Sen. Dan Kotowski

Filed: 5/5/2010

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 3659

2     AMENDMENT NO. ______. Amend House Bill 3659, AS AMENDED, by
3 replacing everything after the enacting clause with the
4 following:
 
5     "Section 1. Short title. This Act may be cited as the Oil
6 Company Gross Income Tax Act.
 
7     Section 5. Definitions. Except as otherwise expressly
8 provided or clearly appearing from the context, any term used
9 in this Act shall have the same meaning as when used in a
10 comparable context in the Illinois Income Tax Act, as in effect
11 for the taxable year. As used in this Act:
12     "Department" means the Department of Revenue.
13     "Gross income" of a taxpayer means the amount of gross
14 income properly reportable for federal income tax purposes for
15 the taxable year under the provisions of the Internal Revenue
16 Code, minus any amounts that are exempt from taxation by this

 

 

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1 State either by reason of its statutes or Constitution or by
2 reason of the Constitution, treaties or statutes of the United
3 States.
4     "Illinois gross income" of a taxpayer means the amount of
5 gross income of the taxpayer, multiplied by the apportionment
6 fraction of the taxpayer determined under Section 304 of the
7 Illinois Income Tax Act for the taxable year.
8     "Oil company" means any taxpayer primarily engaged in the
9 business (other than as an employee) of exploration, drilling,
10 importation, refining or wholesale distribution of petroleum
11 products, excluding retail sales of tangible personal property
12 for use or consumption, and not for resale.
13     "Petroleum products" means any products that contain or are
14 made from petroleum or a petroleum derivative.
15     "Taxpayer" means any person subject to tax under the
16 Illinois Income Tax Act. In the case of a unitary business
17 group as defined in Section 1501(a)(27) of the Illinois Income
18 Tax Act, "taxpayer" means the unitary business group, all
19 returns on behalf of the taxpayer shall be made by the
20 designated agent of the unitary business group and each member
21 of the unitary business group doing business in this State
22 shall be jointly and severally liable for the tax imposed under
23 this Act.
 
24     Section 10. Tax imposed. For taxable years ending on or
25 after December 31, 2011, a tax is hereby imposed on each oil

 

 

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1 company doing business in this State at the rate of 12% of the
2 Illinois gross income of the oil company.
 
3     Section 15. Returns and payments.
4     (a) In General. Except as provided by the Department by
5 rule, every taxpayer qualified to do business in this State at
6 any time during a taxable year shall make a return under this
7 Act for that taxable year. Returns required by this Act shall
8 be made in the form and manner prescribed by the Department,
9 and shall be filed on or before the due date (including
10 extensions) for filing of the taxpayer's Illinois income tax
11 return for the same taxable year under the Illinois Income Tax
12 Act. The Department may by rule require any return required
13 under this Act to be filed electronically.
14     (b) A taxpayer shall notify the Department if the federal
15 income tax liability of that taxpayer for any year is altered
16 by amendment of that taxpayer's federal income tax return or as
17 a result of any other recomputation or redetermination of
18 federal income tax liability, and such alteration reflects a
19 change or settlement with respect to any item or items
20 affecting the computation of such taxpayer's Illinois gross
21 income for any year under this Act. Such notification shall be
22 in the form of an amended return or such other form as the
23 Department may by rule prescribe, and shall be filed not later
24 than 120 days after such alteration has been agreed to or
25 finally determined for federal income tax purposes or any

 

 

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1 federal income tax deficiency or refund, abatement or credit
2 resulting therefrom has been assessed or paid, whichever shall
3 first occur.
4     (c) Every taxpayer required to file a return under this Act
5 shall, without assessment, notice or demand, pay any tax due
6 thereon to the Department, at the place fixed for filing, on or
7 before the date fixed for filing such return (including any
8 extension of time for filing the return) pursuant to rules
9 prescribed by the Department.
10     (d) Every taxpayer shall keep such records, render such
11 statements, make such returns and notices, and comply with such
12 rules and regulations as the Department may from time to time
13 prescribe. Whenever in the judgment of the Director it is
14 necessary, he may require any taxpayer, by notice served upon
15 such taxpayer or by regulations, to make such returns and
16 notices, render such statements, or keep such records, as the
17 Director deems sufficient to show whether or not such taxpayer
18 is liable for tax under this Act.
 
19     Section 20. Payment of Estimated Tax.
20     (a) For taxable years ending on or after December 31, 2011,
21 each taxpayer is required to pay estimated tax for the taxable
22 year, in such amount and with such forms as the Department
23 shall prescribe.
24     (b) There shall be paid 4 equal installments of estimated
25 tax for each taxable year, payable as follows:

 

 

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1Required Installment:Due Date:
21stApril 15
32ndJune 15
43rdSeptember 15
54thDecember 15
6     (c) Application to short taxable years. The application of
7 this Section to taxable years of less than 12 months shall be
8 in accordance with regulations prescribed by the Department.
9     (d) Fiscal years. In the application of this Section to the
10 case of a taxable year ending on any date other than December
11 31, there shall be substituted, for the months specified in
12 subsection (b), the months which correspond thereto.
13     (e) In case of any underpayment of estimated tax by a
14 taxpayer, the taxpayer shall be liable to a penalty in an
15 amount determined at the rate prescribed by Section 3-3 of the
16 Uniform Penalty and Interest Act upon the amount of the
17 underpayment for each required installment.
18         (1) Amount of underpayment. For purposes of subsection
19     (a), the amount of the underpayment shall be the excess of:
20             (A) the amount of the installment which would be
21         required to be paid under paragraph (2) of this
22         subsection, over
23             (B) the amount, if any, of the installment paid on
24         or before the last date prescribed for payment.
25         (2) Amount of Required Installments. The amount of any
26     required installment shall be 25% of the required annual

 

 

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1     payment. The "required annual payment" means the lesser of
2     90% of the tax shown on the return for the taxable year, or
3     if no return is filed, 90% of the tax for such year.
 
4     Section 25. Collection authority. The Department shall
5 collect the taxes imposed by this Act and shall deposit the
6 amounts collected into the General Revenue Fund in the State
7 treasury.
 
8     Section 30. Notice and Demand.
9     (a) In general. Except as provided in subsection (b) the
10 Director shall, as soon as practicable after an amount payable
11 under this Act is deemed assessed (as provided in Section 35 of
12 this Act), give notice to each taxpayer liable for any unpaid
13 portion of such assessment, stating the amount unpaid and
14 demanding payment thereof. In the case of tax deemed assessed
15 with the filing of a return, the Director shall give notice no
16 later than 3 years after the date the return was filed. Upon
17 receipt of any notice and demand there shall be paid at the
18 place and time stated in such notice the amount stated in such
19 notice. Such notice shall be left at the dwelling or usual
20 place of business of such taxpayer or shall be sent by mail to
21 the taxpayer's last known address.
22     (b) Judicial review. In the case of a deficiency deemed
23 assessed under Section 35(b) of this Act after the filing of a
24 protest, notice and demand shall not be made with respect to

 

 

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1 such assessment until all proceedings in court for the review
2 of such assessment have terminated or the time for the taking
3 thereof has expired without such proceedings being instituted.
 
4     Section 35. Assessment.
5     (a) Returns. The amount of tax which is shown to be due on
6 the return shall be deemed assessed on the date of filing of
7 the return (including any amended returns showing an increase
8 of tax). In the event that the amount of tax is understated on
9 the taxpayer's return due to a mathematical error, the
10 Department shall notify the taxpayer that the amount of tax in
11 excess of that shown on the return is due and has been
12 assessed. Such notice of additional tax due shall be issued no
13 later than 3 years after the date the return was filed. Such
14 notice of additional tax due shall not be considered a notice
15 of deficiency nor shall the taxpayer have any right of protest.
16 In the case of a return properly filed without the computation
17 of the tax, the tax computed by the Department shall be deemed
18 to be assessed on the date when payment is due.
19     (b) Notice of deficiency. If a notice of deficiency has
20 been issued, the amount of the deficiency shall be deemed
21 assessed on the date provided in Section 40(d) of this Act if
22 no protest is filed; or, if a protest is filed, then upon the
23 date when the decision of the Department becomes final.
24     (c) Payments. Any amount paid as tax or in respect of tax
25 paid under this Act, other than amounts paid as estimated tax

 

 

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1 under Section 20 of this Act, shall be deemed assessed upon the
2 date of receipt of payment, notwithstanding any other
3 provisions of this Act.
4     (d) Limitations on assessment. No deficiency shall be
5 assessed with respect to a taxable year for which a return was
6 filed unless a notice of deficiency for such year was issued
7 not later than the date prescribed in Section 45 of this Act.
 
8     Section 40. Deficiencies and overpayments.
9     (a) Examination of return. As soon as practicable after a
10 return is filed, the Department shall examine it to determine
11 the correct amount of tax. If the Department finds that the
12 amount of tax shown on the return is less than the correct
13 amount, it shall issue a notice of deficiency to the taxpayer
14 which shall set forth the amount of tax and penalties proposed
15 to be assessed. If the Department finds that the tax paid is
16 more than the correct amount, it shall credit or refund the
17 overpayment as provided by Section 55. The findings of the
18 Department under this subsection shall be prima facie correct
19 and shall be prima facie evidence of the correctness of the
20 amount of tax and penalties due.
21     (b) No return filed. If the taxpayer fails to file a tax
22 return, the Department shall determine the amount of tax due
23 according to its best judgment and information, which amount so
24 fixed by the Department shall be prima facie correct and shall
25 be prima facie evidence of the correctness of the amount of tax

 

 

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1 due. The Department shall issue a notice of deficiency to the
2 taxpayer which shall set forth the amount of tax and penalties
3 proposed to be assessed.
4     (c) Notice of deficiency. A notice of deficiency issued
5 under this Act shall set forth the adjustments giving rise to
6 the proposed assessment and the reasons therefor.
7     (d) Assessment when no protest. Upon the expiration of 60
8 days (150 days if the taxpayer is outside the United States)
9 after the date on which it was issued, a notice of deficiency
10 shall constitute an assessment of the amount of tax and
11 penalties specified therein, except only for such amounts as to
12 which the taxpayer shall have filed a protest with the
13 Department, as provided in Section 50 of this Act.
 
14     Section 45. Limitations on notices of deficiency.
15     (a) In general. Except as otherwise provided in this Act:
16         (1) A notice of deficiency shall be issued not later
17     than 3 years after the date the return was filed, and
18         (2) No deficiency shall be assessed or collected with
19     respect to the year for which the return was filed unless
20     such notice is issued within such period.
21     (b) No return or fraudulent return. If no return is filed
22 or a false and fraudulent return is filed with intent to evade
23 the tax imposed by this Act, a notice of deficiency may be
24 issued at any time.
25     (c) Failure to report federal change. If a taxpayer fails

 

 

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1 to notify the Department in any case where notification is
2 required by Section 15 of this Act, a notice of deficiency may
3 be issued at any time for the taxable year for which the
4 notification is required; provided, however, that the amount of
5 any proposed assessment set forth in the notice shall be
6 limited to the amount of any deficiency resulting under this
7 Act from giving effect to the item or items required to be
8 reported.
9     (d) Report of federal change. In any case where
10 notification of an alteration is given as required by Section
11 15 of this Act, a notice of deficiency may be issued at any
12 time within 2 years after the date such notification is given,
13 provided, however, that the amount of any proposed assessment
14 set forth in such notice shall be limited to the amount of any
15 deficiency resulting under this Act from giving effect to the
16 item or items reflected in the reported alteration.
17     (e) Change in Illinois income tax liability. In any case
18 where the taxpayer's Illinois income tax liability for a
19 taxable year is increased as the result of a change in the
20 taxpayer's apportionment fraction, a notice of deficiency for
21 any additional tax due under this Act as the result of the
22 change in the taxpayer's apportionment fraction may be issued
23 at any time within 2 years after the increased Illinois income
24 tax overpayment is assessed.
25     (f) Extension by agreement. Where, before the expiration of
26 the time prescribed in this section for the issuance of a

 

 

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1 notice of deficiency, both the Department and the taxpayer
2 shall have consented in writing to its issuance after such
3 time, such notice may be issued at any time prior to the
4 expiration of the period agreed upon. The period so agreed upon
5 may be extended by subsequent agreements in writing made before
6 the expiration of the period previously agreed upon.
7     (g) Erroneous refunds. In any case in which there has been
8 an erroneous refund of tax payable under this Act, a notice of
9 deficiency may be issued at any time within 2 years from the
10 making of such refund, or within 5 years from the making of
11 such refund if it appears that any part of the refund was
12 induced by fraud or the misrepresentation of a material fact,
13 provided, however, that the amount of any proposed assessment
14 set forth in such notice shall be limited to the amount of such
15 erroneous refund.
16     (h) Time return deemed filed. For purposes of this Section
17 a tax return filed before the last day prescribed by law
18 (including any extension thereof) shall be deemed to have been
19 filed on such last day.
 
20     Section 50. Procedure on protest.
21     (a) Time for protest. Within 60 days (150 days if the
22 taxpayer is outside the United States) after the issuance of a
23 notice of deficiency, the taxpayer may file with the Department
24 a written protest against the proposed assessment in such form
25 as the Department may by regulations prescribe, setting forth

 

 

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1 the grounds on which such protest is based. If a protest is
2 filed, the Department shall reconsider the proposed assessment
3 and, if the taxpayer has so requested, shall grant the taxpayer
4 or the taxpayer's authorized representative a hearing.
5     (b) Notice of decision. As soon as practicable after such
6 reconsideration and hearing, if any, the Department shall issue
7 a notice of decision by mailing such notice by certified or
8 registered mail. Such notice shall set forth briefly the
9 Department's findings of fact and the basis of decision in each
10 case decided in whole or in part adversely to the taxpayer.
11     (c) Request for rehearing. Within 30 days after the mailing
12 of a notice of decision, the taxpayer may file with a
13 Department a written request for rehearing in such form as the
14 Department may by regulations prescribe, setting forth the
15 grounds on which rehearing is requested. In any such case, the
16 Department shall, in its discretion, grant either a rehearing
17 or Departmental review unless, within 10 days of receipt of
18 such request, it shall issue a denial of such request by
19 mailing such denial to the taxpayer by certified or registered
20 mail. If rehearing or Departmental review is granted, as soon
21 as practicable after such rehearing or Departmental review, the
22 Department shall issue a notice of final decision as provided
23 in subsection (b).
24     (d) Finality of decision. The action of the Department on
25 the taxpayer's protest shall become final:
26         (1) 30 Days after issuance of a notice of decision as

 

 

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1     provided in subsection (b); or
2         (2) if a timely request for rehearing was made, upon
3     the issuance of a denial of such request or the issuance of
4     a notice of final decision as provided in subsection (c).
 
5     Section 55. Credits and refunds.
6     (a) In general. In the case of any overpayment, the
7 Department may credit the amount of such overpayment, including
8 any interest allowed thereon, against any liability in respect
9 of the tax imposed by this Act or any other act administered by
10 the Department or against any liability of the taxpayer
11 collectible by the Department, regardless of whether other
12 collection remedies are closed to the Department on the part of
13 the person who made the overpayment and shall refund any
14 balance to such person. The Department shall apply overpayments
15 to liabilities in the order provided in Section 911.3 of the
16 Illinois Income Tax Act.
17     (b) Credits against estimated tax. The Department may
18 prescribe regulations providing for the crediting against the
19 estimated tax for any taxable year of the amount determined by
20 the taxpayer or the Department to be an overpayment of the tax
21 imposed by this Act for a preceding taxable year.
22     (c) Interest on overpayment. Interest shall be allowed and
23 paid at the rate and in the manner prescribed in Section 3-2 of
24 the Uniform Penalty and Interest Act upon any overpayment in
25 respect of the tax imposed by this Act. For purposes of this

 

 

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1 subsection, no amount of tax, for any taxable year, shall be
2 treated as having been paid before the date on which the
3 payment of tax for such year was due under Section 15(c) of
4 this Act.
5     (d) Refund claim. Every claim for refund shall be filed
6 with the Department in writing in such form as the Department
7 may by regulations prescribe, and shall state the specific
8 grounds upon which it is founded.
9     (e) Notice of denial. As soon as practicable after a claim
10 for refund is filed, the Department shall examine it and either
11 issue a notice of refund, abatement or credit to the claimant
12 or issue a notice of denial. If the Department has failed to
13 approve or deny the claim before the expiration of 6 months
14 from the date the claim was filed, the claimant may
15 nevertheless thereafter file with the Department a written
16 protest in such form as the Department may by regulation
17 prescribe. If a protest is filed, the Department shall consider
18 the claim and, if the taxpayer has so requested, shall grant
19 the taxpayer or the taxpayer's authorized representative a
20 hearing within 6 months after the date such request is filed.
21     (f) Effect of denial. A denial of a claim for refund
22 becomes final 60 days after the date of issuance of the notice
23 of such denial except for such amounts denied as to which the
24 claimant has filed a protest with the Department, as provided
25 by Section 60 of this Act.
 

 

 

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1     Section 60. Procedure on denial of claim for refund.
2     (a) Time for protest. Within 60 days after the denial of
3 the claim, the claimant may file with the Department a written
4 protest against such denial in such form as the Department may
5 by regulations prescribe, setting forth the grounds on which
6 such protest is based. If a protest is filed, the Department
7 shall reconsider the denial and, if the taxpayer has so
8 requested, shall grant the taxpayer or his authorized
9 representative a hearing.
10     (b) Notice of decision. As soon as practicable after such
11 reconsideration and hearing, if any, the Department shall issue
12 a notice of decision by mailing such notice by certified or
13 registered mail. Such notice shall set forth briefly the
14 Department's findings of fact and the basis of decision in each
15 case decided in whole or in part adversely to the claimant.
16     (c) Request for rehearing. Within 30 days after the mailing
17 of a notice of decision, the claimant may file with the
18 Department a written request for rehearing in such form as the
19 Department may by regulations prescribe, setting forth the
20 grounds on which rehearing is requested. In any such case, the
21 Department shall, in its discretion, grant either a rehearing
22 or Departmental review unless, within 10 days of receipt of
23 such request, it shall issue a denial of such request by
24 mailing such denial to the claimant by certified or registered
25 mail. If rehearing or Departmental review is granted, as soon
26 as practicable after such rehearing or Departmental review, the

 

 

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1 Department shall issue a notice of final decision as provided
2 in subsection (b).
3     (d) Finality of decision. The action of the Department on
4 the claimant's protest shall become final:
5         (1) 30 days after issuance of a notice of decision as
6     provided in subsection (b); or
7         (2) If a timely request for rehearing was made, upon
8     the issuance of a denial of such request or the issuance of
9     a notice of final decision as provided in subsection (c).
 
10     Section 65. Limitations on claims for refund.
11     (a) In general. Except as otherwise provided in this Act:
12         (1) A claim for refund shall be filed not later than 3
13     years after the date the return was filed, or one year
14     after the date the tax was paid, whichever is the later;
15     and
16         (2) No credit or refund shall be allowed or made with
17     respect to the year for which the claim was filed unless
18     such claim is filed within such period.
19     (b) Federal changes. In any case where notification of an
20 alteration is required by Section 15(b) of this Act, a claim
21 for refund may be filed within 2 years after the date on which
22 such notification was due (regardless of whether such notice
23 was given), but the amount recoverable pursuant to a claim
24 filed under this Section shall be limited to the amount of any
25 overpayment resulting under this Act from giving effect to the

 

 

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1 item or items reflected in the alteration required to be
2 reported.
3     (c) Change in Illinois income tax liability. In any case
4 where the taxpayer's Illinois income tax liability for a
5 taxable year is decreased as the result of a change in the
6 taxpayer's apportionment fraction, a claim refund of an
7 overpayment resulting from the change in the taxpayer's
8 apportionment fraction may be issued at any time within 2 years
9 after the decreased Illinois income tax overpayment is refunded
10 or credited.
11     (d) Extension by agreement. Where, before the expiration of
12 the time prescribed in this Section for the filing of a claim
13 for refund, both the Department and the claimant shall have
14 consented in writing to its filing after such time, such claim
15 may be filed at any time prior to the expiration of the period
16 agreed upon. The period so agreed upon may be extended by
17 subsequent agreements in writing made before the expiration of
18 the period previously agreed upon.
19     (e) Limit on amount of credit or refund.
20         (1) Limit where claim filed within 3-year period. If
21     the claim was filed by the claimant during the 3-year
22     period prescribed in subsection (a), the amount of the
23     credit or refund shall not exceed the portion of the tax
24     paid within the period, immediately preceding the filing of
25     the claim, equal to 3 years plus the period of any
26     extension of time for filing the return.

 

 

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1         (2) Limit where claim not filed within 3-year period.
2     If the claim was not filed within such 3-year period, the
3     amount of the credit or refund shall not exceed the portion
4     of the tax paid during the one year immediately preceding
5     the filing of the claim.
6     (f) Time return deemed filed. For purposes of this Section
7 a tax return filed before the last day prescribed by law for
8 the filing of such return (including any extensions thereof)
9 shall be deemed to have been filed on such last day.
 
10     Section 70. Procedure and administration. The provisions
11 of Section 913, 914, 915, 916, 917 and 918 and Articles 10, 11,
12 12, 13 and 14 of the Illinois Income Tax Act which are not
13 inconsistent with this Act shall apply, as far as practicable,
14 to the subject matter of this Act to the same extent as if such
15 provisions were included herein.
 
16     Section 75. The Illinois Income Tax Act is amended by
17 changing Sections 205, 901, and 1501 as follows:
 
18     (35 ILCS 5/205)  (from Ch. 120, par. 2-205)
19     Sec. 205. Exempt organizations.
20     (a) Charitable, etc. organizations. The base income of an
21 organization which is exempt from the federal income tax by
22 reason of Section 501(a) of the Internal Revenue Code shall not
23 be determined under section 203 of this Act, but shall be its

 

 

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1 unrelated business taxable income as determined under section
2 512 of the Internal Revenue Code, without any deduction for the
3 tax imposed by this Act. The standard exemption provided by
4 section 204 of this Act shall not be allowed in determining the
5 net income of an organization to which this subsection applies.
6     (b) Partnerships. A partnership as such shall not be
7 subject to the tax imposed by subsection 201 (a) and (b) of
8 this Act, but shall be subject to the replacement tax imposed
9 by subsection 201 (c) and (d) of this Act and shall compute its
10 base income as described in subsection (d) of Section 203 of
11 this Act. For taxable years ending on or after December 31,
12 2004, an investment partnership, as defined in Section
13 1501(a)(11.5) of this Act, shall not be subject to the tax
14 imposed by subsections (c) and (d) of Section 201 of this Act.
15 A partnership shall file such returns and other information at
16 such time and in such manner as may be required under Article 5
17 of this Act. The partners in a partnership shall be liable for
18 the replacement tax imposed by subsection 201 (c) and (d) of
19 this Act on such partnership, to the extent such tax is not
20 paid by the partnership, as provided under the laws of Illinois
21 governing the liability of partners for the obligations of a
22 partnership. Persons carrying on business as partners shall be
23 liable for the tax imposed by subsection 201 (a) and (b) of
24 this Act only in their separate or individual capacities.
25     (c) Subchapter S corporations. A Subchapter S corporation
26 shall not be subject to the tax imposed by subsection 201 (a)

 

 

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1 and (b) of this Act but shall be subject to the replacement tax
2 imposed by subsection 201 (c) and (d) of this Act and shall
3 file such returns and other information at such time and in
4 such manner as may be required under Article 5 of this Act.
5     (d) Combat zone death. An individual relieved from the
6 federal income tax for any taxable year by reason of section
7 692 of the Internal Revenue Code shall not be subject to the
8 tax imposed by this Act for such taxable year.
9     (e) Certain trusts. A common trust fund described in
10 Section 584 of the Internal Revenue Code, and any other trust
11 to the extent that the grantor is treated as the owner thereof
12 under sections 671 through 678 of the Internal Revenue Code
13 shall not be subject to the tax imposed by this Act.
14     (f) Certain business activities. A person not otherwise
15 subject to the tax imposed by this Act shall not become subject
16 to the tax imposed by this Act by reason of:
17         (1) that person's ownership of tangible personal
18     property located at the premises of a printer in this State
19     with which the person has contracted for printing, or
20         (2) activities of the person's employees or agents
21     located solely at the premises of a printer and related to
22     quality control, distribution, or printing services
23     performed by a printer in the State with which the person
24     has contracted for printing.
25     (g) A nonprofit risk organization that holds a certificate
26 of authority under Article VIID of the Illinois Insurance Code

 

 

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1 is exempt from the tax imposed under this Act with respect to
2 its activities or operations in furtherance of the powers
3 conferred upon it under that Article VIID of the Illinois
4 Insurance Code.
5     (h) For taxable years ending on or after December 31, 2011,
6 any oil company liable for tax under the Oil Company Gross
7 Income Tax Act shall not be subject to the tax imposed by
8 subsections 201 (a) and (b) of this Act, but shall be subject
9 to the replacement tax imposed by subsection 201 (c) and (d) of
10 this Act. For purposes of computing the tax imposed on any
11 person by subsections 201 (a) and (b) of this Act, but not the
12 replacement tax imposed by subsections 201 (c) and (d) of this
13 Act, the base income of a partnership, trust or Subchapter S
14 corporation that is liable for tax under the Oil Company Gross
15 Income Tax Act shall be deemed to be an amount exempt from
16 taxation by this State under subparagraphs (a)(2)(N),
17 (b)(2)(J), (c)(2)(K) and (d)(2)(G) of Section 203 of this Act.
18 This subsection (h) is exempt from the provisions of Section
19 250 of this Act.
20 (Source: P.A. 95-233, eff. 8-16-07; 95-331, eff. 8-21-07.)
 
21     (35 ILCS 5/901)  (from Ch. 120, par. 9-901)
22     Sec. 901. Collection Authority.
23     (a) In general.
24     The Department shall collect the taxes imposed by this Act.
25 The Department shall collect certified past due child support

 

 

09600HB3659sam002 - 22 - LRB096 09388 HLH 41193 a

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

 

 

09600HB3659sam002 - 23 - LRB096 09388 HLH 41193 a

1 realized from the tax imposed by subsections (a) and (b) of
2 Section 201 of this Act during the preceding month. Beginning
3 July 1, 1995, the Treasurer shall transfer each month from the
4 General Revenue Fund to the Local Government Distributive Fund
5 an amount equal to the net of (i) 1/10 of the net revenue
6 realized from the tax imposed by subsections (a) and (b) of
7 Section 201 of the Illinois Income Tax Act during the preceding
8 month (ii) minus, beginning July 1, 2003 and ending June 30,
9 2004, $6,666,666, and beginning July 1, 2004, zero. Net revenue
10 realized for a month shall be defined as the revenue from the
11 tax imposed by subsections (a) and (b) of Section 201 of this
12 Act which is deposited in the General Revenue Fund, the
13 Educational Assistance Fund and the Income Tax Surcharge Local
14 Government Distributive Fund during the month minus the amount
15 paid out of the General Revenue Fund in State warrants during
16 that same month as refunds to taxpayers for overpayment of
17 liability under the tax imposed by subsections (a) and (b) of
18 Section 201 of this Act.
19     (c) Deposits Into Income Tax Refund Fund.
20         (1) Beginning on January 1, 1989 and thereafter, the
21     Department shall deposit a percentage of the amounts
22     collected pursuant to subsections (a) and (b)(1), (2), and
23     (3), of Section 201 of this Act into a fund in the State
24     treasury known as the Income Tax Refund Fund. The
25     Department shall deposit 6% of such amounts during the
26     period beginning January 1, 1989 and ending on June 30,

 

 

09600HB3659sam002 - 24 - LRB096 09388 HLH 41193 a

1     1989. Beginning with State fiscal year 1990 and for each
2     fiscal year thereafter, the percentage deposited into the
3     Income Tax Refund Fund during a fiscal year shall be the
4     Annual Percentage. For fiscal years 1999 through 2001, the
5     Annual Percentage shall be 7.1%. For fiscal year 2003, the
6     Annual Percentage shall be 8%. For fiscal year 2004, the
7     Annual Percentage shall be 11.7%. Upon the effective date
8     of this amendatory Act of the 93rd General Assembly, the
9     Annual Percentage shall be 10% for fiscal year 2005. For
10     fiscal year 2006, the Annual Percentage shall be 9.75%. For
11     fiscal year 2007, the Annual Percentage shall be 9.75%. For
12     fiscal year 2008, the Annual Percentage shall be 7.75%. For
13     fiscal year 2009, the Annual Percentage shall be 9.75%. For
14     fiscal year 2010, the Annual Percentage shall be 9.75%. For
15     all other fiscal years, the Annual Percentage shall be
16     calculated as a fraction, the numerator of which shall be
17     the amount of refunds approved for payment by the
18     Department during the preceding fiscal year as a result of
19     overpayment of tax liability under subsections (a) and
20     (b)(1), (2), and (3) of Section 201 of this Act plus the
21     amount of such refunds remaining approved but unpaid at the
22     end of the preceding fiscal year, minus the amounts
23     transferred into the Income Tax Refund Fund from the
24     Tobacco Settlement Recovery Fund, and the denominator of
25     which shall be the amounts which will be collected pursuant
26     to subsections (a) and (b)(1), (2), and (3) of Section 201

 

 

09600HB3659sam002 - 25 - LRB096 09388 HLH 41193 a

1     of this Act during the preceding fiscal year; except that
2     in State fiscal year 2002, the Annual Percentage shall in
3     no event exceed 7.6%. The Director of Revenue shall certify
4     the Annual Percentage to the Comptroller on the last
5     business day of the fiscal year immediately preceding the
6     fiscal year for which it is to be effective.
7         (2) Beginning on January 1, 1989 and thereafter, the
8     Department shall deposit a percentage of the amounts
9     collected pursuant to subsections (a) and (b)(6), (7), and
10     (8), (c) and (d) of Section 201 of this Act into a fund in
11     the State treasury known as the Income Tax Refund Fund. The
12     Department shall deposit 18% of such amounts during the
13     period beginning January 1, 1989 and ending on June 30,
14     1989. Beginning with State fiscal year 1990 and for each
15     fiscal year thereafter, the percentage deposited into the
16     Income Tax Refund Fund during a fiscal year shall be the
17     Annual Percentage. For fiscal years 1999, 2000, and 2001,
18     the Annual Percentage shall be 19%. For fiscal year 2003,
19     the Annual Percentage shall be 27%. For fiscal year 2004,
20     the Annual Percentage shall be 32%. Upon the effective date
21     of this amendatory Act of the 93rd General Assembly, the
22     Annual Percentage shall be 24% for fiscal year 2005. For
23     fiscal year 2006, the Annual Percentage shall be 20%. For
24     fiscal year 2007, the Annual Percentage shall be 17.5%. For
25     fiscal year 2008, the Annual Percentage shall be 15.5%. For
26     fiscal year 2009, the Annual Percentage shall be 17.5%. For

 

 

09600HB3659sam002 - 26 - LRB096 09388 HLH 41193 a

1     fiscal year 2010, the Annual Percentage shall be 17.5%. For
2     all other fiscal years, the Annual Percentage shall be
3     calculated as a fraction, the numerator of which shall be
4     the amount of refunds approved for payment by the
5     Department during the preceding fiscal year as a result of
6     overpayment of tax liability under subsections (a) and
7     (b)(6), (7), and (8), (c) and (d) of Section 201 of this
8     Act plus the amount of such refunds remaining approved but
9     unpaid at the end of the preceding fiscal year, and the
10     denominator of which shall be the amounts which will be
11     collected pursuant to subsections (a) and (b)(6), (7), and
12     (8), (c) and (d) of Section 201 of this Act during the
13     preceding fiscal year; except that in State fiscal year
14     2002, the Annual Percentage shall in no event exceed 23%.
15     The Director of Revenue shall certify the Annual Percentage
16     to the Comptroller on the last business day of the fiscal
17     year immediately preceding the fiscal year for which it is
18     to be effective.
19         (3) The Comptroller shall order transferred and the
20     Treasurer shall transfer from the Tobacco Settlement
21     Recovery Fund to the Income Tax Refund Fund (i) $35,000,000
22     in January, 2001, (ii) $35,000,000 in January, 2002, and
23     (iii) $35,000,000 in January, 2003.
24         (4) As soon as possible after the end of each fiscal
25     year, the Director shall order transferred and the State
26     Treasurer and State Comptroller shall transfer from the

 

 

09600HB3659sam002 - 27 - LRB096 09388 HLH 41193 a

1     General Revenue Fund to the Income Tax Refund Fund an
2     amount, certified by the Director to the Comptroller, equal
3     to refunds paid during the fiscal year under the Oil
4     Company Gross Income Tax Act.
5     (d) Expenditures from Income Tax Refund Fund.
6         (1) Beginning January 1, 1989, money in the Income Tax
7     Refund Fund shall be expended exclusively for the purpose
8     of paying refunds resulting from overpayment of tax
9     liability under Section 201 of this Act or under the Oil
10     Company Gross Income Tax Act, for paying rebates under
11     Section 208.1 in the event that the amounts in the
12     Homeowners' Tax Relief Fund are insufficient for that
13     purpose, and for making transfers pursuant to this
14     subsection (d).
15         (2) The Director shall order payment of refunds
16     resulting from overpayment of tax liability under Section
17     201 of this Act or under the Oil Company Gross Income Tax
18     Act from the Income Tax Refund Fund only to the extent that
19     amounts collected pursuant to Section 201 of this Act and
20     transfers pursuant to this subsection (d) and item (3) of
21     subsection (c) have been deposited and retained in the
22     Fund.
23         (3) As soon as possible after the end of each fiscal
24     year, the Director shall order transferred and the State
25     Treasurer and State Comptroller shall transfer from the
26     Income Tax Refund Fund to the Personal Property Tax

 

 

09600HB3659sam002 - 28 - LRB096 09388 HLH 41193 a

1     Replacement Fund an amount, certified by the Director to
2     the Comptroller, equal to the excess of the amount
3     collected pursuant to subsections (c) and (d) of Section
4     201 of this Act deposited into the Income Tax Refund Fund
5     during the fiscal year over the amount of refunds resulting
6     from overpayment of tax liability under subsections (c) and
7     (d) of Section 201 of this Act paid from the Income Tax
8     Refund Fund during the fiscal year.
9         (4) As soon as possible after the end of each fiscal
10     year, the Director shall order transferred and the State
11     Treasurer and State Comptroller shall transfer from the
12     Personal Property Tax Replacement Fund to the Income Tax
13     Refund Fund an amount, certified by the Director to the
14     Comptroller, equal to the excess of the amount of refunds
15     resulting from overpayment of tax liability under
16     subsections (c) and (d) of Section 201 of this Act paid
17     from the Income Tax Refund Fund during the fiscal year over
18     the amount collected pursuant to subsections (c) and (d) of
19     Section 201 of this Act deposited into the Income Tax
20     Refund Fund during the fiscal year.
21         (4.5) As soon as possible after the end of fiscal year
22     1999 and of each fiscal year thereafter, the Director shall
23     order transferred and the State Treasurer and State
24     Comptroller shall transfer from the Income Tax Refund Fund
25     to the General Revenue Fund any surplus remaining in the
26     Income Tax Refund Fund as of the end of such fiscal year;

 

 

09600HB3659sam002 - 29 - LRB096 09388 HLH 41193 a

1     excluding for fiscal years 2000, 2001, and 2002 amounts
2     attributable to transfers under item (3) of subsection (c)
3     less refunds resulting from the earned income tax credit.
4         (5) This Act shall constitute an irrevocable and
5     continuing appropriation from the Income Tax Refund Fund
6     for the purpose of paying refunds upon the order of the
7     Director in accordance with the provisions of this Section.
8     (e) Deposits into the Education Assistance Fund and the
9 Income Tax Surcharge Local Government Distributive Fund.
10     On July 1, 1991, and thereafter, of the amounts collected
11 pursuant to subsections (a) and (b) of Section 201 of this Act,
12 minus deposits into the Income Tax Refund Fund, the Department
13 shall deposit 7.3% into the Education Assistance Fund in the
14 State Treasury. Beginning July 1, 1991, and continuing through
15 January 31, 1993, of the amounts collected pursuant to
16 subsections (a) and (b) of Section 201 of the Illinois Income
17 Tax Act, minus deposits into the Income Tax Refund Fund, the
18 Department shall deposit 3.0% into the Income Tax Surcharge
19 Local Government Distributive Fund in the State Treasury.
20 Beginning February 1, 1993 and continuing through June 30,
21 1993, of the amounts collected pursuant to subsections (a) and
22 (b) of Section 201 of the Illinois Income Tax Act, minus
23 deposits into the Income Tax Refund Fund, the Department shall
24 deposit 4.4% into the Income Tax Surcharge Local Government
25 Distributive Fund in the State Treasury. Beginning July 1,
26 1993, and continuing through June 30, 1994, of the amounts

 

 

09600HB3659sam002 - 30 - LRB096 09388 HLH 41193 a

1 collected under subsections (a) and (b) of Section 201 of this
2 Act, minus deposits into the Income Tax Refund Fund, the
3 Department shall deposit 1.475% into the Income Tax Surcharge
4 Local Government Distributive Fund in the State Treasury.
5 (Source: P.A. 95-707, eff. 1-11-08; 95-744, eff. 7-18-08;
6 96-45, eff. 7-15-09; 96-328, eff. 8-11-09.)
 
7     (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
8     Sec. 1501. Definitions.
9     (a) In general. When used in this Act, where not otherwise
10 distinctly expressed or manifestly incompatible with the
11 intent thereof:
12         (1) Business income. The term "business income" means
13     all income that may be treated as apportionable business
14     income under the Constitution of the United States.
15     Business income is net of the deductions allocable thereto.
16     Such term does not include compensation or the deductions
17     allocable thereto. For each taxable year beginning on or
18     after January 1, 2003, a taxpayer may elect to treat all
19     income other than compensation as business income. This
20     election shall be made in accordance with rules adopted by
21     the Department and, once made, shall be irrevocable.
22         (1.5) Captive real estate investment trust:
23             (A) The term "captive real estate investment
24         trust" means a corporation, trust, or association:
25                 (i) that is considered a real estate

 

 

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1             investment trust for the taxable year under
2             Section 856 of the Internal Revenue Code;
3                 (ii) the certificates of beneficial interest
4             or shares of which are not regularly traded on an
5             established securities market; and
6                 (iii) of which more than 50% of the voting
7             power or value of the beneficial interest or
8             shares, at any time during the last half of the
9             taxable year, is owned or controlled, directly,
10             indirectly, or constructively, by a single
11             corporation.
12             (B) The term "captive real estate investment
13         trust" does not include:
14                 (i) a real estate investment trust of which
15             more than 50% of the voting power or value of the
16             beneficial interest or shares is owned or
17             controlled, directly, indirectly, or
18             constructively, by:
19                     (a) a real estate investment trust, other
20                 than a captive real estate investment trust;
21                     (b) a person who is exempt from taxation
22                 under Section 501 of the Internal Revenue Code,
23                 and who is not required to treat income
24                 received from the real estate investment trust
25                 as unrelated business taxable income under
26                 Section 512 of the Internal Revenue Code;

 

 

09600HB3659sam002 - 32 - LRB096 09388 HLH 41193 a

1                     (c) a listed Australian property trust, if
2                 no more than 50% of the voting power or value
3                 of the beneficial interest or shares of that
4                 trust, at any time during the last half of the
5                 taxable year, is owned or controlled, directly
6                 or indirectly, by a single person;
7                     (d) an entity organized as a trust,
8                 provided a listed Australian property trust
9                 described in subparagraph (c) owns or
10                 controls, directly or indirectly, or
11                 constructively, 75% or more of the voting power
12                 or value of the beneficial interests or shares
13                 of such entity; or
14                     (e) an entity that is organized outside of
15                 the laws of the United States and that
16                 satisfies all of the following criteria:
17                         (1) at least 75% of the entity's total
18                     asset value at the close of its taxable
19                     year is represented by real estate assets
20                     (as defined in Section 856(c)(5)(B) of the
21                     Internal Revenue Code, thereby including
22                     shares or certificates of beneficial
23                     interest in any real estate investment
24                     trust), cash and cash equivalents, and
25                     U.S. Government securities;
26                         (2) the entity is not subject to tax on

 

 

09600HB3659sam002 - 33 - LRB096 09388 HLH 41193 a

1                     amounts that are distributed to its
2                     beneficial owners or is exempt from
3                     entity-level taxation;
4                         (3) the entity distributes at least
5                     85% of its taxable income (as computed in
6                     the jurisdiction in which it is organized)
7                     to the holders of its shares or
8                     certificates of beneficial interest on an
9                     annual basis;
10                         (4) either (i) the shares or
11                     beneficial interests of the entity are
12                     regularly traded on an established
13                     securities market or (ii) not more than 10%
14                     of the voting power or value in the entity
15                     is held, directly, indirectly, or
16                     constructively, by a single entity or
17                     individual; and
18                         (5) the entity is organized in a
19                     country that has entered into a tax treaty
20                     with the United States; or
21                 (ii) during its first taxable year for which it
22             elects to be treated as a real estate investment
23             trust under Section 856(c)(1) of the Internal
24             Revenue Code, a real estate investment trust the
25             certificates of beneficial interest or shares of
26             which are not regularly traded on an established

 

 

09600HB3659sam002 - 34 - LRB096 09388 HLH 41193 a

1             securities market, but only if the certificates of
2             beneficial interest or shares of the real estate
3             investment trust are regularly traded on an
4             established securities market prior to the earlier
5             of the due date (including extensions) for filing
6             its return under this Act for that first taxable
7             year or the date it actually files that return.
8             (C) For the purposes of this subsection (1.5), the
9         constructive ownership rules prescribed under Section
10         318(a) of the Internal Revenue Code, as modified by
11         Section 856(d)(5) of the Internal Revenue Code, apply
12         in determining the ownership of stock, assets, or net
13         profits of any person.
14         (2) Commercial domicile. The term "commercial
15     domicile" means the principal place from which the trade or
16     business of the taxpayer is directed or managed.
17         (3) Compensation. The term "compensation" means wages,
18     salaries, commissions and any other form of remuneration
19     paid to employees for personal services.
20         (4) Corporation. The term "corporation" includes
21     associations, joint-stock companies, insurance companies
22     and cooperatives. Any entity, including a limited
23     liability company formed under the Illinois Limited
24     Liability Company Act, shall be treated as a corporation if
25     it is so classified for federal income tax purposes.
26         (5) Department. The term "Department" means the

 

 

09600HB3659sam002 - 35 - LRB096 09388 HLH 41193 a

1     Department of Revenue of this State.
2         (6) Director. The term "Director" means the Director of
3     Revenue of this State.
4         (7) Fiduciary. The term "fiduciary" means a guardian,
5     trustee, executor, administrator, receiver, or any person
6     acting in any fiduciary capacity for any person.
7         (8) Financial organization.
8             (A) The term "financial organization" means any
9         bank, bank holding company, trust company, savings
10         bank, industrial bank, land bank, safe deposit
11         company, private banker, savings and loan association,
12         building and loan association, credit union, currency
13         exchange, cooperative bank, small loan company, sales
14         finance company, investment company, or any person
15         which is owned by a bank or bank holding company. For
16         the purpose of this Section a "person" will include
17         only those persons which a bank holding company may
18         acquire and hold an interest in, directly or
19         indirectly, under the provisions of the Bank Holding
20         Company Act of 1956 (12 U.S.C. 1841, et seq.), except
21         where interests in any person must be disposed of
22         within certain required time limits under the Bank
23         Holding Company Act of 1956.
24             (B) For purposes of subparagraph (A) of this
25         paragraph, the term "bank" includes (i) any entity that
26         is regulated by the Comptroller of the Currency under

 

 

09600HB3659sam002 - 36 - LRB096 09388 HLH 41193 a

1         the National Bank Act, or by the Federal Reserve Board,
2         or by the Federal Deposit Insurance Corporation and
3         (ii) any federally or State chartered bank operating as
4         a credit card bank.
5             (C) For purposes of subparagraph (A) of this
6         paragraph, the term "sales finance company" has the
7         meaning provided in the following item (i) or (ii):
8                 (i) A person primarily engaged in one or more
9             of the following businesses: the business of
10             purchasing customer receivables, the business of
11             making loans upon the security of customer
12             receivables, the business of making loans for the
13             express purpose of funding purchases of tangible
14             personal property or services by the borrower, or
15             the business of finance leasing. For purposes of
16             this item (i), "customer receivable" means:
17                     (a) a retail installment contract or
18                 retail charge agreement within the meaning of
19                 the Sales Finance Agency Act, the Retail
20                 Installment Sales Act, or the Motor Vehicle
21                 Retail Installment Sales Act;
22                     (b) an installment, charge, credit, or
23                 similar contract or agreement arising from the
24                 sale of tangible personal property or services
25                 in a transaction involving a deferred payment
26                 price payable in one or more installments

 

 

09600HB3659sam002 - 37 - LRB096 09388 HLH 41193 a

1                 subsequent to the sale; or
2                     (c) the outstanding balance of a contract
3                 or agreement described in provisions (a) or (b)
4                 of this item (i).
5                 A customer receivable need not provide for
6             payment of interest on deferred payments. A sales
7             finance company may purchase a customer receivable
8             from, or make a loan secured by a customer
9             receivable to, the seller in the original
10             transaction or to a person who purchased the
11             customer receivable directly or indirectly from
12             that seller.
13                 (ii) A corporation meeting each of the
14             following criteria:
15                     (a) the corporation must be a member of an
16                 "affiliated group" within the meaning of
17                 Section 1504(a) of the Internal Revenue Code,
18                 determined without regard to Section 1504(b)
19                 of the Internal Revenue Code;
20                     (b) more than 50% of the gross income of
21                 the corporation for the taxable year must be
22                 interest income derived from qualifying loans.
23                 A "qualifying loan" is a loan made to a member
24                 of the corporation's affiliated group that
25                 originates customer receivables (within the
26                 meaning of item (i)) or to whom customer

 

 

09600HB3659sam002 - 38 - LRB096 09388 HLH 41193 a

1                 receivables originated by a member of the
2                 affiliated group have been transferred, to the
3                 extent the average outstanding balance of
4                 loans from that corporation to members of its
5                 affiliated group during the taxable year do not
6                 exceed the limitation amount for that
7                 corporation. The "limitation amount" for a
8                 corporation is the average outstanding
9                 balances during the taxable year of customer
10                 receivables (within the meaning of item (i))
11                 originated by all members of the affiliated
12                 group. If the average outstanding balances of
13                 the loans made by a corporation to members of
14                 its affiliated group exceed the limitation
15                 amount, the interest income of that
16                 corporation from qualifying loans shall be
17                 equal to its interest income from loans to
18                 members of its affiliated groups times a
19                 fraction equal to the limitation amount
20                 divided by the average outstanding balances of
21                 the loans made by that corporation to members
22                 of its affiliated group;
23                     (c) the total of all shareholder's equity
24                 (including, without limitation, paid-in
25                 capital on common and preferred stock and
26                 retained earnings) of the corporation plus the

 

 

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1                 total of all of its loans, advances, and other
2                 obligations payable or owed to members of its
3                 affiliated group may not exceed 20% of the
4                 total assets of the corporation at any time
5                 during the tax year; and
6                     (d) more than 50% of all interest-bearing
7                 obligations of the affiliated group payable to
8                 persons outside the group determined in
9                 accordance with generally accepted accounting
10                 principles must be obligations of the
11                 corporation.
12             This amendatory Act of the 91st General Assembly is
13         declaratory of existing law.
14             (D) Subparagraphs (B) and (C) of this paragraph are
15         declaratory of existing law and apply retroactively,
16         for all tax years beginning on or before December 31,
17         1996, to all original returns, to all amended returns
18         filed no later than 30 days after the effective date of
19         this amendatory Act of 1996, and to all notices issued
20         on or before the effective date of this amendatory Act
21         of 1996 under subsection (a) of Section 903, subsection
22         (a) of Section 904, subsection (e) of Section 909, or
23         Section 912. A taxpayer that is a "financial
24         organization" that engages in any transaction with an
25         affiliate shall be a "financial organization" for all
26         purposes of this Act.

 

 

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1             (E) For all tax years beginning on or before
2         December 31, 1996, a taxpayer that falls within the
3         definition of a "financial organization" under
4         subparagraphs (B) or (C) of this paragraph, but who
5         does not fall within the definition of a "financial
6         organization" under the Proposed Regulations issued by
7         the Department of Revenue on July 19, 1996, may
8         irrevocably elect to apply the Proposed Regulations
9         for all of those years as though the Proposed
10         Regulations had been lawfully promulgated, adopted,
11         and in effect for all of those years. For purposes of
12         applying subparagraphs (B) or (C) of this paragraph to
13         all of those years, the election allowed by this
14         subparagraph applies only to the taxpayer making the
15         election and to those members of the taxpayer's unitary
16         business group who are ordinarily required to
17         apportion business income under the same subsection of
18         Section 304 of this Act as the taxpayer making the
19         election. No election allowed by this subparagraph
20         shall be made under a claim filed under subsection (d)
21         of Section 909 more than 30 days after the effective
22         date of this amendatory Act of 1996.
23             (F) Finance Leases. For purposes of this
24         subsection, a finance lease shall be treated as a loan
25         or other extension of credit, rather than as a lease,
26         regardless of how the transaction is characterized for

 

 

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1         any other purpose, including the purposes of any
2         regulatory agency to which the lessor is subject. A
3         finance lease is any transaction in the form of a lease
4         in which the lessee is treated as the owner of the
5         leased asset entitled to any deduction for
6         depreciation allowed under Section 167 of the Internal
7         Revenue Code.
8         (9) Fiscal year. The term "fiscal year" means an
9     accounting period of 12 months ending on the last day of
10     any month other than December.
11         (9.5) Fixed place of business. The term "fixed place of
12     business" has the same meaning as that term is given in
13     Section 864 of the Internal Revenue Code and the related
14     Treasury regulations.
15         (10) Includes and including. The terms "includes" and
16     "including" when used in a definition contained in this Act
17     shall not be deemed to exclude other things otherwise
18     within the meaning of the term defined.
19         (11) Internal Revenue Code. The term "Internal Revenue
20     Code" means the United States Internal Revenue Code of 1954
21     or any successor law or laws relating to federal income
22     taxes in effect for the taxable year.
23         (11.5) Investment partnership.
24             (A) The term "investment partnership" means any
25         entity that is treated as a partnership for federal
26         income tax purposes that meets the following

 

 

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1         requirements:
2                 (i) no less than 90% of the partnership's cost
3             of its total assets consists of qualifying
4             investment securities, deposits at banks or other
5             financial institutions, and office space and
6             equipment reasonably necessary to carry on its
7             activities as an investment partnership;
8                 (ii) no less than 90% of its gross income
9             consists of interest, dividends, and gains from
10             the sale or exchange of qualifying investment
11             securities; and
12                 (iii) the partnership is not a dealer in
13             qualifying investment securities.
14             (B) For purposes of this paragraph (11.5), the term
15         "qualifying investment securities" includes all of the
16         following:
17                 (i) common stock, including preferred or debt
18             securities convertible into common stock, and
19             preferred stock;
20                 (ii) bonds, debentures, and other debt
21             securities;
22                 (iii) foreign and domestic currency deposits
23             secured by federal, state, or local governmental
24             agencies;
25                 (iv) mortgage or asset-backed securities
26             secured by federal, state, or local governmental

 

 

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1             agencies;
2                 (v) repurchase agreements and loan
3             participations;
4                 (vi) foreign currency exchange contracts and
5             forward and futures contracts on foreign
6             currencies;
7                 (vii) stock and bond index securities and
8             futures contracts and other similar financial
9             securities and futures contracts on those
10             securities;
11                 (viii) options for the purchase or sale of any
12             of the securities, currencies, contracts, or
13             financial instruments described in items (i) to
14             (vii), inclusive;
15                 (ix) regulated futures contracts;
16                 (x) commodities (not described in Section
17             1221(a)(1) of the Internal Revenue Code) or
18             futures, forwards, and options with respect to
19             such commodities, provided, however, that any item
20             of a physical commodity to which title is actually
21             acquired in the partnership's capacity as a dealer
22             in such commodity shall not be a qualifying
23             investment security;
24                 (xi) derivatives; and
25                 (xii) a partnership interest in another
26             partnership that is an investment partnership.

 

 

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1         (12) Mathematical error. The term "mathematical error"
2     includes the following types of errors, omissions, or
3     defects in a return filed by a taxpayer which prevents
4     acceptance of the return as filed for processing:
5             (A) arithmetic errors or incorrect computations on
6         the return or supporting schedules;
7             (B) entries on the wrong lines;
8             (C) omission of required supporting forms or
9         schedules or the omission of the information in whole
10         or in part called for thereon; and
11             (D) an attempt to claim, exclude, deduct, or
12         improperly report, in a manner directly contrary to the
13         provisions of the Act and regulations thereunder any
14         item of income, exemption, deduction, or credit.
15         (13) Nonbusiness income. The term "nonbusiness income"
16     means all income other than business income or
17     compensation.
18         (14) Nonresident. The term "nonresident" means a
19     person who is not a resident.
20         (15) Paid, incurred and accrued. The terms "paid",
21     "incurred" and "accrued" shall be construed according to
22     the method of accounting upon the basis of which the
23     person's base income is computed under this Act.
24         (16) Partnership and partner. The term "partnership"
25     includes a syndicate, group, pool, joint venture or other
26     unincorporated organization, through or by means of which

 

 

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1     any business, financial operation, or venture is carried
2     on, and which is not, within the meaning of this Act, a
3     trust or estate or a corporation; and the term "partner"
4     includes a member in such syndicate, group, pool, joint
5     venture or organization.
6         The term "partnership" includes any entity, including
7     a limited liability company formed under the Illinois
8     Limited Liability Company Act, classified as a partnership
9     for federal income tax purposes.
10         The term "partnership" does not include a syndicate,
11     group, pool, joint venture, or other unincorporated
12     organization established for the sole purpose of playing
13     the Illinois State Lottery.
14         (17) Part-year resident. The term "part-year resident"
15     means an individual who became a resident during the
16     taxable year or ceased to be a resident during the taxable
17     year. Under Section 1501(a)(20)(A)(i) residence commences
18     with presence in this State for other than a temporary or
19     transitory purpose and ceases with absence from this State
20     for other than a temporary or transitory purpose. Under
21     Section 1501(a)(20)(A)(ii) residence commences with the
22     establishment of domicile in this State and ceases with the
23     establishment of domicile in another State.
24         (18) Person. The term "person" shall be construed to
25     mean and include an individual, a trust, estate,
26     partnership, association, firm, company, corporation,

 

 

09600HB3659sam002 - 46 - LRB096 09388 HLH 41193 a

1     limited liability company, or fiduciary. For purposes of
2     Section 1301 and 1302 of this Act, a "person" means (i) an
3     individual, (ii) a corporation, (iii) an officer, agent, or
4     employee of a corporation, (iv) a member, agent or employee
5     of a partnership, or (v) a member, manager, employee,
6     officer, director, or agent of a limited liability company
7     who in such capacity commits an offense specified in
8     Section 1301 and 1302.
9         (18A) Records. The term "records" includes all data
10     maintained by the taxpayer, whether on paper, microfilm,
11     microfiche, or any type of machine-sensible data
12     compilation.
13         (19) Regulations. The term "regulations" includes
14     rules promulgated and forms prescribed by the Department.
15         (20) Resident. The term "resident" means:
16             (A) an individual (i) who is in this State for
17         other than a temporary or transitory purpose during the
18         taxable year; or (ii) who is domiciled in this State
19         but is absent from the State for a temporary or
20         transitory purpose during the taxable year;
21             (B) The estate of a decedent who at his or her
22         death was domiciled in this State;
23             (C) A trust created by a will of a decedent who at
24         his death was domiciled in this State; and
25             (D) An irrevocable trust, the grantor of which was
26         domiciled in this State at the time such trust became

 

 

09600HB3659sam002 - 47 - LRB096 09388 HLH 41193 a

1         irrevocable. For purpose of this subparagraph, a trust
2         shall be considered irrevocable to the extent that the
3         grantor is not treated as the owner thereof under
4         Sections 671 through 678 of the Internal Revenue Code.
5         (21) Sales. The term "sales" means all gross receipts
6     of the taxpayer not allocated under Sections 301, 302 and
7     303.
8         (22) State. The term "state" when applied to a
9     jurisdiction other than this State means any state of the
10     United States, the District of Columbia, the Commonwealth
11     of Puerto Rico, any Territory or Possession of the United
12     States, and any foreign country, or any political
13     subdivision of any of the foregoing. For purposes of the
14     foreign tax credit under Section 601, the term "state"
15     means any state of the United States, the District of
16     Columbia, the Commonwealth of Puerto Rico, and any
17     territory or possession of the United States, or any
18     political subdivision of any of the foregoing, effective
19     for tax years ending on or after December 31, 1989.
20         (23) Taxable year. The term "taxable year" means the
21     calendar year, or the fiscal year ending during such
22     calendar year, upon the basis of which the base income is
23     computed under this Act. "Taxable year" means, in the case
24     of a return made for a fractional part of a year under the
25     provisions of this Act, the period for which such return is
26     made.

 

 

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1         (24) Taxpayer. The term "taxpayer" means any person
2     subject to the tax imposed by this Act.
3         (25) International banking facility. The term
4     international banking facility shall have the same meaning
5     as is set forth in the Illinois Banking Act or as is set
6     forth in the laws of the United States or regulations of
7     the Board of Governors of the Federal Reserve System.
8         (26) Income Tax Return Preparer.
9             (A) The term "income tax return preparer" means any
10         person who prepares for compensation, or who employs
11         one or more persons to prepare for compensation, any
12         return of tax imposed by this Act or any claim for
13         refund of tax imposed by this Act. The preparation of a
14         substantial portion of a return or claim for refund
15         shall be treated as the preparation of that return or
16         claim for refund.
17             (B) A person is not an income tax return preparer
18         if all he or she does is
19                 (i) furnish typing, reproducing, or other
20             mechanical assistance;
21                 (ii) prepare returns or claims for refunds for
22             the employer by whom he or she is regularly and
23             continuously employed;
24                 (iii) prepare as a fiduciary returns or claims
25             for refunds for any person; or
26                 (iv) prepare claims for refunds for a taxpayer

 

 

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1             in response to any notice of deficiency issued to
2             that taxpayer or in response to any waiver of
3             restriction after the commencement of an audit of
4             that taxpayer or of another taxpayer if a
5             determination in the audit of the other taxpayer
6             directly or indirectly affects the tax liability
7             of the taxpayer whose claims he or she is
8             preparing.
9         (27) Unitary business group. The term "unitary
10     business group" means a group of persons related through
11     common ownership whose business activities are integrated
12     with, dependent upon and contribute to each other. The
13     group will not include those members whose business
14     activity outside the United States is 80% or more of any
15     such member's total business activity; for purposes of this
16     paragraph and clause (a)(3)(B)(ii) of Section 304,
17     business activity within the United States shall be
18     measured by means of the factors ordinarily applicable
19     under subsections (a), (b), (c), (d), or (h) of Section 304
20     except that, in the case of members ordinarily required to
21     apportion business income by means of the 3 factor formula
22     of property, payroll and sales specified in subsection (a)
23     of Section 304, including the formula as weighted in
24     subsection (h) of Section 304, such members shall not use
25     the sales factor in the computation and the results of the
26     property and payroll factor computations of subsection (a)

 

 

09600HB3659sam002 - 50 - LRB096 09388 HLH 41193 a

1     of Section 304 shall be divided by 2 (by one if either the
2     property or payroll factor has a denominator of zero). The
3     computation required by the preceding sentence shall, in
4     each case, involve the division of the member's property,
5     payroll, or revenue miles in the United States, insurance
6     premiums on property or risk in the United States, or
7     financial organization business income from sources within
8     the United States, as the case may be, by the respective
9     worldwide figures for such items. Common ownership in the
10     case of corporations is the direct or indirect control or
11     ownership of more than 50% of the outstanding voting stock
12     of the persons carrying on unitary business activity.
13     Unitary business activity can ordinarily be illustrated
14     where the activities of the members are: (1) in the same
15     general line (such as manufacturing, wholesaling,
16     retailing of tangible personal property, insurance,
17     transportation or finance); or (2) are steps in a
18     vertically structured enterprise or process (such as the
19     steps involved in the production of natural resources,
20     which might include exploration, mining, refining, and
21     marketing); and, in either instance, the members are
22     functionally integrated through the exercise of strong
23     centralized management (where, for example, authority over
24     such matters as purchasing, financing, tax compliance,
25     product line, personnel, marketing and capital investment
26     is not left to each member). In no event, however, will any

 

 

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1     unitary business group include members which are
2     ordinarily required to apportion business income under
3     different subsections of Section 304 except that for tax
4     years ending on or after December 31, 1987 this prohibition
5     shall not apply to a unitary business group composed of one
6     or more taxpayers all of which apportion business income
7     pursuant to subsection (b) of Section 304, or all of which
8     apportion business income pursuant to subsection (d) of
9     Section 304, and a holding company of such single-factor
10     taxpayers (see definition of "financial organization" for
11     rule regarding holding companies of financial
12     organizations). If a unitary business group would, but for
13     the preceding sentence, include members that are
14     ordinarily required to apportion business income under
15     different subsections of Section 304, then for each
16     subsection of Section 304 for which there are two or more
17     members, there shall be a separate unitary business group
18     composed of such members. For purposes of the preceding two
19     sentences, a member is "ordinarily required to apportion
20     business income" under a particular subsection of Section
21     304 if it would be required to use the apportionment method
22     prescribed by such subsection except for the fact that it
23     derives business income solely from Illinois. As used in
24     this paragraph, the phrase "United States" means only the
25     50 states and the District of Columbia, and for taxable
26     years ending on or after December 31, 2011, but does not

 

 

09600HB3659sam002 - 52 - LRB096 09388 HLH 41193 a

1     include any territory or possession of the United States
2     and or any area over which the United States has asserted
3     jurisdiction or claimed exclusive rights with respect to
4     the exploration for or exploitation of natural resources.
5         If the unitary business group members' accounting
6     periods differ, the common parent's accounting period or,
7     if there is no common parent, the accounting period of the
8     member that is expected to have, on a recurring basis, the
9     greatest Illinois income tax liability must be used to
10     determine whether to use the apportionment method provided
11     in subsection (a) or subsection (h) of Section 304. The
12     prohibition against membership in a unitary business group
13     for taxpayers ordinarily required to apportion income
14     under different subsections of Section 304 does not apply
15     to taxpayers required to apportion income under subsection
16     (a) and subsection (h) of Section 304. The provisions of
17     this amendatory Act of 1998 apply to tax years ending on or
18     after December 31, 1998.
19         (28) Subchapter S corporation. The term "Subchapter S
20     corporation" means a corporation for which there is in
21     effect an election under Section 1362 of the Internal
22     Revenue Code, or for which there is a federal election to
23     opt out of the provisions of the Subchapter S Revision Act
24     of 1982 and have applied instead the prior federal
25     Subchapter S rules as in effect on July 1, 1982.
26         (30) Foreign person. The term "foreign person" means

 

 

09600HB3659sam002 - 53 - LRB096 09388 HLH 41193 a

1     any person who is a nonresident alien individual and any
2     nonindividual entity, regardless of where created or
3     organized, whose business activity outside the United
4     States is 80% or more of the entity's total business
5     activity.
 
6     (b) Other definitions.
7         (1) Words denoting number, gender, and so forth, when
8     used in this Act, where not otherwise distinctly expressed
9     or manifestly incompatible with the intent thereof:
10             (A) Words importing the singular include and apply
11         to several persons, parties or things;
12             (B) Words importing the plural include the
13         singular; and
14             (C) Words importing the masculine gender include
15         the feminine as well.
16         (2) "Company" or "association" as including successors
17     and assigns. The word "company" or "association", when used
18     in reference to a corporation, shall be deemed to embrace
19     the words "successors and assigns of such company or
20     association", and in like manner as if these last-named
21     words, or words of similar import, were expressed.
22         (3) Other terms. Any term used in any Section of this
23     Act with respect to the application of, or in connection
24     with, the provisions of any other Section of this Act shall
25     have the same meaning as in such other Section.

 

 

09600HB3659sam002 - 54 - LRB096 09388 HLH 41193 a

1 (Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08;
2 96-641, eff. 8-24-09.)
 
3     Section 99. Effective date. This Act takes effect upon
4 becoming law.".