96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB3662

 

Introduced 2/11/2010, by Sen. Michael Noland

 

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

    Amends the Illinois Income Tax Act. Provides that a taxpayer conducting a trade or business in an enterprise zone or a High Impact Business designated by the Department of Commerce and Economic Opportunity or, for taxable years ending on or after December 31, 2006, in a River Edge Redevelopment Zone conducting a trade or business in a federally designated Foreign Trade Zone or Sub-Zone shall be allowed a credit in the amount of (i) $1,000 per eligible employee hired to work in the zone during taxable years ending after December 31, 2009 and ending on or before December 31, 2012 and (ii) $500 per eligible employee hired to work in the zone during taxable years ending after December 31, 2012 (now $500 per eligible employee in each taxable year). Effective immediately.


LRB096 20410 HLH 36056 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3662 LRB096 20410 HLH 36056 b

1     AN ACT concerning revenue.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Income Tax Act is amended by
5 changing Section 201 as follows:
 
6     (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
7     Sec. 201. Tax Imposed.
8     (a) In general. A tax measured by net income is hereby
9 imposed on every individual, corporation, trust and estate for
10 each taxable year ending after July 31, 1969 on the privilege
11 of earning or receiving income in or as a resident of this
12 State. Such tax shall be in addition to all other occupation or
13 privilege taxes imposed by this State or by any municipal
14 corporation or political subdivision thereof.
15     (b) Rates. The tax imposed by subsection (a) of this
16 Section shall be determined as follows, except as adjusted by
17 subsection (d-1):
18         (1) In the case of an individual, trust or estate, for
19     taxable years ending prior to July 1, 1989, an amount equal
20     to 2 1/2% of the taxpayer's net income for the taxable
21     year.
22         (2) In the case of an individual, trust or estate, for
23     taxable years beginning prior to July 1, 1989 and ending

 

 

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1     after June 30, 1989, an amount equal to the sum of (i) 2
2     1/2% of the taxpayer's net income for the period prior to
3     July 1, 1989, as calculated under Section 202.3, and (ii)
4     3% of the taxpayer's net income for the period after June
5     30, 1989, as calculated under Section 202.3.
6         (3) In the case of an individual, trust or estate, for
7     taxable years beginning after June 30, 1989, an amount
8     equal to 3% of the taxpayer's net income for the taxable
9     year.
10         (4) (Blank).
11         (5) (Blank).
12         (6) In the case of a corporation, for taxable years
13     ending prior to July 1, 1989, an amount equal to 4% of the
14     taxpayer's net income for the taxable year.
15         (7) In the case of a corporation, for taxable years
16     beginning prior to July 1, 1989 and ending after June 30,
17     1989, an amount equal to the sum of (i) 4% of the
18     taxpayer's net income for the period prior to July 1, 1989,
19     as calculated under Section 202.3, and (ii) 4.8% of the
20     taxpayer's net income for the period after June 30, 1989,
21     as calculated under Section 202.3.
22         (8) In the case of a corporation, for taxable years
23     beginning after June 30, 1989, an amount equal to 4.8% of
24     the taxpayer's net income for the taxable year.
25     (c) Personal Property Tax Replacement Income Tax.
26 Beginning on July 1, 1979 and thereafter, in addition to such

 

 

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1 income tax, there is also hereby imposed the Personal Property
2 Tax Replacement Income Tax measured by net income on every
3 corporation (including Subchapter S corporations), partnership
4 and trust, for each taxable year ending after June 30, 1979.
5 Such taxes are imposed on the privilege of earning or receiving
6 income in or as a resident of this State. The Personal Property
7 Tax Replacement Income Tax shall be in addition to the income
8 tax imposed by subsections (a) and (b) of this Section and in
9 addition to all other occupation or privilege taxes imposed by
10 this State or by any municipal corporation or political
11 subdivision thereof.
12     (d) Additional Personal Property Tax Replacement Income
13 Tax Rates. The personal property tax replacement income tax
14 imposed by this subsection and subsection (c) of this Section
15 in the case of a corporation, other than a Subchapter S
16 corporation and except as adjusted by subsection (d-1), shall
17 be an additional amount equal to 2.85% of such taxpayer's net
18 income for the taxable year, except that beginning on January
19 1, 1981, and thereafter, the rate of 2.85% specified in this
20 subsection shall be reduced to 2.5%, and in the case of a
21 partnership, trust or a Subchapter S corporation shall be an
22 additional amount equal to 1.5% of such taxpayer's net income
23 for the taxable year.
24     (d-1) Rate reduction for certain foreign insurers. In the
25 case of a foreign insurer, as defined by Section 35A-5 of the
26 Illinois Insurance Code, whose state or country of domicile

 

 

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

 

 

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1         credits allowed under this Act, plus
2             (B) the privilege tax imposed by Section 409 of the
3         Illinois Insurance Code, the fire insurance company
4         tax imposed by Section 12 of the Fire Investigation
5         Act, and the fire department taxes imposed under
6         Section 11-10-1 of the Illinois Municipal Code,
7     equals 1.25% for taxable years ending prior to December 31,
8     2003, or 1.75% for taxable years ending on or after
9     December 31, 2003, of the net taxable premiums written for
10     the taxable year, as described by subsection (1) of Section
11     409 of the Illinois Insurance Code. This paragraph will in
12     no event increase the rates imposed under subsections (b)
13     and (d).
14         (2) Any reduction in the rates of tax imposed by this
15     subsection shall be applied first against the rates imposed
16     by subsection (b) and only after the tax imposed by
17     subsection (a) net of all credits allowed under this
18     Section other than the credit allowed under subsection (i)
19     has been reduced to zero, against the rates imposed by
20     subsection (d).
21     This subsection (d-1) is exempt from the provisions of
22 Section 250.
23     (e) Investment credit. A taxpayer shall be allowed a credit
24 against the Personal Property Tax Replacement Income Tax for
25 investment in qualified property.
26         (1) A taxpayer shall be allowed a credit equal to .5%

 

 

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1     of the basis of qualified property placed in service during
2     the taxable year, provided such property is placed in
3     service on or after July 1, 1984. There shall be allowed an
4     additional credit equal to .5% of the basis of qualified
5     property placed in service during the taxable year,
6     provided such property is placed in service on or after
7     July 1, 1986, and the taxpayer's base employment within
8     Illinois has increased by 1% or more over the preceding
9     year as determined by the taxpayer's employment records
10     filed with the Illinois Department of Employment Security.
11     Taxpayers who are new to Illinois shall be deemed to have
12     met the 1% growth in base employment for the first year in
13     which they file employment records with the Illinois
14     Department of Employment Security. The provisions added to
15     this Section by Public Act 85-1200 (and restored by Public
16     Act 87-895) shall be construed as declaratory of existing
17     law and not as a new enactment. If, in any year, the
18     increase in base employment within Illinois over the
19     preceding year is less than 1%, the additional credit shall
20     be limited to that percentage times a fraction, the
21     numerator of which is .5% and the denominator of which is
22     1%, but shall not exceed .5%. The investment credit shall
23     not be allowed to the extent that it would reduce a
24     taxpayer's liability in any tax year below zero, nor may
25     any credit for qualified property be allowed for any year
26     other than the year in which the property was placed in

 

 

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1     service in Illinois. For tax years ending on or after
2     December 31, 1987, and on or before December 31, 1988, the
3     credit shall be allowed for the tax year in which the
4     property is placed in service, or, if the amount of the
5     credit exceeds the tax liability for that year, whether it
6     exceeds the original liability or the liability as later
7     amended, such excess may be carried forward and applied to
8     the tax liability of the 5 taxable years following the
9     excess credit years if the taxpayer (i) makes investments
10     which cause the creation of a minimum of 2,000 full-time
11     equivalent jobs in Illinois, (ii) is located in an
12     enterprise zone established pursuant to the Illinois
13     Enterprise Zone Act and (iii) is certified by the
14     Department of Commerce and Community Affairs (now
15     Department of Commerce and Economic Opportunity) as
16     complying with the requirements specified in clause (i) and
17     (ii) by July 1, 1986. The Department of Commerce and
18     Community Affairs (now Department of Commerce and Economic
19     Opportunity) shall notify the Department of Revenue of all
20     such certifications immediately. For tax years ending
21     after December 31, 1988, the credit shall be allowed for
22     the tax year in which the property is placed in service,
23     or, if the amount of the credit exceeds the tax liability
24     for that year, whether it exceeds the original liability or
25     the liability as later amended, such excess may be carried
26     forward and applied to the tax liability of the 5 taxable

 

 

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1     years following the excess credit years. The credit shall
2     be applied to the earliest year for which there is a
3     liability. If there is credit from more than one tax year
4     that is available to offset a liability, earlier credit
5     shall be applied first.
6         (2) The term "qualified property" means property
7     which:
8             (A) is tangible, whether new or used, including
9         buildings and structural components of buildings and
10         signs that are real property, but not including land or
11         improvements to real property that are not a structural
12         component of a building such as landscaping, sewer
13         lines, local access roads, fencing, parking lots, and
14         other appurtenances;
15             (B) is depreciable pursuant to Section 167 of the
16         Internal Revenue Code, except that "3-year property"
17         as defined in Section 168(c)(2)(A) of that Code is not
18         eligible for the credit provided by this subsection
19         (e);
20             (C) is acquired by purchase as defined in Section
21         179(d) of the Internal Revenue Code;
22             (D) is used in Illinois by a taxpayer who is
23         primarily engaged in manufacturing, or in mining coal
24         or fluorite, or in retailing, or was placed in service
25         on or after July 1, 2006 in a River Edge Redevelopment
26         Zone established pursuant to the River Edge

 

 

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1         Redevelopment Zone Act; and
2             (E) has not previously been used in Illinois in
3         such a manner and by such a person as would qualify for
4         the credit provided by this subsection (e) or
5         subsection (f).
6         (3) For purposes of this subsection (e),
7     "manufacturing" means the material staging and production
8     of tangible personal property by procedures commonly
9     regarded as manufacturing, processing, fabrication, or
10     assembling which changes some existing material into new
11     shapes, new qualities, or new combinations. For purposes of
12     this subsection (e) the term "mining" shall have the same
13     meaning as the term "mining" in Section 613(c) of the
14     Internal Revenue Code. For purposes of this subsection (e),
15     the term "retailing" means the sale of tangible personal
16     property for use or consumption and not for resale, or
17     services rendered in conjunction with the sale of tangible
18     personal property for use or consumption and not for
19     resale. For purposes of this subsection (e), "tangible
20     personal property" has the same meaning as when that term
21     is used in the Retailers' Occupation Tax Act, and, for
22     taxable years ending after December 31, 2008, does not
23     include the generation, transmission, or distribution of
24     electricity.
25         (4) The basis of qualified property shall be the basis
26     used to compute the depreciation deduction for federal

 

 

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1     income tax purposes.
2         (5) If the basis of the property for federal income tax
3     depreciation purposes is increased after it has been placed
4     in service in Illinois by the taxpayer, the amount of such
5     increase shall be deemed property placed in service on the
6     date of such increase in basis.
7         (6) The term "placed in service" shall have the same
8     meaning as under Section 46 of the Internal Revenue Code.
9         (7) If during any taxable year, any property ceases to
10     be qualified property in the hands of the taxpayer within
11     48 months after being placed in service, or the situs of
12     any qualified property is moved outside Illinois within 48
13     months after being placed in service, the Personal Property
14     Tax Replacement Income Tax for such taxable year shall be
15     increased. Such increase shall be determined by (i)
16     recomputing the investment credit which would have been
17     allowed for the year in which credit for such property was
18     originally allowed by eliminating such property from such
19     computation and, (ii) subtracting such recomputed credit
20     from the amount of credit previously allowed. For the
21     purposes of this paragraph (7), a reduction of the basis of
22     qualified property resulting from a redetermination of the
23     purchase price shall be deemed a disposition of qualified
24     property to the extent of such reduction.
25         (8) Unless the investment credit is extended by law,
26     the basis of qualified property shall not include costs

 

 

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1     incurred after December 31, 2013, except for costs incurred
2     pursuant to a binding contract entered into on or before
3     December 31, 2013.
4         (9) Each taxable year ending before December 31, 2000,
5     a partnership may elect to pass through to its partners the
6     credits to which the partnership is entitled under this
7     subsection (e) for the taxable year. A partner may use the
8     credit allocated to him or her under this paragraph only
9     against the tax imposed in subsections (c) and (d) of this
10     Section. If the partnership makes that election, those
11     credits shall be allocated among the partners in the
12     partnership in accordance with the rules set forth in
13     Section 704(b) of the Internal Revenue Code, and the rules
14     promulgated under that Section, and the allocated amount of
15     the credits shall be allowed to the partners for that
16     taxable year. The partnership shall make this election on
17     its Personal Property Tax Replacement Income Tax return for
18     that taxable year. The election to pass through the credits
19     shall be irrevocable.
20         For taxable years ending on or after December 31, 2000,
21     a partner that qualifies its partnership for a subtraction
22     under subparagraph (I) of paragraph (2) of subsection (d)
23     of Section 203 or a shareholder that qualifies a Subchapter
24     S corporation for a subtraction under subparagraph (S) of
25     paragraph (2) of subsection (b) of Section 203 shall be
26     allowed a credit under this subsection (e) equal to its

 

 

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

 

 

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1     property is placed in service in the Enterprise Zone or
2     River Edge Redevelopment Zone and shall not be allowed to
3     the extent that it would reduce a taxpayer's liability for
4     the tax imposed by subsections (a) and (b) of this Section
5     to below zero. For tax years ending on or after December
6     31, 1985, the credit shall be allowed for the tax year in
7     which the property is placed in service, or, if the amount
8     of the credit exceeds the tax liability for that year,
9     whether it exceeds the original liability or the liability
10     as later amended, such excess may be carried forward and
11     applied to the tax liability of the 5 taxable years
12     following the excess credit year. The credit shall be
13     applied to the earliest year for which there is a
14     liability. If there is credit from more than one tax year
15     that is available to offset a liability, the credit
16     accruing first in time shall be applied first.
17         (2) The term qualified property means property which:
18             (A) is tangible, whether new or used, including
19         buildings and structural components of buildings;
20             (B) is depreciable pursuant to Section 167 of the
21         Internal Revenue Code, except that "3-year property"
22         as defined in Section 168(c)(2)(A) of that Code is not
23         eligible for the credit provided by this subsection
24         (f);
25             (C) is acquired by purchase as defined in Section
26         179(d) of the Internal Revenue Code;

 

 

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

 

 

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1     allowed for the year in which credit for such property was
2     originally allowed by eliminating such property from such
3     computation, and (ii) subtracting such recomputed credit
4     from the amount of credit previously allowed. For the
5     purposes of this paragraph (6), a reduction of the basis of
6     qualified property resulting from a redetermination of the
7     purchase price shall be deemed a disposition of qualified
8     property to the extent of such reduction.
9         (7) There shall be allowed an additional credit equal
10     to 0.5% of the basis of qualified property placed in
11     service during the taxable year in a River Edge
12     Redevelopment Zone, provided such property is placed in
13     service on or after July 1, 2006, and the taxpayer's base
14     employment within Illinois has increased by 1% or more over
15     the preceding year as determined by the taxpayer's
16     employment records filed with the Illinois Department of
17     Employment Security. Taxpayers who are new to Illinois
18     shall be deemed to have met the 1% growth in base
19     employment for the first year in which they file employment
20     records with the Illinois Department of Employment
21     Security. If, in any year, the increase in base employment
22     within Illinois over the preceding year is less than 1%,
23     the additional credit shall be limited to that percentage
24     times a fraction, the numerator of which is 0.5% and the
25     denominator of which is 1%, but shall not exceed 0.5%.
26     (g) Jobs Tax Credit; Enterprise Zone, River Edge

 

 

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1 Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
2         (1) A taxpayer conducting a trade or business in an
3     enterprise zone or a High Impact Business designated by the
4     Department of Commerce and Economic Opportunity or for
5     taxable years ending on or after December 31, 2006, in a
6     River Edge Redevelopment Zone conducting a trade or
7     business in a federally designated Foreign Trade Zone or
8     Sub-Zone shall be allowed a credit against the tax imposed
9     by subsections (a) and (b) of this Section in the amount of
10     (i) $500 per eligible employee hired to work in the zone
11     during the taxable year for taxable years ending on or
12     before December 31, 2009, (ii) $1,000 per eligible employee
13     hired to work in the zone during the taxable year for
14     taxable years ending after December 31, 2009 and ending on
15     or before December 31, 2012, and (iii) $500 per eligible
16     employee hired to work in the zone during the taxable year
17     for taxable years ending after December 31, 2012.
18         (2) To qualify for the credit:
19             (A) the taxpayer must hire 5 or more eligible
20         employees to work in an enterprise zone, River Edge
21         Redevelopment Zone, or federally designated Foreign
22         Trade Zone or Sub-Zone during the taxable year;
23             (B) the taxpayer's total employment within the
24         enterprise zone, River Edge Redevelopment Zone, or
25         federally designated Foreign Trade Zone or Sub-Zone
26         must increase by 5 or more full-time employees beyond

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1     this subsection may be sold to a buyer as part of a sale of
2     all or part of the remediation site for which the credit
3     was granted. The purchaser of a remediation site and the
4     tax credit shall succeed to the unused credit and remaining
5     carry-forward period of the seller. To perfect the
6     transfer, the assignor shall record the transfer in the
7     chain of title for the site and provide written notice to
8     the Director of the Illinois Department of Revenue of the
9     assignor's intent to sell the remediation site and the
10     amount of the tax credit to be transferred as a portion of
11     the sale. In no event may a credit be transferred to any
12     taxpayer if the taxpayer or a related party would not be
13     eligible under the provisions of subsection (i).
14         (iii) For purposes of this Section, the term "site"
15     shall have the same meaning as under Section 58.2 of the
16     Environmental Protection Act.
17         (iv) This subsection is exempt from the provisions of
18     Section 250.
19 (Source: P.A. 95-454, eff. 8-27-07; 96-115, eff. 7-31-09;
20 96-116, eff. 7-31-09; revised 8-20-09.)
 
21     Section 99. Effective date. This Act takes effect upon
22 becoming law.