Rep. Barbara Flynn Currie

Filed: 5/30/2009

 

 


 

 


 
09600SB0256ham002 LRB096 05667 HLH 27832 a

1
AMENDMENT TO SENATE BILL 256

2     AMENDMENT NO. ______. Amend Senate Bill 256, AS AMENDED, by
3 replacing everything after the enacting clause with the
4 following:
 
5     "Section 5. The Illinois Income Tax Act is amended by
6 changing Section 201 as follows:
 
7     (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
8     Sec. 201. Tax Imposed.
9     (a) In general. A tax measured by net income is hereby
10 imposed on every individual, corporation, trust and estate for
11 each taxable year ending after July 31, 1969 on the privilege
12 of earning or receiving income in or as a resident of this
13 State. Such tax shall be in addition to all other occupation or
14 privilege taxes imposed by this State or by any municipal
15 corporation or political subdivision thereof.
16     (b) Rates. The tax imposed by subsection (a) of this

 

 

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

 

 

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

 

 

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1 1, 1981, and thereafter, the rate of 2.85% specified in this
2 subsection shall be reduced to 2.5%, and in the case of a
3 partnership, trust or a Subchapter S corporation shall be an
4 additional amount equal to 1.5% of such taxpayer's net income
5 for the taxable year.
6     (d-1) Rate reduction for certain foreign insurers. In the
7 case of a foreign insurer, as defined by Section 35A-5 of the
8 Illinois Insurance Code, whose state or country of domicile
9 imposes on insurers domiciled in Illinois a retaliatory tax
10 (excluding any insurer whose premiums from reinsurance assumed
11 are 50% or more of its total insurance premiums as determined
12 under paragraph (2) of subsection (b) of Section 304, except
13 that for purposes of this determination premiums from
14 reinsurance do not include premiums from inter-affiliate
15 reinsurance arrangements), beginning with taxable years ending
16 on or after December 31, 1999, the sum of the rates of tax
17 imposed by subsections (b) and (d) shall be reduced (but not
18 increased) to the rate at which the total amount of tax imposed
19 under this Act, net of all credits allowed under this Act,
20 shall equal (i) the total amount of tax that would be imposed
21 on the foreign insurer's net income allocable to Illinois for
22 the taxable year by such foreign insurer's state or country of
23 domicile if that net income were subject to all income taxes
24 and taxes measured by net income imposed by such foreign
25 insurer's state or country of domicile, net of all credits
26 allowed or (ii) a rate of zero if no such tax is imposed on such

 

 

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

 

 

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1     has been reduced to zero, against the rates imposed by
2     subsection (d).
3     This subsection (d-1) is exempt from the provisions of
4 Section 250.
5     (e) Investment credit. A taxpayer shall be allowed a credit
6 against the Personal Property Tax Replacement Income Tax for
7 investment in qualified property.
8         (1) A taxpayer shall be allowed a credit equal to .5%
9     of the basis of qualified property placed in service during
10     the taxable year, provided such property is placed in
11     service on or after July 1, 1984. There shall be allowed an
12     additional credit equal to .5% of the basis of qualified
13     property placed in service during the taxable year,
14     provided such property is placed in service on or after
15     July 1, 1986, and the taxpayer's base employment within
16     Illinois has increased by 1% or more over the preceding
17     year as determined by the taxpayer's employment records
18     filed with the Illinois Department of Employment Security.
19     Taxpayers who are new to Illinois shall be deemed to have
20     met the 1% growth in base employment for the first year in
21     which they file employment records with the Illinois
22     Department of Employment Security. The provisions added to
23     this Section by Public Act 85-1200 (and restored by Public
24     Act 87-895) shall be construed as declaratory of existing
25     law and not as a new enactment. If, in any year, the
26     increase in base employment within Illinois over the

 

 

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1     preceding year is less than 1%, the additional credit shall
2     be limited to that percentage times a fraction, the
3     numerator of which is .5% and the denominator of which is
4     1%, but shall not exceed .5%. The investment credit shall
5     not be allowed to the extent that it would reduce a
6     taxpayer's liability in any tax year below zero, nor may
7     any credit for qualified property be allowed for any year
8     other than the year in which the property was placed in
9     service in Illinois. For tax years ending on or after
10     December 31, 1987, and on or before December 31, 1988, the
11     credit shall be allowed for the tax year in which the
12     property is placed in service, or, if the amount of the
13     credit exceeds the tax liability for that year, whether it
14     exceeds the original liability or the liability as later
15     amended, such excess may be carried forward and applied to
16     the tax liability of the 5 taxable years following the
17     excess credit years if the taxpayer (i) makes investments
18     which cause the creation of a minimum of 2,000 full-time
19     equivalent jobs in Illinois, (ii) is located in an
20     enterprise zone established pursuant to the Illinois
21     Enterprise Zone Act and (iii) is certified by the
22     Department of Commerce and Community Affairs (now
23     Department of Commerce and Economic Opportunity) as
24     complying with the requirements specified in clause (i) and
25     (ii) by July 1, 1986. The Department of Commerce and
26     Community Affairs (now Department of Commerce and Economic

 

 

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1     Opportunity) shall notify the Department of Revenue of all
2     such certifications immediately. For tax years ending
3     after December 31, 1988, the credit shall be allowed for
4     the tax year in which the property is placed in service,
5     or, if the amount of the credit exceeds the tax liability
6     for that year, whether it exceeds the original liability or
7     the liability as later amended, such excess may be carried
8     forward and applied to the tax liability of the 5 taxable
9     years following the excess credit years. The credit shall
10     be applied to the earliest year for which there is a
11     liability. If there is credit from more than one tax year
12     that is available to offset a liability, earlier credit
13     shall be applied first.
14         (2) The term "qualified property" means property
15     which:
16             (A) is tangible, whether new or used, including
17         buildings and structural components of buildings and
18         signs that are real property, but not including land or
19         improvements to real property that are not a structural
20         component of a building such as landscaping, sewer
21         lines, local access roads, fencing, parking lots, and
22         other appurtenances;
23             (B) is depreciable pursuant to Section 167 of the
24         Internal Revenue Code, except that "3-year property"
25         as defined in Section 168(c)(2)(A) of that Code is not
26         eligible for the credit provided by this subsection

 

 

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

 

 

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1     resale. For purposes of this subsection (e), "tangible
2     personal property" has the same meaning as when that term
3     is used in the Retailers' Occupation Tax Act, and, for
4     taxable years ending after December 31, 2008, does not
5     include the generation, transmission, or distribution of
6     electricity consumer goods or commodities.
7         (4) The basis of qualified property shall be the basis
8     used to compute the depreciation deduction for federal
9     income tax purposes.
10         (5) If the basis of the property for federal income tax
11     depreciation purposes is increased after it has been placed
12     in service in Illinois by the taxpayer, the amount of such
13     increase shall be deemed property placed in service on the
14     date of such increase in basis.
15         (6) The term "placed in service" shall have the same
16     meaning as under Section 46 of the Internal Revenue Code.
17         (7) If during any taxable year, any property ceases to
18     be qualified property in the hands of the taxpayer within
19     48 months after being placed in service, or the situs of
20     any qualified property is moved outside Illinois within 48
21     months after being placed in service, the Personal Property
22     Tax Replacement Income Tax for such taxable year shall be
23     increased. Such increase shall be determined by (i)
24     recomputing the investment credit which would have been
25     allowed for the year in which credit for such property was
26     originally allowed by eliminating such property from such

 

 

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

 

 

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1     shall be irrevocable.
2         For taxable years ending on or after December 31, 2000,
3     a partner that qualifies its partnership for a subtraction
4     under subparagraph (I) of paragraph (2) of subsection (d)
5     of Section 203 or a shareholder that qualifies a Subchapter
6     S corporation for a subtraction under subparagraph (S) of
7     paragraph (2) of subsection (b) of Section 203 shall be
8     allowed a credit under this subsection (e) equal to its
9     share of the credit earned under this subsection (e) during
10     the taxable year by the partnership or Subchapter S
11     corporation, determined in accordance with the
12     determination of income and distributive share of income
13     under Sections 702 and 704 and Subchapter S of the Internal
14     Revenue Code. This paragraph is exempt from the provisions
15     of Section 250.
16     (f) Investment credit; Enterprise Zone; River Edge
17 Redevelopment Zone.
18         (1) A taxpayer shall be allowed a credit against the
19     tax imposed by subsections (a) and (b) of this Section for
20     investment in qualified property which is placed in service
21     in an Enterprise Zone created pursuant to the Illinois
22     Enterprise Zone Act or, for property placed in service on
23     or after July 1, 2006, a River Edge Redevelopment Zone
24     established pursuant to the River Edge Redevelopment Zone
25     Act. For partners, shareholders of Subchapter S
26     corporations, and owners of limited liability companies,

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1     and (b) of this Section to below zero. For tax years ending
2     on or after December 31, 1987, the credit shall be allowed
3     for the tax year in which the property is placed in
4     service, or, if the amount of the credit exceeds the tax
5     liability for that year, whether it exceeds the original
6     liability or the liability as later amended, such excess
7     may be carried forward and applied to the tax liability of
8     the 5 taxable years following the excess credit year. The
9     credit shall be applied to the earliest year for which
10     there is a liability. If there is credit from more than one
11     tax year that is available to offset a liability, the
12     credit accruing first in time shall be applied first.
13         Changes made in this subdivision (h)(1) by Public Act
14     88-670 restore changes made by Public Act 85-1182 and
15     reflect existing law.
16         (2) The term qualified property means property which:
17             (A) is tangible, whether new or used, including
18         buildings and structural components of buildings;
19             (B) is depreciable pursuant to Section 167 of the
20         Internal Revenue Code, except that "3-year property"
21         as defined in Section 168(c)(2)(A) of that Code is not
22         eligible for the credit provided by this subsection
23         (h);
24             (C) is acquired by purchase as defined in Section
25         179(d) of the Internal Revenue Code; and
26             (D) is not eligible for the Enterprise Zone

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1     (k) Research and development credit.
2     For tax years ending after July 1, 1990 and prior to
3 December 31, 2003, and beginning again for tax years ending on
4 or after December 31, 2004, a taxpayer shall be allowed a
5 credit against the tax imposed by subsections (a) and (b) of
6 this Section for increasing research activities in this State.
7 The credit allowed against the tax imposed by subsections (a)
8 and (b) shall be equal to 6 1/2% of the qualifying expenditures
9 for increasing research activities in this State. For partners,
10 shareholders of subchapter S corporations, and owners of
11 limited liability companies, if the liability company is
12 treated as a partnership for purposes of federal and State
13 income taxation, there shall be allowed a credit under this
14 subsection to be determined in accordance with the
15 determination of income and distributive share of income under
16 Sections 702 and 704 and subchapter S of the Internal Revenue
17 Code.
18     For purposes of this subsection, "qualifying expenditures"
19 means the qualifying expenditures as defined for the federal
20 credit for increasing research activities which would be
21 allowable under Section 41 of the Internal Revenue Code and
22 which are conducted in this State, "qualifying expenditures for
23 increasing research activities in this State" means the excess
24 of qualifying expenditures for the taxable year in which
25 incurred over qualifying expenditures for the base period,
26 "qualifying expenditures for the base period" means the average

 

 

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

 

 

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1 years beginning before January 1, 1999.
2     (l) Environmental Remediation Tax Credit.
3         (i) For tax years ending after December 31, 1997 and on
4     or before December 31, 2001, a taxpayer shall be allowed a
5     credit against the tax imposed by subsections (a) and (b)
6     of this Section for certain amounts paid for unreimbursed
7     eligible remediation costs, as specified in this
8     subsection. For purposes of this Section, "unreimbursed
9     eligible remediation costs" means costs approved by the
10     Illinois Environmental Protection Agency ("Agency") under
11     Section 58.14 of the Environmental Protection Act that were
12     paid in performing environmental remediation at a site for
13     which a No Further Remediation Letter was issued by the
14     Agency and recorded under Section 58.10 of the
15     Environmental Protection Act. The credit must be claimed
16     for the taxable year in which Agency approval of the
17     eligible remediation costs is granted. The credit is not
18     available to any taxpayer if the taxpayer or any related
19     party caused or contributed to, in any material respect, a
20     release of regulated substances on, in, or under the site
21     that was identified and addressed by the remedial action
22     pursuant to the Site Remediation Program of the
23     Environmental Protection Act. After the Pollution Control
24     Board rules are adopted pursuant to the Illinois
25     Administrative Procedure Act for the administration and
26     enforcement of Section 58.9 of the Environmental

 

 

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

 

 

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

 

 

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1 ending after December 31, 1999, a taxpayer who is the custodian
2 of one or more qualifying pupils shall be allowed a credit
3 against the tax imposed by subsections (a) and (b) of this
4 Section for qualified education expenses incurred on behalf of
5 the qualifying pupils. The credit shall be equal to 25% of
6 qualified education expenses, but in no event may the total
7 credit under this subsection claimed by a family that is the
8 custodian of qualifying pupils exceed $500. In no event shall a
9 credit under this subsection reduce the taxpayer's liability
10 under this Act to less than zero. This subsection is exempt
11 from the provisions of Section 250 of this Act.
12     For purposes of this subsection:
13     "Qualifying pupils" means individuals who (i) are
14 residents of the State of Illinois, (ii) are under the age of
15 21 at the close of the school year for which a credit is
16 sought, and (iii) during the school year for which a credit is
17 sought were full-time pupils enrolled in a kindergarten through
18 twelfth grade education program at any school, as defined in
19 this subsection.
20     "Qualified education expense" means the amount incurred on
21 behalf of a qualifying pupil in excess of $250 for tuition,
22 book fees, and lab fees at the school in which the pupil is
23 enrolled during the regular school year.
24     "School" means any public or nonpublic elementary or
25 secondary school in Illinois that is in compliance with Title
26 VI of the Civil Rights Act of 1964 and attendance at which

 

 

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1 satisfies the requirements of Section 26-1 of the School Code,
2 except that nothing shall be construed to require a child to
3 attend any particular public or nonpublic school to qualify for
4 the credit under this Section.
5     "Custodian" means, with respect to qualifying pupils, an
6 Illinois resident who is a parent, the parents, a legal
7 guardian, or the legal guardians of the qualifying pupils.
8     (n) River Edge Redevelopment Zone site remediation tax
9 credit.
10         (i) For tax years ending on or after December 31, 2006,
11     a taxpayer shall be allowed a credit against the tax
12     imposed by subsections (a) and (b) of this Section for
13     certain amounts paid for unreimbursed eligible remediation
14     costs, as specified in this subsection. For purposes of
15     this Section, "unreimbursed eligible remediation costs"
16     means costs approved by the Illinois Environmental
17     Protection Agency ("Agency") under Section 58.14a of the
18     Environmental Protection Act that were paid in performing
19     environmental remediation at a site within a River Edge
20     Redevelopment Zone for which a No Further Remediation
21     Letter was issued by the Agency and recorded under Section
22     58.10 of the Environmental Protection Act. The credit must
23     be claimed for the taxable year in which Agency approval of
24     the eligible remediation costs is granted. The credit is
25     not available to any taxpayer if the taxpayer or any
26     related party caused or contributed to, in any material

 

 

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

 

 

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1     offset a liability, the earliest credit arising under this
2     subsection shall be applied first. A credit allowed under
3     this subsection may be sold to a buyer as part of a sale of
4     all or part of the remediation site for which the credit
5     was granted. The purchaser of a remediation site and the
6     tax credit shall succeed to the unused credit and remaining
7     carry-forward period of the seller. To perfect the
8     transfer, the assignor shall record the transfer in the
9     chain of title for the site and provide written notice to
10     the Director of the Illinois Department of Revenue of the
11     assignor's intent to sell the remediation site and the
12     amount of the tax credit to be transferred as a portion of
13     the sale. In no event may a credit be transferred to any
14     taxpayer if the taxpayer or a related party would not be
15     eligible under the provisions of subsection (i).
16         (iii) For purposes of this Section, the term "site"
17     shall have the same meaning as under Section 58.2 of the
18     Environmental Protection Act.
19         (iv) This subsection is exempt from the provisions of
20     Section 250.
21 (Source: P.A. 94-1021, eff. 7-12-06; 95-454, eff. 8-27-07.)
 
22     Section 99. Effective date. This Act takes effect upon
23 becoming law.".