer's last prior tax bill, and
10         (f) the amount of tax abated under Section 18-178
11     labeled "Portion of your Education Related Property Taxes
12     paid by the State of Illinois".
13     The county treasurer shall ensure that only those taxing
14 districts in which a parcel of property is located shall be
15 listed on the bill for that property.
16     In all counties the statement shall also provide:
17         (1) the property index number or other suitable
18     description,
19         (2) the assessment of the property,
20         (3) the equalization factors imposed by the county and
21     by the Department, and
22         (4) the equalized assessment resulting from the
23     application of the equalization factors to the basic
24     assessment.
25     In all counties which do not classify property for purposes
26 of taxation, for property on which a single family residence is

 

 

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1 situated the statement shall also include a statement to
2 reflect the fair cash value determined for the property. In all
3 counties which classify property for purposes of taxation in
4 accordance with Section 4 of Article IX of the Illinois
5 Constitution, for parcels of residential property in the lowest
6 assessment classification the statement shall also include a
7 statement to reflect the fair cash value determined for the
8 property.
9     In all counties, the statement shall include information
10 that certain taxpayers may be eligible for the Senior Citizens
11 and Disabled Persons Property Tax Relief and Pharmaceutical
12 Assistance Act and that applications are available from the
13 Illinois Department of Revenue.
14     In counties which use the estimated or accelerated billing
15 methods, these statements shall only be provided with the final
16 installment of taxes due, except that the statement under item
17 (f) shall be included with both installments in those counties
18 under estimated or accelerated billing methods, the first
19 billing showing the amount deducted from the first installment,
20 and the final billing showing the total tax abated for the levy
21 year under Section 18-178. The provisions of this Section
22 create a mandatory statutory duty. They are not merely
23 directory or discretionary. The failure or neglect of the
24 collector to mail the bill, or the failure of the taxpayer to
25 receive the bill, shall not affect the validity of any tax, or
26 the liability for the payment of any tax.

 

 

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1 (Source: P.A. 91-699, eff. 1-1-01.)
 
2     (35 ILCS 200/21-30)
3     Sec. 21-30. Accelerated billing. Except as provided in this
4 Section, Section 9-260, and Section 21-40, in counties with
5 3,000,000 or more inhabitants, by January 31 annually,
6 estimated tax bills setting out the first installment of
7 property taxes for the preceding year, payable in that year,
8 shall be prepared and mailed. The first installment of taxes on
9 the estimated tax bills shall be computed at 50% of the total
10 of each tax bill before the abatement of taxes under Section
11 18-178 for the preceding year, less an estimate of one-half of
12 the minimum school district property tax relief grant for the
13 current year determined based on information available. If,
14 prior to the preparation of the estimated tax bills, a
15 certificate of error has been either approved by a court on or
16 before November 30 of the preceding year or certified pursuant
17 to Section 14-15 on or before November 30 of the preceding
18 year, then the first installment of taxes on the estimated tax
19 bills shall be computed at 50% of the total taxes before the
20 abatement of taxes under Section 18-178 for the preceding year
21 as corrected by the certificate of error, less an estimate of
22 one-half of the minimum school district property tax relief
23 grant for the current year determined based on information
24 available. By June 30 annually, actual tax bills shall be
25 prepared and mailed. These bills shall set out total taxes due

 

 

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1 and the amount of estimated taxes billed in the first
2 installment, and shall state the balance of taxes due for that
3 year as represented by the sum derived from subtracting the
4 amount of the first installment from the total taxes due for
5 that year.
6     The county board may provide by ordinance, in counties with
7 3,000,000 or more inhabitants, for taxes to be paid in 4
8 installments. For the levy year for which the ordinance is
9 first effective and each subsequent year, estimated tax bills
10 setting out the first, second, and third installment of taxes
11 for the preceding year, payable in that year, shall be prepared
12 and mailed not later than the date specified by ordinance. Each
13 installment on estimated tax bills shall be computed at 25% of
14 the total of each tax bill for the preceding year. By the date
15 specified in the ordinance, actual tax bills shall be prepared
16 and mailed. These bills shall set out total taxes due and the
17 amount of estimated taxes billed in the first, second, and
18 third installments and shall state the balance of taxes due for
19 that year as represented by the sum derived from subtracting
20 the amount of the estimated installments from the total taxes
21 due for that year.
22     The county board of any county with less than 3,000,000
23 inhabitants may, by ordinance or resolution, adopt an
24 accelerated method of tax billing. The county board may
25 subsequently rescind the ordinance or resolution and revert to
26 the method otherwise provided for in this Code.

 

 

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1 (Source: P.A. 93-560, eff. 8-20-03; 94-312, eff. 7-25-05.)
 
2     Section 40. The Motor Fuel Tax Law is amended by changing
3 Section 2b as follows:
 
4     (35 ILCS 505/2b)  (from Ch. 120, par. 418b)
5     Sec. 2b. In addition to the tax collection and reporting
6 responsibilities imposed elsewhere in this Act, a person who is
7 required to pay the tax imposed by Section 2a of this Act shall
8 pay the tax to the Department by return showing all fuel
9 purchased, acquired or received and sold, distributed or used
10 during the preceding calendar month including losses of fuel as
11 the result of evaporation or shrinkage due to temperature
12 variations, and such other reasonable information as the
13 Department may require. Losses of fuel as the result of
14 evaporation or shrinkage due to temperature variations may not
15 exceed 1% of the total gallons in storage at the beginning of
16 the month, plus the receipts of gallonage during the month,
17 minus the gallonage remaining in storage at the end of the
18 month. Any loss reported that is in excess of this amount shall
19 be subject to the tax imposed by Section 2a of this Law. On and
20 after July 1, 2001, for each 6-month period January through
21 June, net losses of fuel (for each category of fuel that is
22 required to be reported on a return) as the result of
23 evaporation or shrinkage due to temperature variations may not
24 exceed 1% of the total gallons in storage at the beginning of

 

 

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1 each January, plus the receipts of gallonage each January
2 through June, minus the gallonage remaining in storage at the
3 end of each June. On and after July 1, 2001, for each 6-month
4 period July through December, net losses of fuel (for each
5 category of fuel that is required to be reported on a return)
6 as the result of evaporation or shrinkage due to temperature
7 variations may not exceed 1% of the total gallons in storage at
8 the beginning of each July, plus the receipts of gallonage each
9 July through December, minus the gallonage remaining in storage
10 at the end of each December. Any net loss reported that is in
11 excess of this amount shall be subject to the tax imposed by
12 Section 2a of this Law. For purposes of this Section, "net
13 loss" means the number of gallons gained through temperature
14 variations minus the number of gallons lost through temperature
15 variations or evaporation for each of the respective 6-month
16 periods.
17     The return shall be prescribed by the Department and shall
18 be filed between the 1st and 20th days of each calendar month.
19 The Department may, in its discretion, combine the returns
20 filed under this Section, Section 5, and Section 5a of this
21 Act. The return must be accompanied by appropriate
22 computer-generated magnetic media supporting schedule data in
23 the format required by the Department, unless, as provided by
24 rule, the Department grants an exception upon petition of a
25 taxpayer. If the return is filed timely, the seller shall take
26 a discount of 2% through June 30, 2003 and 1.75% thereafter

 

 

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1 which is allowed to reimburse the seller for the expenses
2 incurred in keeping records, preparing and filing returns,
3 collecting and remitting the tax and supplying data to the
4 Department on request. The discount, however, shall be
5 applicable only to the amount of payment which accompanies a
6 return that is filed timely in accordance with this Section.
7 (Source: P.A. 92-30, eff. 7-1-01; 93-32, eff. 6-20-03.)
 
8     Section 45. The School Code is amended by changing Section
9 18-8.05 and by adding Sections 18-8.15 and 18-25 as follows:
 
10     (105 ILCS 5/18-8.05)
11     Sec. 18-8.05. Basis for apportionment of general State
12 financial aid and supplemental general State aid to the common
13 schools for the 1998-1999 and subsequent school years.
 
14 (A) General Provisions.
15     (1) The provisions of this Section apply to the 1998-1999
16 and subsequent school years. The system of general State
17 financial aid provided for in this Section is designed to
18 assure that, through a combination of State financial aid and
19 required local resources, the financial support provided each
20 pupil in Average Daily Attendance equals or exceeds a
21 prescribed per pupil Foundation Level. This formula approach
22 imputes a level of per pupil Available Local Resources and
23 provides for the basis to calculate a per pupil level of

 

 

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1 general State financial aid that, when added to Available Local
2 Resources, equals or exceeds the Foundation Level. The amount
3 of per pupil general State financial aid for school districts,
4 in general, varies in inverse relation to Available Local
5 Resources. Per pupil amounts are based upon each school
6 district's Average Daily Attendance as that term is defined in
7 this Section.
8     (2) In addition to general State financial aid, school
9 districts with specified levels or concentrations of pupils
10 from low income households are eligible to receive supplemental
11 general State financial aid grants as provided pursuant to
12 subsection (H). The supplemental State aid grants provided for
13 school districts under subsection (H) shall be appropriated for
14 distribution to school districts as part of the same line item
15 in which the general State financial aid of school districts is
16 appropriated under this Section.
17     (3) To receive financial assistance under this Section,
18 school districts are required to file claims with the State
19 Board of Education, subject to the following requirements:
20         (a) Any school district which fails for any given
21     school year to maintain school as required by law, or to
22     maintain a recognized school is not eligible to file for
23     such school year any claim upon the Common School Fund. In
24     case of nonrecognition of one or more attendance centers in
25     a school district otherwise operating recognized schools,
26     the claim of the district shall be reduced in the

 

 

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1     proportion which the Average Daily Attendance in the
2     attendance center or centers bear to the Average Daily
3     Attendance in the school district. A "recognized school"
4     means any public school which meets the standards as
5     established for recognition by the State Board of
6     Education. A school district or attendance center not
7     having recognition status at the end of a school term is
8     entitled to receive State aid payments due upon a legal
9     claim which was filed while it was recognized.
10         (b) School district claims filed under this Section are
11     subject to Sections 18-9, 18-10, and 18-12, except as
12     otherwise provided in this Section.
13         (c) If a school district operates a full year school
14     under Section 10-19.1, the general State aid to the school
15     district shall be determined by the State Board of
16     Education in accordance with this Section as near as may be
17     applicable.
18         (c-5) "ECI" means the Employment Cost Index as
19     published by the U.S. Bureau of Labor Statistics.
20         (d) (Blank).
21     (4) Except as provided in subsections (H) and (L), the
22 board of any district receiving any of the grants provided for
23 in this Section may apply those funds to any fund so received
24 for which that board is authorized to make expenditures by law.
25     School districts are not required to exert a minimum
26 Operating Tax Rate in order to qualify for assistance under

 

 

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1 this Section.
2     (5) As used in this Section the following terms, when
3 capitalized, shall have the meaning ascribed herein:
4         (a) "Average Daily Attendance": A count of pupil
5     attendance in school, averaged as provided for in
6     subsection (C) and utilized in deriving per pupil financial
7     support levels.
8         (b) "Available Local Resources": A computation of
9     local financial support, calculated on the basis of Average
10     Daily Attendance and derived as provided pursuant to
11     subsection (D).
12         (c) "Corporate Personal Property Replacement Taxes":
13     Funds paid to local school districts pursuant to "An Act in
14     relation to the abolition of ad valorem personal property
15     tax and the replacement of revenues lost thereby, and
16     amending and repealing certain Acts and parts of Acts in
17     connection therewith", certified August 14, 1979, as
18     amended (Public Act 81-1st S.S.-1).
19         (d) "Foundation Level": A prescribed level of per pupil
20     financial support as provided for in subsection (B).
21         (e) "Operating Tax Rate": All school district property
22     taxes extended for all purposes, except Bond and Interest,
23     Summer School, Rent, Capital Improvement, and Vocational
24     Education Building purposes.
 
25 (B) Foundation Level.

 

 

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1     (1) The Foundation Level is a figure established by the
2 State representing the minimum level of per pupil financial
3 support that should be available to provide for the basic
4 education of each pupil in Average Daily Attendance. As set
5 forth in this Section, each school district is assumed to exert
6 a sufficient local taxing effort such that, in combination with
7 the aggregate of general State financial aid provided the
8 district, an aggregate of State and local resources are
9 available to meet the basic education needs of pupils in the
10 district.
11     (2) For the 1998-1999 school year, the Foundation Level of
12 support is $4,225. For the 1999-2000 school year, the
13 Foundation Level of support is $4,325. For the 2000-2001 school
14 year, the Foundation Level of support is $4,425. For the
15 2001-2002 school year and 2002-2003 school year, the Foundation
16 Level of support is $4,560. For the 2003-2004 school year, the
17 Foundation Level of support is $4,810. For the 2004-2005 school
18 year, the Foundation Level of support is $4,964. For the
19 2005-2006 school year, the Foundation Level of support is
20 $5,164.
21     (3) For the 2006-2007 school year and each school year
22 thereafter, the Foundation Level of support is $5,334 or such
23 greater amount as may be established by law by the General
24 Assembly.
25     (4) For the 2007-2008 school year, the Foundation Level of
26 support is $5,952. For each school year thereafter, the

 

 

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1 Foundation Level of support shall be equal to the Foundation
2 Level of support for the immediately preceding school year,
3 increased by the percentage increase, if any, in the ECI
4 published for the immediately preceding school year, or such
5 greater amount as may be established by law by the General
6 Assembly.
 
7 (C) Average Daily Attendance.
8     (1) For purposes of calculating general State aid pursuant
9 to subsection (E), an Average Daily Attendance figure shall be
10 utilized. The Average Daily Attendance figure for formula
11 calculation purposes shall be the monthly average of the actual
12 number of pupils in attendance of each school district, as
13 further averaged for the best 3 months of pupil attendance for
14 each school district. In compiling the figures for the number
15 of pupils in attendance, school districts and the State Board
16 of Education shall, for purposes of general State aid funding,
17 conform attendance figures to the requirements of subsection
18 (F).
19     (2) The Average Daily Attendance figures utilized in
20 subsection (E) shall be the requisite attendance data for the
21 school year immediately preceding the school year for which
22 general State aid is being calculated or the average of the
23 attendance data for the 3 preceding school years, whichever is
24 greater. The Average Daily Attendance figures utilized in
25 subsection (H) shall be the requisite attendance data for the

 

 

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1 school year immediately preceding the school year for which
2 general State aid is being calculated.
 
3 (D) Available Local Resources.
4     (1) For purposes of calculating general State aid pursuant
5 to subsection (E), a representation of Available Local
6 Resources per pupil, as that term is defined and determined in
7 this subsection, shall be utilized. Available Local Resources
8 per pupil shall include a calculated dollar amount representing
9 local school district revenues from local property taxes and
10 from Corporate Personal Property Replacement Taxes, expressed
11 on the basis of pupils in Average Daily Attendance. Calculation
12 of Available Local Resources shall exclude any tax amnesty
13 funds received as a result of Public Act 93-26.
14     (2) In determining a school district's revenue from local
15 property taxes, the State Board of Education shall utilize the
16 equalized assessed valuation of all taxable property of each
17 school district as of September 30 of the previous year. The
18 equalized assessed valuation utilized shall be obtained and
19 determined as provided in subsection (G).
20     (3) For school districts maintaining grades kindergarten
21 through 12, local property tax revenues per pupil shall be
22 calculated as the product of the applicable equalized assessed
23 valuation for the district multiplied by 3.00%, and divided by
24 the district's Average Daily Attendance figure. For school
25 districts maintaining grades kindergarten through 8, local

 

 

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1 property tax revenues per pupil shall be calculated as the
2 product of the applicable equalized assessed valuation for the
3 district multiplied by 2.30%, and divided by the district's
4 Average Daily Attendance figure. For school districts
5 maintaining grades 9 through 12, local property tax revenues
6 per pupil shall be the applicable equalized assessed valuation
7 of the district multiplied by 1.05%, and divided by the
8 district's Average Daily Attendance figure.
9     For partial elementary unit districts created pursuant to
10 Article 11E of this Code, local property tax revenues per pupil
11 shall be calculated as the product of the equalized assessed
12 valuation for property within the elementary and high school
13 classification of the partial elementary unit district
14 multiplied by 2.06% and divided by the Average Daily Attendance
15 figure for grades kindergarten through 8, plus the product of
16 the equalized assessed valuation for property within the high
17 school only classification of the partial elementary unit
18 district multiplied by 0.94% and divided by the Average Daily
19 Attendance figure for grades 9 through 12.
20     (4) The Corporate Personal Property Replacement Taxes paid
21 to each school district during the calendar year 2 years before
22 the calendar year in which a school year begins, divided by the
23 Average Daily Attendance figure for that district, shall be
24 added to the local property tax revenues per pupil as derived
25 by the application of the immediately preceding paragraph (3).
26 The sum of these per pupil figures for each school district

 

 

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1 shall constitute Available Local Resources as that term is
2 utilized in subsection (E) in the calculation of general State
3 aid.
 
4 (E) Computation of General State Aid.
5     (1) For each school year, the amount of general State aid
6 allotted to a school district shall be computed by the State
7 Board of Education as provided in this subsection.
8     (2) For any school district for which Available Local
9 Resources per pupil is less than the product of 0.93 times the
10 Foundation Level, general State aid for that district shall be
11 calculated as an amount equal to the Foundation Level minus
12 Available Local Resources, multiplied by the Average Daily
13 Attendance of the school district.
14     (3) For any school district for which Available Local
15 Resources per pupil is equal to or greater than the product of
16 0.93 times the Foundation Level and less than the product of
17 1.75 times the Foundation Level, the general State aid per
18 pupil shall be a decimal proportion of the Foundation Level
19 derived using a linear algorithm. Under this linear algorithm,
20 the calculated general State aid per pupil shall decline in
21 direct linear fashion from 0.07 times the Foundation Level for
22 a school district with Available Local Resources equal to the
23 product of 0.93 times the Foundation Level, to 0.05 times the
24 Foundation Level for a school district with Available Local
25 Resources equal to the product of 1.75 times the Foundation

 

 

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1 Level. The allocation of general State aid for school districts
2 subject to this paragraph 3 shall be the calculated general
3 State aid per pupil figure multiplied by the Average Daily
4 Attendance of the school district.
5     (4) For any school district for which Available Local
6 Resources per pupil equals or exceeds the product of 1.75 times
7 the Foundation Level, the general State aid for the school
8 district shall be calculated as the product of $218 multiplied
9 by the Average Daily Attendance of the school district.
10     (5) The amount of general State aid allocated to a school
11 district for the 1999-2000 school year meeting the requirements
12 set forth in paragraph (4) of subsection (G) shall be increased
13 by an amount equal to the general State aid that would have
14 been received by the district for the 1998-1999 school year by
15 utilizing the Extension Limitation Equalized Assessed
16 Valuation as calculated in paragraph (4) of subsection (G) less
17 the general State aid allotted for the 1998-1999 school year.
18 This amount shall be deemed a one time increase, and shall not
19 affect any future general State aid allocations.
 
20 (F) Compilation of Average Daily Attendance.
21     (1) Each school district shall, by July 1 of each year,
22 submit to the State Board of Education, on forms prescribed by
23 the State Board of Education, attendance figures for the school
24 year that began in the preceding calendar year. The attendance
25 information so transmitted shall identify the average daily

 

 

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1 attendance figures for each month of the school year. Beginning
2 with the general State aid claim form for the 2002-2003 school
3 year, districts shall calculate Average Daily Attendance as
4 provided in subdivisions (a), (b), and (c) of this paragraph
5 (1).
6         (a) In districts that do not hold year-round classes,
7     days of attendance in August shall be added to the month of
8     September and any days of attendance in June shall be added
9     to the month of May.
10         (b) In districts in which all buildings hold year-round
11     classes, days of attendance in July and August shall be
12     added to the month of September and any days of attendance
13     in June shall be added to the month of May.
14         (c) In districts in which some buildings, but not all,
15     hold year-round classes, for the non-year-round buildings,
16     days of attendance in August shall be added to the month of
17     September and any days of attendance in June shall be added
18     to the month of May. The average daily attendance for the
19     year-round buildings shall be computed as provided in
20     subdivision (b) of this paragraph (1). To calculate the
21     Average Daily Attendance for the district, the average
22     daily attendance for the year-round buildings shall be
23     multiplied by the days in session for the non-year-round
24     buildings for each month and added to the monthly
25     attendance of the non-year-round buildings.
26     Except as otherwise provided in this Section, days of

 

 

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1 attendance by pupils shall be counted only for sessions of not
2 less than 5 clock hours of school work per day under direct
3 supervision of: (i) teachers, or (ii) non-teaching personnel or
4 volunteer personnel when engaging in non-teaching duties and
5 supervising in those instances specified in subsection (a) of
6 Section 10-22.34 and paragraph 10 of Section 34-18, with pupils
7 of legal school age and in kindergarten and grades 1 through
8 12.
9     Days of attendance by tuition pupils shall be accredited
10 only to the districts that pay the tuition to a recognized
11 school.
12     (2) Days of attendance by pupils of less than 5 clock hours
13 of school shall be subject to the following provisions in the
14 compilation of Average Daily Attendance.
15         (a) Pupils regularly enrolled in a public school for
16     only a part of the school day may be counted on the basis
17     of 1/6 day for every class hour of instruction of 40
18     minutes or more attended pursuant to such enrollment,
19     unless a pupil is enrolled in a block-schedule format of 80
20     minutes or more of instruction, in which case the pupil may
21     be counted on the basis of the proportion of minutes of
22     school work completed each day to the minimum number of
23     minutes that school work is required to be held that day.
24         (b) Days of attendance may be less than 5 clock hours
25     on the opening and closing of the school term, and upon the
26     first day of pupil attendance, if preceded by a day or days

 

 

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1     utilized as an institute or teachers' workshop.
2         (c) A session of 4 or more clock hours may be counted
3     as a day of attendance upon certification by the regional
4     superintendent, and approved by the State Superintendent
5     of Education to the extent that the district has been
6     forced to use daily multiple sessions.
7         (d) A session of 3 or more clock hours may be counted
8     as a day of attendance (1) when the remainder of the school
9     day or at least 2 hours in the evening of that day is
10     utilized for an in-service training program for teachers,
11     up to a maximum of 5 days per school year of which a
12     maximum of 4 days of such 5 days may be used for
13     parent-teacher conferences, provided a district conducts
14     an in-service training program for teachers which has been
15     approved by the State Superintendent of Education; or, in
16     lieu of 4 such days, 2 full days may be used, in which
17     event each such day may be counted as a day of attendance;
18     and (2) when days in addition to those provided in item (1)
19     are scheduled by a school pursuant to its school
20     improvement plan adopted under Article 34 or its revised or
21     amended school improvement plan adopted under Article 2,
22     provided that (i) such sessions of 3 or more clock hours
23     are scheduled to occur at regular intervals, (ii) the
24     remainder of the school days in which such sessions occur
25     are utilized for in-service training programs or other
26     staff development activities for teachers, and (iii) a

 

 

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1     sufficient number of minutes of school work under the
2     direct supervision of teachers are added to the school days
3     between such regularly scheduled sessions to accumulate
4     not less than the number of minutes by which such sessions
5     of 3 or more clock hours fall short of 5 clock hours. Any
6     full days used for the purposes of this paragraph shall not
7     be considered for computing average daily attendance. Days
8     scheduled for in-service training programs, staff
9     development activities, or parent-teacher conferences may
10     be scheduled separately for different grade levels and
11     different attendance centers of the district.
12         (e) A session of not less than one clock hour of
13     teaching hospitalized or homebound pupils on-site or by
14     telephone to the classroom may be counted as 1/2 day of
15     attendance, however these pupils must receive 4 or more
16     clock hours of instruction to be counted for a full day of
17     attendance.
18         (f) A session of at least 4 clock hours may be counted
19     as a day of attendance for first grade pupils, and pupils
20     in full day kindergartens, and a session of 2 or more hours
21     may be counted as 1/2 day of attendance by pupils in
22     kindergartens which provide only 1/2 day of attendance.
23         (g) For children with disabilities who are below the
24     age of 6 years and who cannot attend 2 or more clock hours
25     because of their disability or immaturity, a session of not
26     less than one clock hour may be counted as 1/2 day of

 

 

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1     attendance; however for such children whose educational
2     needs so require a session of 4 or more clock hours may be
3     counted as a full day of attendance.
4         (h) A recognized kindergarten which provides for only
5     1/2 day of attendance by each pupil shall not have more
6     than 1/2 day of attendance counted in any one day. However,
7     kindergartens may count 2 1/2 days of attendance in any 5
8     consecutive school days. When a pupil attends such a
9     kindergarten for 2 half days on any one school day, the
10     pupil shall have the following day as a day absent from
11     school, unless the school district obtains permission in
12     writing from the State Superintendent of Education.
13     Attendance at kindergartens which provide for a full day of
14     attendance by each pupil shall be counted the same as
15     attendance by first grade pupils. Only the first year of
16     attendance in one kindergarten shall be counted, except in
17     case of children who entered the kindergarten in their
18     fifth year whose educational development requires a second
19     year of kindergarten as determined under the rules and
20     regulations of the State Board of Education.
21         (i) On the days when the Prairie State Achievement
22     Examination is administered under subsection (c) of
23     Section 2-3.64 of this Code, the day of attendance for a
24     pupil whose school day must be shortened to accommodate
25     required testing procedures may be less than 5 clock hours
26     and shall be counted towards the 176 days of actual pupil

 

 

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1     attendance required under Section 10-19 of this Code,
2     provided that a sufficient number of minutes of school work
3     in excess of 5 clock hours are first completed on other
4     school days to compensate for the loss of school work on
5     the examination days.
 
6 (G) Equalized Assessed Valuation Data.
7     (1) For purposes of the calculation of Available Local
8 Resources required pursuant to subsection (D), the State Board
9 of Education shall secure from the Department of Revenue the
10 value as equalized or assessed by the Department of Revenue of
11 all taxable property of every school district, together with
12 (i) the applicable tax rate used in extending taxes for the
13 funds of the district as of September 30 of the previous year
14 and (ii) the limiting rate for all school districts subject to
15 property tax extension limitations as imposed under the
16 Property Tax Extension Limitation Law.
17     The Department of Revenue shall add to the equalized
18 assessed value of all taxable property of each school district
19 situated entirely or partially within a county that is or was
20 subject to the alternative general homestead exemption
21 provisions of Section 15-176 of the Property Tax Code (a) an
22 amount equal to the total amount by which the homestead
23 exemption allowed under Section 15-176 of the Property Tax Code
24 for real property situated in that school district exceeds the
25 total amount that would have been allowed in that school

 

 

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1 district if the maximum reduction under Section 15-176 was (i)
2 $4,500 in Cook County or $3,500 in all other counties in tax
3 year 2003 or (ii) $5,000 in all counties in tax year 2004 and
4 thereafter and (b) an amount equal to the aggregate amount for
5 the taxable year of all additional exemptions under Section
6 15-175 of the Property Tax Code for owners with a household
7 income of $30,000 or less. The county clerk of any county that
8 is or was subject to the alternative general homestead
9 exemption provisions of Section 15-176 of the Property Tax Code
10 shall annually calculate and certify to the Department of
11 Revenue for each school district all homestead exemption
12 amounts under Section 15-176 of the Property Tax Code and all
13 amounts of additional exemptions under Section 15-175 of the
14 Property Tax Code for owners with a household income of $30,000
15 or less. It is the intent of this paragraph that if the general
16 homestead exemption for a parcel of property is determined
17 under Section 15-176 of the Property Tax Code rather than
18 Section 15-175, then the calculation of Available Local
19 Resources shall not be affected by the difference, if any,
20 between the amount of the general homestead exemption allowed
21 for that parcel of property under Section 15-176 of the
22 Property Tax Code and the amount that would have been allowed
23 had the general homestead exemption for that parcel of property
24 been determined under Section 15-175 of the Property Tax Code.
25 It is further the intent of this paragraph that if additional
26 exemptions are allowed under Section 15-175 of the Property Tax

 

 

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1 Code for owners with a household income of less than $30,000,
2 then the calculation of Available Local Resources shall not be
3 affected by the difference, if any, because of those additional
4 exemptions.
5     This equalized assessed valuation, as adjusted further by
6 the requirements of this subsection, shall be utilized in the
7 calculation of Available Local Resources.
8     (2) The equalized assessed valuation in paragraph (1) shall
9 be adjusted, as applicable, in the following manner:
10         (a) For the purposes of calculating State aid under
11     this Section, with respect to any part of a school district
12     within a redevelopment project area in respect to which a
13     municipality has adopted tax increment allocation
14     financing pursuant to the Tax Increment Allocation
15     Redevelopment Act, Sections 11-74.4-1 through 11-74.4-11
16     of the Illinois Municipal Code or the Industrial Jobs
17     Recovery Law, Sections 11-74.6-1 through 11-74.6-50 of the
18     Illinois Municipal Code, no part of the current equalized
19     assessed valuation of real property located in any such
20     project area which is attributable to an increase above the
21     total initial equalized assessed valuation of such
22     property shall be used as part of the equalized assessed
23     valuation of the district, until such time as all
24     redevelopment project costs have been paid, as provided in
25     Section 11-74.4-8 of the Tax Increment Allocation
26     Redevelopment Act or in Section 11-74.6-35 of the

 

 

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1     Industrial Jobs Recovery Law. For the purpose of the
2     equalized assessed valuation of the district, the total
3     initial equalized assessed valuation or the current
4     equalized assessed valuation, whichever is lower, shall be
5     used until such time as all redevelopment project costs
6     have been paid.
7         (b) The real property equalized assessed valuation for
8     a school district shall be adjusted by subtracting from the
9     real property value as equalized or assessed by the
10     Department of Revenue for the district an amount computed
11     by dividing the amount of any abatement of taxes under
12     Section 18-170 of the Property Tax Code by 3.00% for a
13     district maintaining grades kindergarten through 12, by
14     2.30% for a district maintaining grades kindergarten
15     through 8, or by 1.05% for a district maintaining grades 9
16     through 12 and adjusted by an amount computed by dividing
17     the amount of any abatement of taxes under subsection (a)
18     of Section 18-165 of the Property Tax Code by the same
19     percentage rates for district type as specified in this
20     subparagraph (b).
21     (3) For the 1999-2000 school year and each school year
22 thereafter, if a school district meets all of the criteria of
23 this subsection (G)(3), the school district's Available Local
24 Resources shall be calculated under subsection (D) using the
25 district's Extension Limitation Equalized Assessed Valuation
26 as calculated under this subsection (G)(3).

 

 

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1     For purposes of this subsection (G)(3) the following terms
2 shall have the following meanings:
3         "Budget Year": The school year for which general State
4     aid is calculated and awarded under subsection (E).
5         "Base Tax Year": The property tax levy year used to
6     calculate the Budget Year allocation of general State aid.
7         "Preceding Tax Year": The property tax levy year
8     immediately preceding the Base Tax Year.
9         "Base Tax Year's Tax Extension": The product of the
10     equalized assessed valuation utilized by the County Clerk
11     in the Base Tax Year multiplied by the limiting rate as
12     calculated by the County Clerk and defined in the Property
13     Tax Extension Limitation Law.
14         "Preceding Tax Year's Tax Extension": The product of
15     the equalized assessed valuation utilized by the County
16     Clerk in the Preceding Tax Year multiplied by the Operating
17     Tax Rate as defined in subsection (A).
18         "Extension Limitation Ratio": A numerical ratio,
19     certified by the County Clerk, in which the numerator is
20     the Base Tax Year's Tax Extension and the denominator is
21     the Preceding Tax Year's Tax Extension.
22         "Operating Tax Rate": The operating tax rate as defined
23     in subsection (A).
24     If a school district is subject to property tax extension
25 limitations as imposed under the Property Tax Extension
26 Limitation Law, the State Board of Education shall calculate

 

 

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1 the Extension Limitation Equalized Assessed Valuation of that
2 district. For the 1999-2000 school year, the Extension
3 Limitation Equalized Assessed Valuation of a school district as
4 calculated by the State Board of Education shall be equal to
5 the product of the district's 1996 Equalized Assessed Valuation
6 and the district's Extension Limitation Ratio. For the
7 2000-2001 school year and each school year thereafter, the
8 Extension Limitation Equalized Assessed Valuation of a school
9 district as calculated by the State Board of Education shall be
10 equal to the product of the Equalized Assessed Valuation last
11 used in the calculation of general State aid and the district's
12 Extension Limitation Ratio. If the Extension Limitation
13 Equalized Assessed Valuation of a school district as calculated
14 under this subsection (G)(3) is less than the district's
15 equalized assessed valuation as calculated pursuant to
16 subsections (G)(1) and (G)(2), then for purposes of calculating
17 the district's general State aid for the Budget Year pursuant
18 to subsection (E), that Extension Limitation Equalized
19 Assessed Valuation shall be utilized to calculate the
20 district's Available Local Resources under subsection (D).
21     Partial elementary unit districts created in accordance
22 with Article 11E of this Code shall not be eligible for the
23 adjustment in this subsection (G)(3) until the fifth year
24 following the effective date of the reorganization.
25     (4) For the purposes of calculating general State aid for
26 the 1999-2000 school year only, if a school district

 

 

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1 experienced a triennial reassessment on the equalized assessed
2 valuation used in calculating its general State financial aid
3 apportionment for the 1998-1999 school year, the State Board of
4 Education shall calculate the Extension Limitation Equalized
5 Assessed Valuation that would have been used to calculate the
6 district's 1998-1999 general State aid. This amount shall equal
7 the product of the equalized assessed valuation used to
8 calculate general State aid for the 1997-1998 school year and
9 the district's Extension Limitation Ratio. If the Extension
10 Limitation Equalized Assessed Valuation of the school district
11 as calculated under this paragraph (4) is less than the
12 district's equalized assessed valuation utilized in
13 calculating the district's 1998-1999 general State aid
14 allocation, then for purposes of calculating the district's
15 general State aid pursuant to paragraph (5) of subsection (E),
16 that Extension Limitation Equalized Assessed Valuation shall
17 be utilized to calculate the district's Available Local
18 Resources.
19     (5) For school districts having a majority of their
20 equalized assessed valuation in any county except Cook, DuPage,
21 Kane, Lake, McHenry, or Will, if the amount of general State
22 aid allocated to the school district for the 1999-2000 school
23 year under the provisions of subsection (E), (H), and (J) of
24 this Section is less than the amount of general State aid
25 allocated to the district for the 1998-1999 school year under
26 these subsections, then the general State aid of the district

 

 

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1 for the 1999-2000 school year only shall be increased by the
2 difference between these amounts. The total payments made under
3 this paragraph (5) shall not exceed $14,000,000. Claims shall
4 be prorated if they exceed $14,000,000.
 
5 (H) Supplemental General State Aid.
6     (1) In addition to the general State aid a school district
7 is allotted pursuant to subsection (E), qualifying school
8 districts shall receive a grant, paid in conjunction with a
9 district's payments of general State aid, for supplemental
10 general State aid based upon the concentration level of
11 children from low-income households within the school
12 district. Supplemental State aid grants provided for school
13 districts under this subsection shall be appropriated for
14 distribution to school districts as part of the same line item
15 in which the general State financial aid of school districts is
16 appropriated under this Section. If the appropriation in any
17 fiscal year for general State aid and supplemental general
18 State aid is insufficient to pay the amounts required under the
19 general State aid and supplemental general State aid
20 calculations, then the State Board of Education shall ensure
21 that each school district receives the full amount due for
22 general State aid and the remainder of the appropriation shall
23 be used for supplemental general State aid, which the State
24 Board of Education shall calculate and pay to eligible
25 districts on a prorated basis.

 

 

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1     (1.5) This paragraph (1.5) applies only to those school
2 years preceding the 2003-2004 school year. For purposes of this
3 subsection (H), the term "Low-Income Concentration Level"
4 shall be the low-income eligible pupil count from the most
5 recently available federal census divided by the Average Daily
6 Attendance of the school district. If, however, (i) the
7 percentage decrease from the 2 most recent federal censuses in
8 the low-income eligible pupil count of a high school district
9 with fewer than 400 students exceeds by 75% or more the
10 percentage change in the total low-income eligible pupil count
11 of contiguous elementary school districts, whose boundaries
12 are coterminous with the high school district, or (ii) a high
13 school district within 2 counties and serving 5 elementary
14 school districts, whose boundaries are coterminous with the
15 high school district, has a percentage decrease from the 2 most
16 recent federal censuses in the low-income eligible pupil count
17 and there is a percentage increase in the total low-income
18 eligible pupil count of a majority of the elementary school
19 districts in excess of 50% from the 2 most recent federal
20 censuses, then the high school district's low-income eligible
21 pupil count from the earlier federal census shall be the number
22 used as the low-income eligible pupil count for the high school
23 district, for purposes of this subsection (H). The changes made
24 to this paragraph (1) by Public Act 92-28 shall apply to
25 supplemental general State aid grants for school years
26 preceding the 2003-2004 school year that are paid in fiscal

 

 

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1 year 1999 or thereafter and to any State aid payments made in
2 fiscal year 1994 through fiscal year 1998 pursuant to
3 subsection 1(n) of Section 18-8 of this Code (which was
4 repealed on July 1, 1998), and any high school district that is
5 affected by Public Act 92-28 is entitled to a recomputation of
6 its supplemental general State aid grant or State aid paid in
7 any of those fiscal years. This recomputation shall not be
8 affected by any other funding.
9     (1.10) This paragraph (1.10) applies to the 2003-2004
10 school year and each school year thereafter. For purposes of
11 this subsection (H), the term "Low-Income Concentration Level"
12 shall, for each fiscal year, be the low-income eligible pupil
13 count as of July 1 of the immediately preceding fiscal year (as
14 determined by the Department of Human Services based on the
15 number of pupils who are eligible for at least one of the
16 following low income programs: Medicaid, KidCare, TANF, or Food
17 Stamps, excluding pupils who are eligible for services provided
18 by the Department of Children and Family Services, averaged
19 over the 2 immediately preceding fiscal years for fiscal year
20 2004 and over the 3 immediately preceding fiscal years for each
21 fiscal year thereafter) divided by the Average Daily Attendance
22 of the school district.
23     (2) Supplemental general State aid pursuant to this
24 subsection (H) shall be provided as follows for the 1998-1999,
25 1999-2000, and 2000-2001 school years only:
26         (a) For any school district with a Low Income

 

 

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1     Concentration Level of at least 20% and less than 35%, the
2     grant for any school year shall be $800 multiplied by the
3     low income eligible pupil count.
4         (b) For any school district with a Low Income
5     Concentration Level of at least 35% and less than 50%, the
6     grant for the 1998-1999 school year shall be $1,100
7     multiplied by the low income eligible pupil count.
8         (c) For any school district with a Low Income
9     Concentration Level of at least 50% and less than 60%, the
10     grant for the 1998-99 school year shall be $1,500
11     multiplied by the low income eligible pupil count.
12         (d) For any school district with a Low Income
13     Concentration Level of 60% or more, the grant for the
14     1998-99 school year shall be $1,900 multiplied by the low
15     income eligible pupil count.
16         (e) For the 1999-2000 school year, the per pupil amount
17     specified in subparagraphs (b), (c), and (d) immediately
18     above shall be increased to $1,243, $1,600, and $2,000,
19     respectively.
20         (f) For the 2000-2001 school year, the per pupil
21     amounts specified in subparagraphs (b), (c), and (d)
22     immediately above shall be $1,273, $1,640, and $2,050,
23     respectively.
24     (2.5) Supplemental general State aid pursuant to this
25 subsection (H) shall be provided as follows for the 2002-2003
26 school year:

 

 

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1         (a) For any school district with a Low Income
2     Concentration Level of less than 10%, the grant for each
3     school year shall be $355 multiplied by the low income
4     eligible pupil count.
5         (b) For any school district with a Low Income
6     Concentration Level of at least 10% and less than 20%, the
7     grant for each school year shall be $675 multiplied by the
8     low income eligible pupil count.
9         (c) For any school district with a Low Income
10     Concentration Level of at least 20% and less than 35%, the
11     grant for each school year shall be $1,330 multiplied by
12     the low income eligible pupil count.
13         (d) For any school district with a Low Income
14     Concentration Level of at least 35% and less than 50%, the
15     grant for each school year shall be $1,362 multiplied by
16     the low income eligible pupil count.
17         (e) For any school district with a Low Income
18     Concentration Level of at least 50% and less than 60%, the
19     grant for each school year shall be $1,680 multiplied by
20     the low income eligible pupil count.
21         (f) For any school district with a Low Income
22     Concentration Level of 60% or more, the grant for each
23     school year shall be $2,080 multiplied by the low income
24     eligible pupil count.
25     (2.10) Except as otherwise provided, supplemental general
26 State aid pursuant to this subsection (H) shall be provided as

 

 

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1 follows for the 2003-2004 school year and each school year
2 thereafter:
3         (a) For any school district with a Low Income
4     Concentration Level of 15% or less, the grant for the
5     2003-2004 school year through the 2006-2007 each school
6     year shall be $355 multiplied by the low income eligible
7     pupil count. For the 2007-2008 school year and each school
8     year thereafter, the grant shall be $355, increased by the
9     percentage increase, if any, in the ECI published for the
10     immediately preceding school year, and then multiplied by
11     the low income eligible pupil count.
12         (b) For any school district with a Low Income
13     Concentration Level greater than 15%, the grant for the
14     2003-2004 school year through the 2006-2007 each school
15     year shall be $294.25 added to the product of $2,700 and
16     the square of the Low Income Concentration Level, all
17     multiplied by the low income eligible pupil count. For the
18     2007-2008 school year and each school year thereafter, the
19     grant shall be $294.25, increased by the percentage
20     increase, if any, in the ECI published for the immediately
21     preceding school year, then added to the product of (i)
22     $2,700, which amount shall be increased by the percentage
23     increase, if any, in the ECI published for the immediately
24     preceding school year, and (ii) the square of the Low
25     Income Concentration Level, and then all multiplied by the
26     low income eligible pupil count.

 

 

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1     For the 2003-2004 school year, 2004-2005 school year,
2 2005-2006 school year, and 2006-2007 school year only, the
3 grant shall be no less than the grant for the 2002-2003 school
4 year. For the 2007-2008 school year only, the grant shall be no
5 less than the grant for the 2002-2003 school year multiplied by
6 0.66. For the 2008-2009 school year only, the grant shall be no
7 less than the grant for the 2002-2003 school year multiplied by
8 0.33. Notwithstanding the provisions of this paragraph to the
9 contrary, if for any school year supplemental general State aid
10 grants are prorated as provided in paragraph (1) of this
11 subsection (H), then the grants under this paragraph shall be
12 prorated.
13     For the 2003-2004 school year only, the grant shall be no
14 greater than the grant received during the 2002-2003 school
15 year added to the product of 0.25 multiplied by the difference
16 between the grant amount calculated under subsection (a) or (b)
17 of this paragraph (2.10), whichever is applicable, and the
18 grant received during the 2002-2003 school year. For the
19 2004-2005 school year only, the grant shall be no greater than
20 the grant received during the 2002-2003 school year added to
21 the product of 0.50 multiplied by the difference between the
22 grant amount calculated under subsection (a) or (b) of this
23 paragraph (2.10), whichever is applicable, and the grant
24 received during the 2002-2003 school year. For the 2005-2006
25 school year only, the grant shall be no greater than the grant
26 received during the 2002-2003 school year added to the product

 

 

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1 of 0.75 multiplied by the difference between the grant amount
2 calculated under subsection (a) or (b) of this paragraph
3 (2.10), whichever is applicable, and the grant received during
4 the 2002-2003 school year.
5     (3) School districts with an Average Daily Attendance of
6 more than 1,000 and less than 50,000 that qualify for
7 supplemental general State aid pursuant to this subsection
8 shall submit a plan to the State Board of Education prior to
9 October 30 of each year for the use of the funds resulting from
10 this grant of supplemental general State aid for the
11 improvement of instruction in which priority is given to
12 meeting the education needs of disadvantaged children. Such
13 plan shall be submitted in accordance with rules and
14 regulations promulgated by the State Board of Education.
15     (4) School districts with an Average Daily Attendance of
16 50,000 or more that qualify for supplemental general State aid
17 pursuant to this subsection shall be required to distribute
18 from funds available pursuant to this Section, no less than
19 $261,000,000 in accordance with the following requirements:
20         (a) The required amounts shall be distributed to the
21     attendance centers within the district in proportion to the
22     number of pupils enrolled at each attendance center who are
23     eligible to receive free or reduced-price lunches or
24     breakfasts under the federal Child Nutrition Act of 1966
25     and under the National School Lunch Act during the
26     immediately preceding school year.

 

 

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1         (b) The distribution of these portions of supplemental
2     and general State aid among attendance centers according to
3     these requirements shall not be compensated for or
4     contravened by adjustments of the total of other funds
5     appropriated to any attendance centers, and the Board of
6     Education shall utilize funding from one or several sources
7     in order to fully implement this provision annually prior
8     to the opening of school.
9         (c) Each attendance center shall be provided by the
10     school district a distribution of noncategorical funds and
11     other categorical funds to which an attendance center is
12     entitled under law in order that the general State aid and
13     supplemental general State aid provided by application of
14     this subsection supplements rather than supplants the
15     noncategorical funds and other categorical funds provided
16     by the school district to the attendance centers.
17         (d) Any funds made available under this subsection that
18     by reason of the provisions of this subsection are not
19     required to be allocated and provided to attendance centers
20     may be used and appropriated by the board of the district
21     for any lawful school purpose.
22         (e) Funds received by an attendance center pursuant to
23     this subsection shall be used by the attendance center at
24     the discretion of the principal and local school council
25     for programs to improve educational opportunities at
26     qualifying schools through the following programs and

 

 

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1     services: early childhood education, reduced class size or
2     improved adult to student classroom ratio, enrichment
3     programs, remedial assistance, attendance improvement, and
4     other educationally beneficial expenditures which
5     supplement the regular and basic programs as determined by
6     the State Board of Education. Funds provided shall not be
7     expended for any political or lobbying purposes as defined
8     by board rule.
9         (f) Each district subject to the provisions of this
10     subdivision (H)(4) shall submit an acceptable plan to meet
11     the educational needs of disadvantaged children, in
12     compliance with the requirements of this paragraph, to the
13     State Board of Education prior to July 15 of each year.
14     This plan shall be consistent with the decisions of local
15     school councils concerning the school expenditure plans
16     developed in accordance with part 4 of Section 34-2.3. The
17     State Board shall approve or reject the plan within 60 days
18     after its submission. If the plan is rejected, the district
19     shall give written notice of intent to modify the plan
20     within 15 days of the notification of rejection and then
21     submit a modified plan within 30 days after the date of the
22     written notice of intent to modify. Districts may amend
23     approved plans pursuant to rules promulgated by the State
24     Board of Education.
25         Upon notification by the State Board of Education that
26     the district has not submitted a plan prior to July 15 or a

 

 

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1     modified plan within the time period specified herein, the
2     State aid funds affected by that plan or modified plan
3     shall be withheld by the State Board of Education until a
4     plan or modified plan is submitted.
5         If the district fails to distribute State aid to
6     attendance centers in accordance with an approved plan, the
7     plan for the following year shall allocate funds, in
8     addition to the funds otherwise required by this
9     subsection, to those attendance centers which were
10     underfunded during the previous year in amounts equal to
11     such underfunding.
12         For purposes of determining compliance with this
13     subsection in relation to the requirements of attendance
14     center funding, each district subject to the provisions of
15     this subsection shall submit as a separate document by
16     December 1 of each year a report of expenditure data for
17     the prior year in addition to any modification of its
18     current plan. If it is determined that there has been a
19     failure to comply with the expenditure provisions of this
20     subsection regarding contravention or supplanting, the
21     State Superintendent of Education shall, within 60 days of
22     receipt of the report, notify the district and any affected
23     local school council. The district shall within 45 days of
24     receipt of that notification inform the State
25     Superintendent of Education of the remedial or corrective
26     action to be taken, whether by amendment of the current

 

 

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1     plan, if feasible, or by adjustment in the plan for the
2     following year. Failure to provide the expenditure report
3     or the notification of remedial or corrective action in a
4     timely manner shall result in a withholding of the affected
5     funds.
6         The State Board of Education shall promulgate rules and
7     regulations to implement the provisions of this
8     subsection. No funds shall be released under this
9     subdivision (H)(4) to any district that has not submitted a
10     plan that has been approved by the State Board of
11     Education.
 
12 (I) (Blank).
 
13 (J) Supplementary Grants in Aid.
14     (1) Notwithstanding any other provisions of this Section,
15 the amount of the aggregate general State aid in combination
16 with supplemental general State aid under this Section for
17 which each school district is eligible shall be no less than
18 the amount of the aggregate general State aid entitlement that
19 was received by the district under Section 18-8 (exclusive of
20 amounts received under subsections 5(p) and 5(p-5) of that
21 Section) for the 1997-98 school year, pursuant to the
22 provisions of that Section as it was then in effect. If a
23 school district qualifies to receive a supplementary payment
24 made under this subsection (J), the amount of the aggregate

 

 

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1 general State aid in combination with supplemental general
2 State aid under this Section which that district is eligible to
3 receive for each school year shall be no less than the amount
4 of the aggregate general State aid entitlement that was
5 received by the district under Section 18-8 (exclusive of
6 amounts received under subsections 5(p) and 5(p-5) of that
7 Section) for the 1997-1998 school year, pursuant to the
8 provisions of that Section as it was then in effect.
9     (2) If, as provided in paragraph (1) of this subsection
10 (J), a school district is to receive aggregate general State
11 aid in combination with supplemental general State aid under
12 this Section for the 1998-99 school year and any subsequent
13 school year that in any such school year is less than the
14 amount of the aggregate general State aid entitlement that the
15 district received for the 1997-98 school year, the school
16 district shall also receive, from a separate appropriation made
17 for purposes of this subsection (J), a supplementary payment
18 that is equal to the amount of the difference in the aggregate
19 State aid figures as described in paragraph (1).
20     (3) (Blank).
 
21 (K) Grants to Laboratory and Alternative Schools.
22     In calculating the amount to be paid to the governing board
23 of a public university that operates a laboratory school under
24 this Section or to any alternative school that is operated by a
25 regional superintendent of schools, the State Board of

 

 

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1 Education shall require by rule such reporting requirements as
2 it deems necessary.
3     As used in this Section, "laboratory school" means a public
4 school which is created and operated by a public university and
5 approved by the State Board of Education. The governing board
6 of a public university which receives funds from the State
7 Board under this subsection (K) may not increase the number of
8 students enrolled in its laboratory school from a single
9 district, if that district is already sending 50 or more
10 students, except under a mutual agreement between the school
11 board of a student's district of residence and the university
12 which operates the laboratory school. A laboratory school may
13 not have more than 1,000 students, excluding students with
14 disabilities in a special education program.
15     As used in this Section, "alternative school" means a
16 public school which is created and operated by a Regional
17 Superintendent of Schools and approved by the State Board of
18 Education. Such alternative schools may offer courses of
19 instruction for which credit is given in regular school
20 programs, courses to prepare students for the high school
21 equivalency testing program or vocational and occupational
22 training. A regional superintendent of schools may contract
23 with a school district or a public community college district
24 to operate an alternative school. An alternative school serving
25 more than one educational service region may be established by
26 the regional superintendents of schools of the affected

 

 

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1 educational service regions. An alternative school serving
2 more than one educational service region may be operated under
3 such terms as the regional superintendents of schools of those
4 educational service regions may agree.
5     Each laboratory and alternative school shall file, on forms
6 provided by the State Superintendent of Education, an annual
7 State aid claim which states the Average Daily Attendance of
8 the school's students by month. The best 3 months' Average
9 Daily Attendance shall be computed for each school. The general
10 State aid entitlement shall be computed by multiplying the
11 applicable Average Daily Attendance by the Foundation Level as
12 determined under this Section.
 
13 (L) Payments, Additional Grants in Aid and Other Requirements.
14     (1) For a school district operating under the financial
15 supervision of an Authority created under Article 34A, the
16 general State aid otherwise payable to that district under this
17 Section, but not the supplemental general State aid, shall be
18 reduced by an amount equal to the budget for the operations of
19 the Authority as certified by the Authority to the State Board
20 of Education, and an amount equal to such reduction shall be
21 paid to the Authority created for such district for its
22 operating expenses in the manner provided in Section 18-11. The
23 remainder of general State school aid for any such district
24 shall be paid in accordance with Article 34A when that Article
25 provides for a disposition other than that provided by this

 

 

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1 Article.
2     (2) (Blank).
3     (3) Summer school. Summer school payments shall be made as
4 provided in Section 18-4.3.
 
5 (M) Education Funding Advisory Board.
6     The Education Funding Advisory Board, hereinafter in this
7 subsection (M) referred to as the "Board", is hereby created.
8 The Board shall consist of 5 members who are appointed by the
9 Governor, by and with the advice and consent of the Senate. The
10 members appointed shall include representatives of education,
11 business, and the general public. One of the members so
12 appointed shall be designated by the Governor at the time the
13 appointment is made as the chairperson of the Board. The
14 initial members of the Board may be appointed any time after
15 the effective date of this amendatory Act of 1997. The regular
16 term of each member of the Board shall be for 4 years from the
17 third Monday of January of the year in which the term of the
18 member's appointment is to commence, except that of the 5
19 initial members appointed to serve on the Board, the member who
20 is appointed as the chairperson shall serve for a term that
21 commences on the date of his or her appointment and expires on
22 the third Monday of January, 2002, and the remaining 4 members,
23 by lots drawn at the first meeting of the Board that is held
24 after all 5 members are appointed, shall determine 2 of their
25 number to serve for terms that commence on the date of their

 

 

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1 respective appointments and expire on the third Monday of
2 January, 2001, and 2 of their number to serve for terms that
3 commence on the date of their respective appointments and
4 expire on the third Monday of January, 2000. All members
5 appointed to serve on the Board shall serve until their
6 respective successors are appointed and confirmed. Vacancies
7 shall be filled in the same manner as original appointments. If
8 a vacancy in membership occurs at a time when the Senate is not
9 in session, the Governor shall make a temporary appointment
10 until the next meeting of the Senate, when he or she shall
11 appoint, by and with the advice and consent of the Senate, a
12 person to fill that membership for the unexpired term. If the
13 Senate is not in session when the initial appointments are
14 made, those appointments shall be made as in the case of
15 vacancies.
16     The Education Funding Advisory Board shall be deemed
17 established, and the initial members appointed by the Governor
18 to serve as members of the Board shall take office, on the date
19 that the Governor makes his or her appointment of the fifth
20 initial member of the Board, whether those initial members are
21 then serving pursuant to appointment and confirmation or
22 pursuant to temporary appointments that are made by the
23 Governor as in the case of vacancies.
24     The State Board of Education shall provide such staff
25 assistance to the Education Funding Advisory Board as is
26 reasonably required for the proper performance by the Board of

 

 

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1 its responsibilities.
2     For school years after the 2000-2001 school year, the
3 Education Funding Advisory Board, in consultation with the
4 State Board of Education, shall make recommendations as
5 provided in this subsection (M) to the General Assembly for the
6 foundation level under subsection(B) subdivision (B)(3) of
7 this Section and for the supplemental general State aid grant
8 level under subsection (H) of this Section for districts with
9 high concentrations of children from poverty. The recommended
10 foundation level shall be determined based on a methodology
11 which incorporates the basic education expenditures of
12 low-spending schools exhibiting high academic performance. The
13 Education Funding Advisory Board shall make such
14 recommendations to the General Assembly on January 1 of odd
15 numbered years, beginning January 1, 2001.
 
16 (N) (Blank).
 
17 (O) References.
18     (1) References in other laws to the various subdivisions of
19 Section 18-8 as that Section existed before its repeal and
20 replacement by this Section 18-8.05 shall be deemed to refer to
21 the corresponding provisions of this Section 18-8.05, to the
22 extent that those references remain applicable.
23     (2) References in other laws to State Chapter 1 funds shall
24 be deemed to refer to the supplemental general State aid

 

 

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1 provided under subsection (H) of this Section.
 
2 (P) Public Act 93-838 and Public Act 93-808 make inconsistent
3 changes to this Section. Under Section 6 of the Statute on
4 Statutes there is an irreconcilable conflict between Public Act
5 93-808 and Public Act 93-838. Public Act 93-838, being the last
6 acted upon, is controlling. The text of Public Act 93-838 is
7 the law regardless of the text of Public Act 93-808.
8 (Source: P.A. 93-21, eff. 7-1-03; 93-715, eff. 7-12-04; 93-808,
9 eff. 7-26-04; 93-838, eff. 7-30-04; 93-875, eff. 8-6-04; 94-69,
10 eff. 7-1-05; 94-438, eff. 8-4-05; 94-835, eff. 6-6-06; 94-1019,
11 eff. 7-10-06; revised 8-3-06.)
 
12     (105 ILCS 5/18-8.15 new)
13     Sec. 18-8.15. Supplemental State aid for rapidly expanding
14 school districts.
15     (a) If there has been an increase in a school district's
16 student population over any 2 consecutive school years of (i)
17 over 1.5% in a district with 10,000 or more pupils in average
18 daily attendance, as defined in Section 18-8.05 of this Code,
19 or (ii) over 10% in any other district, then, subject to
20 appropriation, the district is eligible for a grant under this
21 Section.
22     (b) The State Board of Education shall determine a per
23 pupil grant amount for each school district based on the needs
24 of each district. The total grant amount for a district for any

 

 

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1 given school year shall equal the per pupil grant amount
2 multiplied by the difference between the number of pupils in
3 average daily attendance for the first 3 months of the school
4 year and the number of pupils in average daily attendance for
5 the immediately preceding school year.
6     (c) Each fiscal year, the General Assembly shall
7 appropriate at least $40 million of the aggregate Common School
8 Fund appropriation to funding supplemental grants under this
9 Section. Funds for grants under this Section must be
10 appropriated to the State Board of Education in a separate line
11 item for this purpose. As soon as possible after funds have
12 been appropriated to the State Board of Education, the State
13 Board of Education shall distribute the grants to eligible
14 districts.
15     (d) If a school district intentionally reports incorrect
16 average daily attendance numbers to receive a grant under this
17 Section, then the district shall be denied State aid for
18 intentional incorrect reporting of average daily attendance
19 numbers under Section 18-8.05 of this Code.
20     (e) The State Board of Education may adopt any rules
21 necessary to implement this Section.
 
22     (105 ILCS 5/18-25 new)
23     Sec. 18-25. Education appropriation minimum. At a minimum,
24 the General Assembly shall appropriate to the Common School
25 Fund for fiscal year 2008 and each fiscal year thereafter, an

 

 

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1 amount equal to the following (the "Education Appropriation
2 Minimum"):
3         (1) For fiscal year 2008, a total appropriation equal
4     to the sum of (A) all amounts appropriated to the Common
5     School Fund for fiscal year 2007, plus (B) the amount
6     necessary to increase the Foundation Level of support per
7     student to $5,952 under Section 18-8.05 of this Code, plus
8     (C) $2.4 billion to fund the School District Property Tax
9     Relief Fund described in Section 6z-65 of the State Finance
10     Act.
11         (2) For each fiscal year thereafter, a total
12     appropriation equal to (A) the Education Appropriation
13     Minimum for the immediately preceding fiscal year,
14     increased by the percentage increase, if any, in the
15     Employment Cost Index published by the U.S. Bureau of Labor
16     Statistics for the immediately preceding fiscal year, or
17     (B) such greater amount as the General Assembly may
18     appropriate.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3     30 ILCS 105/5.675 new
4     30 ILCS 105/6z-69 new
5     35 ILCS 5/201 from Ch. 120, par. 2-201
6     35 ILCS 5/203 from Ch. 120, par. 2-203
7     35 ILCS 5/247 new
8     35 ILCS 105/2 from Ch. 120, par. 439.2
9     35 ILCS 105/3-50 rep. from Ch. 120, par. 439.3-50
10     35 ILCS 110/2 from Ch. 120, par. 439.32
11     35 ILCS 115/2 from Ch. 120, par. 439.102
12     35 ILCS 120/1 from Ch. 120, par. 440
13     35 ILCS 120/2-5 from Ch. 120, par. 441-5
14     35 ILCS 120/1d rep. from Ch. 120, par. 440d
15     35 ILCS 120/1f rep. from Ch. 120, par. 440f
16     35 ILCS 200/18-178 new
17     35 ILCS 200/18-255
18     35 ILCS 200/20-15
19     35 ILCS 200/21-30
20     35 ILCS 505/2b from Ch. 120, par. 418b
21     105 ILCS 5/18-8.05
22     105 ILCS 5/18-8.15 new
23     105 ILCS 5/18-25 new