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1 | AN ACT concerning revenue.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Income Tax Act is amended by | ||||||
5 | changing Section 1501 as follows:
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6 | (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
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7 | Sec. 1501. Definitions.
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8 | (a) In general. When used in this Act, where not
otherwise | ||||||
9 | distinctly expressed or manifestly incompatible with the | ||||||
10 | intent
thereof:
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11 | (1) Business income. The term "business income" means | ||||||
12 | all income that may be treated as apportionable business | ||||||
13 | income under the Constitution of the United States. | ||||||
14 | Business income is net of the deductions allocable thereto. | ||||||
15 | Such term does not include compensation
or the deductions | ||||||
16 | allocable thereto.
For each taxable year beginning on or | ||||||
17 | after January 1, 2003, a taxpayer may
elect to treat all | ||||||
18 | income other than compensation as business income. This
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19 | election shall be made in accordance with rules adopted by | ||||||
20 | the Department and,
once made, shall be irrevocable.
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21 | (1.5) Captive real estate investment trust:
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22 | (A) The term "captive real estate investment | ||||||
23 | trust" means a corporation, trust, or association:
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1 | (i) that is considered a real estate | ||||||
2 | investment trust for the taxable year under | ||||||
3 | Section 856 of the Internal Revenue Code;
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4 | (ii) the certificates of beneficial interest | ||||||
5 | or shares of which are not regularly traded on an | ||||||
6 | established securities market; and | ||||||
7 | (iii) of which more than 50% of the voting | ||||||
8 | power or value of the beneficial interest or | ||||||
9 | shares, at any time during the last half of the | ||||||
10 | taxable year, is owned or controlled, directly, | ||||||
11 | indirectly, or constructively, by a single | ||||||
12 | corporation person . | ||||||
13 | (B) The term "captive real estate investment | ||||||
14 | trust" does not include: | ||||||
15 | (i) a real estate investment trust of which | ||||||
16 | more than 50% of the voting power or value of the | ||||||
17 | beneficial interest or shares is owned or | ||||||
18 | controlled, directly, indirectly, or | ||||||
19 | constructively, by: | ||||||
20 | (a) a real estate investment trust, other | ||||||
21 | than a captive real estate investment trust; | ||||||
22 | (b) a person who is exempt from taxation | ||||||
23 | under Section 501 of the Internal Revenue Code, | ||||||
24 | and who is not required to treat income | ||||||
25 | received from the real estate investment trust | ||||||
26 | as unrelated business taxable income under |
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1 | Section 512 of the Internal Revenue Code; | ||||||
2 | (c) a listed Australian property trust, if | ||||||
3 | no more than 50% of the voting power or value | ||||||
4 | of the beneficial interest or shares of that | ||||||
5 | trust, at any time during the last half of the | ||||||
6 | taxable year, is owned or controlled, directly | ||||||
7 | or indirectly, by a single person; or | ||||||
8 | (d) an entity organized as a trust, | ||||||
9 | provided a listed Australian property trust | ||||||
10 | described in subparagraph (c) owns or | ||||||
11 | controls, directly or indirectly, or | ||||||
12 | constructively, 75% or more of the voting power | ||||||
13 | or value of the beneficial interests or shares | ||||||
14 | of such entity; or | ||||||
15 | (e) an entity that is organized outside of | ||||||
16 | the laws of the United States and that | ||||||
17 | satisfies all of the following criteria: | ||||||
18 | (1) at least 75% of the entity's total | ||||||
19 | asset value at the close of its taxable | ||||||
20 | year is represented by real estate assets | ||||||
21 | (as defined in Section 856(c)(5)(B) of the | ||||||
22 | Internal Revenue Code, thereby including | ||||||
23 | shares or certificates of beneficial | ||||||
24 | interest in any real estate investment | ||||||
25 | trust), cash and cash equivalents, and | ||||||
26 | U.S. Government securities; |
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1 | (2) the entity is not subject to tax on | ||||||
2 | amounts that are distributed to its | ||||||
3 | beneficial owners or is exempt from | ||||||
4 | entity-level taxation; | ||||||
5 | (3) the entity distributes at least | ||||||
6 | 85% of its taxable income (as computed in | ||||||
7 | the jurisdiction in which it is organized) | ||||||
8 | to the holders of its shares or | ||||||
9 | certificates of beneficial interest on an | ||||||
10 | annual basis; | ||||||
11 | (4) either (i) the shares or | ||||||
12 | beneficial interests of the entity are | ||||||
13 | regularly traded on an established | ||||||
14 | securities market or (ii) not more than 10% | ||||||
15 | of the voting power or value in the entity | ||||||
16 | is held, directly, indirectly, or | ||||||
17 | constructively, by a single entity or | ||||||
18 | individual; and | ||||||
19 | (5) the entity is organized in a | ||||||
20 | country that has entered into a tax treaty | ||||||
21 | with the United States; or | ||||||
22 | (ii) during its first taxable year for which it | ||||||
23 | elects to be treated as a real estate investment | ||||||
24 | trust under Section 856(c)(1) of the Internal | ||||||
25 | Revenue Code, a real estate investment trust the | ||||||
26 | certificates of beneficial interest or shares of |
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1 | which are not regularly traded on an established | ||||||
2 | securities market, but only if the certificates of | ||||||
3 | beneficial interest or shares of the real estate | ||||||
4 | investment trust are regularly traded on an | ||||||
5 | established securities market prior to the earlier | ||||||
6 | of the due date (including extensions) for filing | ||||||
7 | its return under this Act for that first taxable | ||||||
8 | year or the date it actually files that return. | ||||||
9 | (C) For the purposes of this subsection (1.5), the | ||||||
10 | constructive ownership rules prescribed under Section | ||||||
11 | 318(a) of the Internal Revenue Code, as modified by | ||||||
12 | Section 856(d)(5) of the Internal Revenue Code, apply | ||||||
13 | in determining the ownership of stock, assets, or net | ||||||
14 | profits of any person.
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15 | (2) Commercial domicile. The term "commercial | ||||||
16 | domicile" means the
principal
place from which the trade or | ||||||
17 | business of the taxpayer is directed or managed.
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18 | (3) Compensation. The term "compensation" means wages, | ||||||
19 | salaries,
commissions
and any other form of remuneration | ||||||
20 | paid to employees for personal services.
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21 | (4) Corporation. The term "corporation" includes | ||||||
22 | associations, joint-stock
companies, insurance companies | ||||||
23 | and cooperatives. Any entity, including a
limited | ||||||
24 | liability company formed under the Illinois Limited | ||||||
25 | Liability Company
Act, shall be treated as a corporation if | ||||||
26 | it is so classified for federal
income tax purposes.
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1 | (5) Department. The term "Department" means the | ||||||
2 | Department of Revenue of
this State.
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3 | (6) Director. The term "Director" means the Director of | ||||||
4 | Revenue of this
State.
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5 | (7) Fiduciary. The term "fiduciary" means a guardian, | ||||||
6 | trustee, executor,
administrator, receiver, or any person | ||||||
7 | acting in any fiduciary capacity for any
person.
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8 | (8) Financial organization.
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9 | (A) The term "financial organization" means
any
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10 | bank, bank holding company, trust company, savings | ||||||
11 | bank, industrial bank,
land bank, safe deposit | ||||||
12 | company, private banker, savings and loan association,
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13 | building and loan association, credit union, currency | ||||||
14 | exchange, cooperative
bank, small loan company, sales | ||||||
15 | finance company, investment company, or any
person | ||||||
16 | which is owned by a bank or bank holding company. For | ||||||
17 | the purpose of
this Section a "person" will include | ||||||
18 | only those persons which a bank holding
company may | ||||||
19 | acquire and hold an interest in, directly or | ||||||
20 | indirectly, under the
provisions of the Bank Holding | ||||||
21 | Company Act of 1956 (12 U.S.C. 1841, et seq.),
except | ||||||
22 | where interests in any person must be disposed of | ||||||
23 | within certain
required time limits under the Bank | ||||||
24 | Holding Company Act of 1956.
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25 | (B) For purposes of subparagraph (A) of this | ||||||
26 | paragraph, the term
"bank" includes (i) any entity that |
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1 | is regulated by the Comptroller of the
Currency under | ||||||
2 | the National Bank Act, or by the Federal Reserve Board, | ||||||
3 | or by
the
Federal Deposit Insurance Corporation and | ||||||
4 | (ii) any federally or State chartered
bank
operating as | ||||||
5 | a credit card bank.
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6 | (C) For purposes of subparagraph (A) of this | ||||||
7 | paragraph, the term
"sales finance company" has the | ||||||
8 | meaning provided in the following item (i) or
(ii):
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9 | (i) A person primarily engaged in one or more | ||||||
10 | of the following
businesses: the business of | ||||||
11 | purchasing customer receivables, the business
of | ||||||
12 | making loans upon the security of customer | ||||||
13 | receivables, the
business of making loans for the | ||||||
14 | express purpose of funding purchases of
tangible | ||||||
15 | personal property or services by the borrower, or | ||||||
16 | the business of
finance leasing. For purposes of | ||||||
17 | this item (i), "customer receivable"
means:
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18 | (a) a retail installment contract or | ||||||
19 | retail charge agreement within
the
meaning
of | ||||||
20 | the Sales Finance Agency Act, the Retail | ||||||
21 | Installment Sales Act, or the
Motor Vehicle | ||||||
22 | Retail Installment Sales Act;
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23 | (b) an installment, charge, credit, or | ||||||
24 | similar contract or agreement
arising from
the | ||||||
25 | sale of tangible personal property or services | ||||||
26 | in a transaction involving
a deferred payment |
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1 | price payable in one or more installments | ||||||
2 | subsequent
to the sale; or
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3 | (c) the outstanding balance of a contract | ||||||
4 | or agreement described in
provisions
(a) or (b) | ||||||
5 | of this item (i).
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6 | A customer receivable need not provide for | ||||||
7 | payment of interest on
deferred
payments. A sales | ||||||
8 | finance company may purchase a customer receivable | ||||||
9 | from, or
make a loan secured by a customer | ||||||
10 | receivable to, the seller in the original
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11 | transaction or to a person who purchased the | ||||||
12 | customer receivable directly or
indirectly from | ||||||
13 | that seller.
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14 | (ii) A corporation meeting each of the | ||||||
15 | following criteria:
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16 | (a) the corporation must be a member of an | ||||||
17 | "affiliated group" within
the
meaning of | ||||||
18 | Section 1504(a) of the Internal Revenue Code, | ||||||
19 | determined
without regard to Section 1504(b) | ||||||
20 | of the Internal Revenue Code;
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21 | (b) more than 50% of the gross income of | ||||||
22 | the corporation for the
taxable
year
must be | ||||||
23 | interest income derived from qualifying loans. | ||||||
24 | A "qualifying
loan" is a loan made to a member | ||||||
25 | of the corporation's affiliated group that
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26 | originates customer receivables (within the |
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1 | meaning of item (i)) or to whom
customer | ||||||
2 | receivables originated by a member of the | ||||||
3 | affiliated group have been
transferred, to
the | ||||||
4 | extent the average outstanding balance of | ||||||
5 | loans from that corporation
to members of its | ||||||
6 | affiliated group during the taxable year do not | ||||||
7 | exceed
the limitation amount for that | ||||||
8 | corporation. The "limitation amount" for a
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9 | corporation is the average outstanding | ||||||
10 | balances during the taxable year of
customer | ||||||
11 | receivables (within the meaning of item (i)) | ||||||
12 | originated by
all members of the affiliated | ||||||
13 | group.
If the average outstanding balances of | ||||||
14 | the
loans made by a corporation to members of | ||||||
15 | its affiliated group exceed the
limitation | ||||||
16 | amount, the interest income of that | ||||||
17 | corporation from qualifying
loans shall be | ||||||
18 | equal to its interest income from loans to | ||||||
19 | members of its
affiliated groups times a | ||||||
20 | fraction equal to the limitation amount | ||||||
21 | divided by
the average outstanding balances of | ||||||
22 | the loans made by that corporation to
members | ||||||
23 | of its affiliated group;
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24 | (c) the total of all shareholder's equity | ||||||
25 | (including, without
limitation,
paid-in
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26 | capital on common and preferred stock and |
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1 | retained earnings) of the
corporation plus the | ||||||
2 | total of all of its loans, advances, and other
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3 | obligations payable or owed to members of its | ||||||
4 | affiliated group may not
exceed 20% of the | ||||||
5 | total assets of the corporation at any time | ||||||
6 | during the tax
year; and
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7 | (d) more than 50% of all interest-bearing | ||||||
8 | obligations of the
affiliated group payable to | ||||||
9 | persons outside the group determined in | ||||||
10 | accordance
with generally accepted accounting | ||||||
11 | principles must be obligations of the
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12 | corporation.
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13 | This amendatory Act of the 91st General Assembly is | ||||||
14 | declaratory of
existing
law.
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15 | (D) Subparagraphs
(B) and (C) of this paragraph are | ||||||
16 | declaratory of
existing law and apply retroactively, | ||||||
17 | for all tax years beginning on or before
December 31, | ||||||
18 | 1996,
to all original returns, to all amended returns | ||||||
19 | filed no later than 30
days after the effective date of | ||||||
20 | this amendatory Act of 1996, and to all
notices issued | ||||||
21 | on or before the effective date of this amendatory Act | ||||||
22 | of 1996
under subsection (a) of Section 903, subsection | ||||||
23 | (a) of Section 904,
subsection (e) of Section 909, or | ||||||
24 | Section 912.
A taxpayer that is a "financial | ||||||
25 | organization" that engages in any transaction
with an | ||||||
26 | affiliate shall be a "financial organization" for all |
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1 | purposes of this
Act.
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2 | (E) For all tax years beginning on or
before | ||||||
3 | December 31, 1996, a taxpayer that falls within the | ||||||
4 | definition
of a
"financial organization" under | ||||||
5 | subparagraphs (B) or (C) of this paragraph, but
who | ||||||
6 | does
not fall within the definition of a "financial | ||||||
7 | organization" under the Proposed
Regulations issued by | ||||||
8 | the Department of Revenue on July 19, 1996, may
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9 | irrevocably elect to apply the Proposed Regulations | ||||||
10 | for all of those years as
though the Proposed | ||||||
11 | Regulations had been lawfully promulgated, adopted, | ||||||
12 | and in
effect for all of those years. For purposes of | ||||||
13 | applying subparagraphs (B) or
(C) of
this
paragraph to | ||||||
14 | all of those years, the election allowed by this | ||||||
15 | subparagraph
applies only to the taxpayer making the | ||||||
16 | election and to those members of the
taxpayer's unitary | ||||||
17 | business group who are ordinarily required to | ||||||
18 | apportion
business income under the same subsection of | ||||||
19 | Section 304 of this Act as the
taxpayer making the | ||||||
20 | election. No election allowed by this subparagraph | ||||||
21 | shall
be made under a claim
filed under subsection (d) | ||||||
22 | of Section 909 more than 30 days after the
effective | ||||||
23 | date of this amendatory Act of 1996.
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24 | (F) Finance Leases. For purposes of this | ||||||
25 | subsection, a finance lease
shall be treated as a loan | ||||||
26 | or other extension of credit, rather than as a
lease,
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1 | regardless of how the transaction is characterized for | ||||||
2 | any other purpose,
including the purposes of any | ||||||
3 | regulatory agency to which the lessor is subject.
A | ||||||
4 | finance lease is any transaction in the form of a lease | ||||||
5 | in which the lessee
is treated as the owner of the | ||||||
6 | leased asset entitled to any deduction for
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7 | depreciation allowed under Section 167 of the Internal | ||||||
8 | Revenue Code.
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9 | (9) Fiscal year. The term "fiscal year" means an | ||||||
10 | accounting period of
12 months ending on the last day of | ||||||
11 | any month other than December.
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12 | (9.5) Fixed place of business. The term "fixed place of | ||||||
13 | business" has the same meaning as that term is given in | ||||||
14 | Section 864 of the Internal Revenue Code and the related | ||||||
15 | Treasury regulations.
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16 | (10) Includes and including. The terms "includes" and | ||||||
17 | "including" when
used in a definition contained in this Act | ||||||
18 | shall not be deemed to exclude
other things otherwise | ||||||
19 | within the meaning of the term defined.
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20 | (11) Internal Revenue Code. The term "Internal Revenue | ||||||
21 | Code" means the
United States Internal Revenue Code of 1954 | ||||||
22 | or any successor law or laws
relating to federal income | ||||||
23 | taxes in effect for the taxable year.
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24 | (11.5) Investment partnership. | ||||||
25 | (A) The term "investment partnership" means any | ||||||
26 | entity that is treated as a partnership for federal |
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1 | income tax purposes that meets the following | ||||||
2 | requirements: | ||||||
3 | (i) no less than 90% of the partnership's cost | ||||||
4 | of its total assets consists of qualifying | ||||||
5 | investment securities, deposits at banks or other | ||||||
6 | financial institutions, and office space and | ||||||
7 | equipment reasonably necessary to carry on its | ||||||
8 | activities as an investment partnership; | ||||||
9 | (ii) no less than 90% of its gross income | ||||||
10 | consists of interest, dividends, and gains from | ||||||
11 | the sale or exchange of qualifying investment | ||||||
12 | securities; and
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13 | (iii) the partnership is not a dealer in | ||||||
14 | qualifying investment securities. | ||||||
15 | (B) For purposes of this paragraph (11.5), the term | ||||||
16 | "qualifying investment securities" includes all of the | ||||||
17 | following:
| ||||||
18 | (i) common stock, including preferred or debt | ||||||
19 | securities convertible into common stock, and | ||||||
20 | preferred stock; | ||||||
21 | (ii) bonds, debentures, and other debt | ||||||
22 | securities; | ||||||
23 | (iii) foreign and domestic currency deposits | ||||||
24 | secured by federal, state, or local governmental | ||||||
25 | agencies; | ||||||
26 | (iv) mortgage or asset-backed securities |
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1 | secured by federal, state, or local governmental | ||||||
2 | agencies; | ||||||
3 | (v) repurchase agreements and loan | ||||||
4 | participations; | ||||||
5 | (vi) foreign currency exchange contracts and | ||||||
6 | forward and futures contracts on foreign | ||||||
7 | currencies; | ||||||
8 | (vii) stock and bond index securities and | ||||||
9 | futures contracts and other similar financial | ||||||
10 | securities and futures contracts on those | ||||||
11 | securities;
| ||||||
12 | (viii) options for the purchase or sale of any | ||||||
13 | of the securities, currencies, contracts, or | ||||||
14 | financial instruments described in items (i) to | ||||||
15 | (vii), inclusive;
| ||||||
16 | (ix) regulated futures contracts;
| ||||||
17 | (x) commodities (not described in Section | ||||||
18 | 1221(a)(1) of the Internal Revenue Code) or | ||||||
19 | futures, forwards, and options with respect to | ||||||
20 | such commodities, provided, however, that any item | ||||||
21 | of a physical commodity to which title is actually | ||||||
22 | acquired in the partnership's capacity as a dealer | ||||||
23 | in such commodity shall not be a qualifying | ||||||
24 | investment security;
| ||||||
25 | (xi) derivatives; and
| ||||||
26 | (xii) a partnership interest in another |
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1 | partnership that is an investment partnership.
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2 | (12) Mathematical error. The term "mathematical error" | ||||||
3 | includes the
following types of errors, omissions, or | ||||||
4 | defects in a return filed by a
taxpayer which prevents | ||||||
5 | acceptance of the return as filed for processing:
| ||||||
6 | (A) arithmetic errors or incorrect computations on | ||||||
7 | the return or
supporting schedules;
| ||||||
8 | (B) entries on the wrong lines;
| ||||||
9 | (C) omission of required supporting forms or | ||||||
10 | schedules or the omission
of the information in whole | ||||||
11 | or in part called for thereon; and
| ||||||
12 | (D) an attempt to claim, exclude, deduct, or | ||||||
13 | improperly report, in a
manner
directly contrary to the | ||||||
14 | provisions of the Act and regulations thereunder
any | ||||||
15 | item of income, exemption, deduction, or credit.
| ||||||
16 | (13) Nonbusiness income. The term "nonbusiness income" | ||||||
17 | means all income
other than business income or | ||||||
18 | compensation.
| ||||||
19 | (14) Nonresident. The term "nonresident" means a | ||||||
20 | person who is not a
resident.
| ||||||
21 | (15) Paid, incurred and accrued. The terms "paid", | ||||||
22 | "incurred" and
"accrued"
shall be construed according to | ||||||
23 | the method of accounting upon the basis
of which the | ||||||
24 | person's base income is computed under this Act.
| ||||||
25 | (16) Partnership and partner. The term "partnership" | ||||||
26 | includes a syndicate,
group, pool, joint venture or other |
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| |||||||
1 | unincorporated organization, through
or by means of which | ||||||
2 | any business, financial operation, or venture is carried
| ||||||
3 | on, and which is not, within the meaning of this Act, a | ||||||
4 | trust or estate
or a corporation; and the term "partner" | ||||||
5 | includes a member in such syndicate,
group, pool, joint | ||||||
6 | venture or organization.
| ||||||
7 | The term "partnership" includes any entity, including | ||||||
8 | a limited
liability company formed under the Illinois
| ||||||
9 | Limited Liability Company Act, classified as a partnership | ||||||
10 | for federal income tax purposes.
| ||||||
11 | The term "partnership" does not include a syndicate, | ||||||
12 | group, pool,
joint venture, or other unincorporated | ||||||
13 | organization established for the
sole purpose of playing | ||||||
14 | the Illinois State Lottery.
| ||||||
15 | (17) Part-year resident. The term "part-year resident" | ||||||
16 | means an individual
who became a resident during the | ||||||
17 | taxable year or ceased to be a resident
during the taxable | ||||||
18 | year. Under Section 1501(a)(20)(A)(i) residence
commences | ||||||
19 | with presence in this State for other than a temporary or | ||||||
20 | transitory
purpose and ceases with absence from this State | ||||||
21 | for other than a temporary or
transitory purpose. Under | ||||||
22 | Section 1501(a)(20)(A)(ii) residence commences
with the | ||||||
23 | establishment of domicile in this State and ceases with the
| ||||||
24 | establishment of domicile in another State.
| ||||||
25 | (18) Person. The term "person" shall be construed to | ||||||
26 | mean and include
an individual, a trust, estate, |
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| |||||||
1 | partnership, association, firm, company,
corporation, | ||||||
2 | limited liability company, or fiduciary. For purposes of | ||||||
3 | Section
1301 and 1302 of this Act, a "person" means (i) an | ||||||
4 | individual, (ii) a
corporation, (iii) an officer, agent, or | ||||||
5 | employee of a
corporation, (iv) a member, agent or employee | ||||||
6 | of a partnership, or (v)
a member,
manager, employee, | ||||||
7 | officer, director, or agent of a limited liability company
| ||||||
8 | who in such capacity commits an offense specified in | ||||||
9 | Section 1301 and 1302.
| ||||||
10 | (18A) Records. The term "records" includes all data | ||||||
11 | maintained by the
taxpayer, whether on paper, microfilm, | ||||||
12 | microfiche, or any type of
machine-sensible data | ||||||
13 | compilation.
| ||||||
14 | (19) Regulations. The term "regulations" includes | ||||||
15 | rules promulgated and
forms prescribed by the Department.
| ||||||
16 | (20) Resident. The term "resident" means:
| ||||||
17 | (A) an individual (i) who is
in this State for | ||||||
18 | other than a temporary or transitory purpose during the
| ||||||
19 | taxable year; or (ii) who is domiciled in this State | ||||||
20 | but is absent from
the State for a temporary or | ||||||
21 | transitory purpose during the taxable year;
| ||||||
22 | (B) The estate of a decedent who at his or her | ||||||
23 | death was domiciled in
this
State;
| ||||||
24 | (C) A trust created by a will of a decedent who at | ||||||
25 | his death was
domiciled
in this State; and
| ||||||
26 | (D) An irrevocable trust, the grantor of which was |
| |||||||
| |||||||
1 | domiciled in this
State
at the time such trust became | ||||||
2 | irrevocable. For purpose of this subparagraph,
a trust | ||||||
3 | shall be considered irrevocable to the extent that the | ||||||
4 | grantor is
not treated as the owner thereof under | ||||||
5 | Sections 671 through 678 of the Internal
Revenue Code.
| ||||||
6 | (21) Sales. The term "sales" means all gross receipts | ||||||
7 | of the taxpayer
not allocated under Sections 301, 302 and | ||||||
8 | 303.
| ||||||
9 | (22) State. The term "state" when applied to a | ||||||
10 | jurisdiction other than
this State means any state of the | ||||||
11 | United States, the District of Columbia,
the Commonwealth | ||||||
12 | of Puerto Rico, any Territory or Possession of the United
| ||||||
13 | States, and any foreign country, or any political | ||||||
14 | subdivision of any of the
foregoing. For purposes of the | ||||||
15 | foreign tax credit under Section 601, the
term "state" | ||||||
16 | means any state of the United States, the District of | ||||||
17 | Columbia,
the Commonwealth of Puerto Rico, and any | ||||||
18 | territory or possession of the
United States, or any | ||||||
19 | political subdivision of any of the foregoing,
effective | ||||||
20 | for tax years ending on or after December 31, 1989.
| ||||||
21 | (23) Taxable year. The term "taxable year" means the | ||||||
22 | calendar year, or
the fiscal year ending during such | ||||||
23 | calendar year, upon the basis of which
the base income is | ||||||
24 | computed under this Act. "Taxable year" means, in the
case | ||||||
25 | of a return made for a fractional part of a year under the | ||||||
26 | provisions
of this Act, the period for which such return is |
| |||||||
| |||||||
1 | made.
| ||||||
2 | (24) Taxpayer. The term "taxpayer" means any person | ||||||
3 | subject to the tax
imposed by this Act.
| ||||||
4 | (25) International banking facility. The term | ||||||
5 | international banking
facility shall have the same meaning | ||||||
6 | as is set forth in the Illinois Banking
Act or as is set | ||||||
7 | forth in the laws of the United States or regulations of
| ||||||
8 | the Board of Governors of the Federal Reserve System.
| ||||||
9 | (26) Income Tax Return Preparer.
| ||||||
10 | (A) The term "income tax return preparer"
means any | ||||||
11 | person who prepares for compensation, or who employs | ||||||
12 | one or more
persons to prepare for compensation, any | ||||||
13 | return of tax imposed by this Act
or any claim for | ||||||
14 | refund of tax imposed by this Act. The preparation of a
| ||||||
15 | substantial portion of a return or claim for refund | ||||||
16 | shall be treated as
the preparation of that return or | ||||||
17 | claim for refund.
| ||||||
18 | (B) A person is not an income tax return preparer | ||||||
19 | if all he or she does
is
| ||||||
20 | (i) furnish typing, reproducing, or other | ||||||
21 | mechanical assistance;
| ||||||
22 | (ii) prepare returns or claims for refunds for | ||||||
23 | the employer by whom he
or she is regularly and | ||||||
24 | continuously employed;
| ||||||
25 | (iii) prepare as a fiduciary returns or claims | ||||||
26 | for refunds for any
person; or
|
| |||||||
| |||||||
1 | (iv) prepare claims for refunds for a taxpayer | ||||||
2 | in response to any
notice
of deficiency issued to | ||||||
3 | that taxpayer or in response to any waiver of
| ||||||
4 | restriction after the commencement of an audit of | ||||||
5 | that taxpayer or of another
taxpayer if a | ||||||
6 | determination in the audit of the other taxpayer | ||||||
7 | directly or
indirectly affects the tax liability | ||||||
8 | of the taxpayer whose claims he or she is
| ||||||
9 | preparing.
| ||||||
10 | (27) Unitary business group. The term "unitary | ||||||
11 | business group" means
a group of persons related through | ||||||
12 | common ownership whose business activities
are integrated | ||||||
13 | with, dependent upon and contribute to each other. The | ||||||
14 | group
will not include those members whose business | ||||||
15 | activity outside the United
States is 80% or more of any | ||||||
16 | such member's total business activity; for
purposes of this | ||||||
17 | paragraph and clause (a)(3)(B)(ii) of Section 304,
| ||||||
18 | business
activity within the United States shall be | ||||||
19 | measured by means of the factors
ordinarily applicable | ||||||
20 | under subsections (a), (b), (c), (d), or (h)
of Section
304 | ||||||
21 | except that, in the case of members ordinarily required to | ||||||
22 | apportion
business income by means of the 3 factor formula | ||||||
23 | of property, payroll and sales
specified in subsection (a) | ||||||
24 | of Section 304, including the
formula as weighted in | ||||||
25 | subsection (h) of Section 304, such members shall
not use | ||||||
26 | the sales factor in the computation and the results of the |
| |||||||
| |||||||
1 | property
and payroll factor computations of subsection (a) | ||||||
2 | of Section 304 shall be
divided by 2 (by one if either
the | ||||||
3 | property or payroll factor has a denominator of zero). The | ||||||
4 | computation
required by the preceding sentence shall, in | ||||||
5 | each case, involve the division of
the member's property, | ||||||
6 | payroll, or revenue miles in the United States,
insurance | ||||||
7 | premiums on property or risk in the United States, or | ||||||
8 | financial
organization business income from sources within | ||||||
9 | the United States, as the
case may be, by the respective | ||||||
10 | worldwide figures for such items. Common
ownership in the | ||||||
11 | case of corporations is the direct or indirect control or
| ||||||
12 | ownership of more than 50% of the outstanding voting stock | ||||||
13 | of the persons
carrying on unitary business activity. | ||||||
14 | Unitary business activity can
ordinarily be illustrated | ||||||
15 | where the activities of the members are: (1) in the
same | ||||||
16 | general line (such as manufacturing, wholesaling, | ||||||
17 | retailing of tangible
personal property, insurance, | ||||||
18 | transportation or finance); or (2) are steps in a
| ||||||
19 | vertically structured enterprise or process (such as the | ||||||
20 | steps involved in the
production of natural resources, | ||||||
21 | which might include exploration, mining,
refining, and | ||||||
22 | marketing); and, in either instance, the members are | ||||||
23 | functionally
integrated through the exercise of strong | ||||||
24 | centralized management (where, for
example, authority over | ||||||
25 | such matters as purchasing, financing, tax compliance,
| ||||||
26 | product line, personnel, marketing and capital investment |
| |||||||
| |||||||
1 | is not left to each
member).
In no event, however, will any
| ||||||
2 | unitary business group include members
which are | ||||||
3 | ordinarily required to apportion business income under | ||||||
4 | different
subsections of Section 304 except that for tax | ||||||
5 | years ending on or after
December 31, 1987 this prohibition | ||||||
6 | shall not apply to a unitary business group
composed of one | ||||||
7 | or more taxpayers all of which apportion business income
| ||||||
8 | pursuant to subsection (b) of Section 304, or all of which | ||||||
9 | apportion business
income pursuant to subsection (d) of | ||||||
10 | Section 304, and a holding company of such
single-factor | ||||||
11 | taxpayers (see definition of "financial organization" for | ||||||
12 | rule
regarding holding companies of financial | ||||||
13 | organizations). If a unitary business
group would, but for | ||||||
14 | the preceding sentence, include members that are
| ||||||
15 | ordinarily required to apportion business income under | ||||||
16 | different subsections of
Section 304, then for each | ||||||
17 | subsection of Section 304 for which there are two or
more | ||||||
18 | members, there shall be a separate unitary business group | ||||||
19 | composed of such
members. For purposes of the preceding two | ||||||
20 | sentences, a member is "ordinarily
required to apportion | ||||||
21 | business income" under a particular subsection of Section
| ||||||
22 | 304 if it would be required to use the apportionment method | ||||||
23 | prescribed by such
subsection except for the fact that it | ||||||
24 | derives business income solely from
Illinois. As used in | ||||||
25 | this paragraph, the phrase "United States" means only the | ||||||
26 | 50 states and the District of Columbia, but does not |
| |||||||
| |||||||
1 | include any territory or possession of the United States or | ||||||
2 | 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 |
| |||||||
| |||||||
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.
|
| |||||||
| |||||||
1 | (Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08.)
| ||||||
2 | Section 99. Effective date. This Act takes effect upon | ||||||
3 | becoming law.
|