Sen. John J. Cullerton

Filed: 5/30/2012

 

 


 

 


 
09700HB5342sam001LRB097 20175 HLH 70338 a

1
AMENDMENT TO HOUSE BILL 5342

2    AMENDMENT NO. ______. Amend House Bill 5342 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Income Tax Act is amended by
5changing Sections 901 and 1501 and by adding Section 223 as
6follows:
 
7    (35 ILCS 5/223 new)
8    Sec. 223. Credit for qualified education expenses.
9    (a) For taxable years ending on or after December 31, 2012,
10and ending prior to December 31, 2017, each qualifying
11individual taxpayer is entitled to a credit against the tax
12imposed by subsections (a) and (b) of Section 201 in an amount
13equal to 2.5% of the qualified education expenses paid by the
14taxpayer to an eligible educational institution during the
15taxable year on behalf of a qualified student, but not to
16exceed $250 per qualifying individual taxpayer who files as

 

 

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1married filing jointly, or $125 per taxpayer who files as an
2individual, married filing separately, widow, or head of
3household, in any taxable year.
4    (b) The credit may not be carried back. If the amount of
5the credit exceeds the tax liability for the year, the excess
6may be carried forward and applied to the tax liability of the
75 taxable years following the excess credit year. The tax
8credit shall be applied to the earliest year for which there is
9a tax liability. If there are credits for more than one year
10that are available to offset a liability, the earlier credit
11shall be applied first.
12    (c) For the purposes of this Section:
13    "Eligible educational institution" means any public or
14private university, community college, vocational school, or
15other postsecondary educational institution that is physically
16located in the State and is eligible to participate in a
17student loan program administered by the United States
18Department of Education.
19    "Qualified education expenses" means tuition and fees
20required for enrollment or attendance at an eligible
21educational institution, as well as expenses for
22course-related books, supplies, and equipment if those
23expenses are incurred as part of the student's course of study.
24    "Qualifying individual" means an individual taxpayer who
25either (i) files as an individual, married filing separately,
26widow, or head of household, with a federal adjusted gross

 

 

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1income of $75,000 or less; or (ii) files married filing jointly
2with a federal adjusted gross income that is $150,000 or less.
3    "Qualified student" means a person:
4        (1) who is a resident of this State and a citizen or
5    permanent resident of the United States; and
6        (2) who enrolls or is enrolled in an eligible
7    educational institution as an undergraduate student and
8    has not received a baccalaureate degree.
 
9    (35 ILCS 5/901)  (from Ch. 120, par. 9-901)
10    Sec. 901. Collection Authority.
11    (a) In general.
12    The Department shall collect the taxes imposed by this Act.
13The Department shall collect certified past due child support
14amounts under Section 2505-650 of the Department of Revenue Law
15(20 ILCS 2505/2505-650). Except as provided in subsections (c),
16(e), (f), and (g) of this Section, money collected pursuant to
17subsections (a) and (b) of Section 201 of this Act shall be
18paid into the General Revenue Fund in the State treasury; money
19collected pursuant to subsections (c) and (d) of Section 201 of
20this Act shall be paid into the Personal Property Tax
21Replacement Fund, a special fund in the State Treasury; and
22money collected under Section 2505-650 of the Department of
23Revenue Law (20 ILCS 2505/2505-650) shall be paid into the
24Child Support Enforcement Trust Fund, a special fund outside
25the State Treasury, or to the State Disbursement Unit

 

 

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1established under Section 10-26 of the Illinois Public Aid
2Code, as directed by the Department of Healthcare and Family
3Services.
4    (b) Local Government Distributive Fund.
5    Beginning August 1, 1969, and continuing through June 30,
61994, the Treasurer shall transfer each month from the General
7Revenue Fund to a special fund in the State treasury, to be
8known as the "Local Government Distributive Fund", an amount
9equal to 1/12 of the net revenue realized from the tax imposed
10by subsections (a) and (b) of Section 201 of this Act during
11the preceding month. Beginning July 1, 1994, and continuing
12through June 30, 1995, the Treasurer shall transfer each month
13from the General Revenue Fund to the Local Government
14Distributive Fund an amount equal to 1/11 of the net revenue
15realized from the tax imposed by subsections (a) and (b) of
16Section 201 of this Act during the preceding month. Beginning
17July 1, 1995 and continuing through January 31, 2011, the
18Treasurer shall transfer each month from the General Revenue
19Fund to the Local Government Distributive Fund an amount equal
20to the net of (i) 1/10 of the net revenue realized from the tax
21imposed by subsections (a) and (b) of Section 201 of the
22Illinois Income Tax Act during the preceding month (ii) minus,
23beginning July 1, 2003 and ending June 30, 2004, $6,666,666,
24and beginning July 1, 2004, zero. Beginning February 1, 2011,
25and continuing through January 31, 2015, the Treasurer shall
26transfer each month from the General Revenue Fund to the Local

 

 

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1Government Distributive Fund an amount equal to the sum of (i)
26% (10% of the ratio of the 3% individual income tax rate prior
3to 2011 to the 5% individual income tax rate after 2010) of the
4net revenue realized from the tax imposed by subsections (a)
5and (b) of Section 201 of this Act upon individuals, trusts,
6and estates during the preceding month and (ii) 6.86% (10% of
7the ratio of the 4.8% corporate income tax rate prior to 2011
8to the 7% corporate income tax rate after 2010) of the net
9revenue realized from the tax imposed by subsections (a) and
10(b) of Section 201 of this Act upon corporations during the
11preceding month. Beginning February 1, 2015 and continuing
12through January 31, 2025, the Treasurer shall transfer each
13month from the General Revenue Fund to the Local Government
14Distributive Fund an amount equal to the sum of (i) 8% (10% of
15the ratio of the 3% individual income tax rate prior to 2011 to
16the 3.75% individual income tax rate after 2014) of the net
17revenue realized from the tax imposed by subsections (a) and
18(b) of Section 201 of this Act upon individuals, trusts, and
19estates during the preceding month and (ii) 9.14% (10% of the
20ratio of the 4.8% corporate income tax rate prior to 2011 to
21the 5.25% corporate income tax rate after 2014) of the net
22revenue realized from the tax imposed by subsections (a) and
23(b) of Section 201 of this Act upon corporations during the
24preceding month. Beginning February 1, 2025, the Treasurer
25shall transfer each month from the General Revenue Fund to the
26Local Government Distributive Fund an amount equal to the sum

 

 

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1of (i) 9.23% (10% of the ratio of the 3% individual income tax
2rate prior to 2011 to the 3.25% individual income tax rate
3after 2024) of the net revenue realized from the tax imposed by
4subsections (a) and (b) of Section 201 of this Act upon
5individuals, trusts, and estates during the preceding month and
6(ii) 10% of the net revenue realized from the tax imposed by
7subsections (a) and (b) of Section 201 of this Act upon
8corporations during the preceding month. Net revenue realized
9for a month shall be defined as the revenue from the tax
10imposed by subsections (a) and (b) of Section 201 of this Act
11which is deposited in the General Revenue Fund, the Education
12Assistance Fund, the Income Tax Surcharge Local Government
13Distributive Fund, the Fund for the Advancement of Education,
14and the Commitment to Human Services Fund during the month
15minus the amount paid out of the General Revenue Fund in State
16warrants during that same month as refunds to taxpayers for
17overpayment of liability under the tax imposed by subsections
18(a) and (b) of Section 201 of this Act.
19    (c) Deposits Into Income Tax Refund Fund.
20        (1) Beginning on January 1, 1989 and thereafter, the
21    Department shall deposit a percentage of the amounts
22    collected pursuant to subsections (a) and (b)(1), (2), and
23    (3), of Section 201 of this Act into a fund in the State
24    treasury known as the Income Tax Refund Fund. The
25    Department shall deposit 6% of such amounts during the
26    period beginning January 1, 1989 and ending on June 30,

 

 

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1    1989. Beginning with State fiscal year 1990 and for each
2    fiscal year thereafter, the percentage deposited into the
3    Income Tax Refund Fund during a fiscal year shall be the
4    Annual Percentage. For fiscal years 1999 through 2001, the
5    Annual Percentage shall be 7.1%. For fiscal year 2003, the
6    Annual Percentage shall be 8%. For fiscal year 2004, the
7    Annual Percentage shall be 11.7%. Upon the effective date
8    of this amendatory Act of the 93rd General Assembly, the
9    Annual Percentage shall be 10% for fiscal year 2005. For
10    fiscal year 2006, the Annual Percentage shall be 9.75%. For
11    fiscal year 2007, the Annual Percentage shall be 9.75%. For
12    fiscal year 2008, the Annual Percentage shall be 7.75%. For
13    fiscal year 2009, the Annual Percentage shall be 9.75%. For
14    fiscal year 2010, the Annual Percentage shall be 9.75%. For
15    fiscal year 2011, the Annual Percentage shall be 8.75%. For
16    fiscal year 2012, the Annual Percentage shall be 8.75%. For
17    all other fiscal years, the Annual Percentage shall be
18    calculated as a fraction, the numerator of which shall be
19    the amount of refunds approved for payment by the
20    Department during the preceding fiscal year as a result of
21    overpayment of tax liability under subsections (a) and
22    (b)(1), (2), and (3) of Section 201 of this Act plus the
23    amount of such refunds remaining approved but unpaid at the
24    end of the preceding fiscal year, minus the amounts
25    transferred into the Income Tax Refund Fund from the
26    Tobacco Settlement Recovery Fund, and the denominator of

 

 

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

 

 

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1    fiscal year 2008, the Annual Percentage shall be 15.5%. For
2    fiscal year 2009, the Annual Percentage shall be 17.5%. For
3    fiscal year 2010, the Annual Percentage shall be 17.5%. For
4    fiscal year 2011, the Annual Percentage shall be 17.5%. For
5    fiscal year 2012, the Annual Percentage shall be 17.5%. For
6    all other fiscal years, the Annual Percentage shall be
7    calculated as a fraction, the numerator of which shall be
8    the amount of refunds approved for payment by the
9    Department during the preceding fiscal year as a result of
10    overpayment of tax liability under subsections (a) and
11    (b)(6), (7), and (8), (c) and (d) of Section 201 of this
12    Act plus the amount of such refunds remaining approved but
13    unpaid at the end of the preceding fiscal year, and the
14    denominator of which shall be the amounts which will be
15    collected pursuant to subsections (a) and (b)(6), (7), and
16    (8), (c) and (d) of Section 201 of this Act during the
17    preceding fiscal year; except that in State fiscal year
18    2002, the Annual Percentage shall in no event exceed 23%.
19    The Director of Revenue shall certify the Annual Percentage
20    to the Comptroller on the last business day of the fiscal
21    year immediately preceding the fiscal year for which it is
22    to be effective.
23        (3) The Comptroller shall order transferred and the
24    Treasurer shall transfer from the Tobacco Settlement
25    Recovery Fund to the Income Tax Refund Fund (i) $35,000,000
26    in January, 2001, (ii) $35,000,000 in January, 2002, and

 

 

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1    (iii) $35,000,000 in January, 2003.
2    (d) Expenditures from Income Tax Refund Fund.
3        (1) Beginning January 1, 1989, money in the Income Tax
4    Refund Fund shall be expended exclusively for the purpose
5    of paying refunds resulting from overpayment of tax
6    liability under Section 201 of this Act, for paying rebates
7    under Section 208.1 in the event that the amounts in the
8    Homeowners' Tax Relief Fund are insufficient for that
9    purpose, and for making transfers pursuant to this
10    subsection (d).
11        (2) The Director shall order payment of refunds
12    resulting from overpayment of tax liability under Section
13    201 of this Act from the Income Tax Refund Fund only to the
14    extent that amounts collected pursuant to Section 201 of
15    this Act and transfers pursuant to this subsection (d) and
16    item (3) of subsection (c) have been deposited and retained
17    in the Fund.
18        (3) As soon as possible after the end of each fiscal
19    year, the Director shall order transferred and the State
20    Treasurer and State Comptroller shall transfer from the
21    Income Tax Refund Fund to the Personal Property Tax
22    Replacement Fund an amount, certified by the Director to
23    the Comptroller, equal to the excess of the amount
24    collected pursuant to subsections (c) and (d) of Section
25    201 of this Act deposited into the Income Tax Refund Fund
26    during the fiscal year over the amount of refunds resulting

 

 

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1    from overpayment of tax liability under subsections (c) and
2    (d) of Section 201 of this Act paid from the Income Tax
3    Refund Fund during the fiscal year.
4        (4) As soon as possible after the end of each fiscal
5    year, the Director shall order transferred and the State
6    Treasurer and State Comptroller shall transfer from the
7    Personal Property Tax Replacement Fund to the Income Tax
8    Refund Fund an amount, certified by the Director to the
9    Comptroller, equal to the excess of the amount of refunds
10    resulting from overpayment of tax liability under
11    subsections (c) and (d) of Section 201 of this Act paid
12    from the Income Tax Refund Fund during the fiscal year over
13    the amount collected pursuant to subsections (c) and (d) of
14    Section 201 of this Act deposited into the Income Tax
15    Refund Fund during the fiscal year.
16        (4.5) As soon as possible after the end of fiscal year
17    1999 and of each fiscal year thereafter, the Director shall
18    order transferred and the State Treasurer and State
19    Comptroller shall transfer from the Income Tax Refund Fund
20    to the General Revenue Fund any surplus remaining in the
21    Income Tax Refund Fund as of the end of such fiscal year;
22    excluding for fiscal years 2000, 2001, and 2002 amounts
23    attributable to transfers under item (3) of subsection (c)
24    less refunds resulting from the earned income tax credit.
25        (5) This Act shall constitute an irrevocable and
26    continuing appropriation from the Income Tax Refund Fund

 

 

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1    for the purpose of paying refunds upon the order of the
2    Director in accordance with the provisions of this Section.
3    (e) Deposits into the Education Assistance Fund and the
4Income Tax Surcharge Local Government Distributive Fund.
5    On July 1, 1991, and thereafter, of the amounts collected
6pursuant to subsections (a) and (b) of Section 201 of this Act,
7minus deposits into the Income Tax Refund Fund, the Department
8shall deposit 7.3% into the Education Assistance Fund in the
9State Treasury. Beginning on the effective date of this
10amendatory Act of the 97th General Assembly the Department
11shall deposit 100% of the proceeds collected as a result of the
12changes made to Section 1501 of this Act by this amendatory Act
13of the 97th General Assembly into the Education Assistance
14Fund. Beginning July 1, 1991, and continuing through January
1531, 1993, of the amounts collected pursuant to subsections (a)
16and (b) of Section 201 of the Illinois Income Tax Act, minus
17deposits into the Income Tax Refund Fund, the Department shall
18deposit 3.0% into the Income Tax Surcharge Local Government
19Distributive Fund in the State Treasury. Beginning February 1,
201993 and continuing through June 30, 1993, of the amounts
21collected pursuant to subsections (a) and (b) of Section 201 of
22the Illinois Income Tax Act, minus deposits into the Income Tax
23Refund Fund, the Department shall deposit 4.4% into the Income
24Tax Surcharge Local Government Distributive Fund in the State
25Treasury. Beginning July 1, 1993, and continuing through June
2630, 1994, of the amounts collected under subsections (a) and

 

 

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1(b) of Section 201 of this Act, minus deposits into the Income
2Tax Refund Fund, the Department shall deposit 1.475% into the
3Income Tax Surcharge Local Government Distributive Fund in the
4State Treasury.
5    (f) Deposits into the Fund for the Advancement of
6Education. Beginning February 1, 2015, the Department shall
7deposit the following portions of the revenue realized from the
8tax imposed upon individuals, trusts, and estates by
9subsections (a) and (b) of Section 201 of this Act during the
10preceding month, minus deposits into the Income Tax Refund
11Fund, into the Fund for the Advancement of Education:
12        (1) beginning February 1, 2015, and prior to February
13    1, 2025, 1/30; and
14        (2) beginning February 1, 2025, 1/26.
15    If the rate of tax imposed by subsection (a) and (b) of
16Section 201 is reduced pursuant to Section 201.5 of this Act,
17the Department shall not make the deposits required by this
18subsection (f) on or after the effective date of the reduction.
19    (g) Deposits into the Commitment to Human Services Fund.
20Beginning February 1, 2015, the Department shall deposit the
21following portions of the revenue realized from the tax imposed
22upon individuals, trusts, and estates by subsections (a) and
23(b) of Section 201 of this Act during the preceding month,
24minus deposits into the Income Tax Refund Fund, into the
25Commitment to Human Services Fund:
26        (1) beginning February 1, 2015, and prior to February

 

 

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1    1, 2025, 1/30; and
2        (2) beginning February 1, 2025, 1/26.
3    If the rate of tax imposed by subsection (a) and (b) of
4Section 201 is reduced pursuant to Section 201.5 of this Act,
5the Department shall not make the deposits required by this
6subsection (g) on or after the effective date of the reduction.
7(Source: P.A. 96-45, eff. 7-15-09; 96-328, eff. 8-11-09;
896-959, eff. 7-1-10; 96-1496, eff. 1-13-11; 97-72, eff.
97-1-11.)
 
10    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
11    (Text of Section before amendment by P.A. 97-636)
12    Sec. 1501. Definitions.
13    (a) In general. When used in this Act, where not otherwise
14distinctly expressed or manifestly incompatible with the
15intent thereof:
16        (1) Business income. The term "business income" means
17    all income that may be treated as apportionable business
18    income under the Constitution of the United States.
19    Business income is net of the deductions allocable thereto.
20    Such term does not include compensation or the deductions
21    allocable thereto. For each taxable year beginning on or
22    after January 1, 2003, a taxpayer may elect to treat all
23    income other than compensation as business income. This
24    election shall be made in accordance with rules adopted by
25    the Department and, once made, shall be irrevocable.

 

 

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1        (1.5) Captive real estate investment trust:
2            (A) The term "captive real estate investment
3        trust" means a corporation, trust, or association:
4                (i) that is considered a real estate
5            investment trust for the taxable year under
6            Section 856 of the Internal Revenue Code;
7                (ii) the certificates of beneficial interest
8            or shares of which are not regularly traded on an
9            established securities market; and
10                (iii) of which more than 50% of the voting
11            power or value of the beneficial interest or
12            shares, at any time during the last half of the
13            taxable year, is owned or controlled, directly,
14            indirectly, or constructively, by a single
15            corporation.
16            (B) The term "captive real estate investment
17        trust" does not include:
18                (i) a real estate investment trust of which
19            more than 50% of the voting power or value of the
20            beneficial interest or shares is owned or
21            controlled, directly, indirectly, or
22            constructively, by:
23                    (a) a real estate investment trust, other
24                than a captive real estate investment trust;
25                    (b) a person who is exempt from taxation
26                under Section 501 of the Internal Revenue Code,

 

 

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1                and who is not required to treat income
2                received from the real estate investment trust
3                as unrelated business taxable income under
4                Section 512 of the Internal Revenue Code;
5                    (c) a listed Australian property trust, if
6                no more than 50% of the voting power or value
7                of the beneficial interest or shares of that
8                trust, at any time during the last half of the
9                taxable year, is owned or controlled, directly
10                or indirectly, by a single person;
11                    (d) an entity organized as a trust,
12                provided a listed Australian property trust
13                described in subparagraph (c) owns or
14                controls, directly or indirectly, or
15                constructively, 75% or more of the voting power
16                or value of the beneficial interests or shares
17                of such entity; or
18                    (e) an entity that is organized outside of
19                the laws of the United States and that
20                satisfies all of the following criteria:
21                        (1) at least 75% of the entity's total
22                    asset value at the close of its taxable
23                    year is represented by real estate assets
24                    (as defined in Section 856(c)(5)(B) of the
25                    Internal Revenue Code, thereby including
26                    shares or certificates of beneficial

 

 

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

 

 

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1            trust under Section 856(c)(1) of the Internal
2            Revenue Code, a real estate investment trust the
3            certificates of beneficial interest or shares of
4            which are not regularly traded on an established
5            securities market, but only if the certificates of
6            beneficial interest or shares of the real estate
7            investment trust are regularly traded on an
8            established securities market prior to the earlier
9            of the due date (including extensions) for filing
10            its return under this Act for that first taxable
11            year or the date it actually files that return.
12            (C) For the purposes of this subsection (1.5), the
13        constructive ownership rules prescribed under Section
14        318(a) of the Internal Revenue Code, as modified by
15        Section 856(d)(5) of the Internal Revenue Code, apply
16        in determining the ownership of stock, assets, or net
17        profits of any person.
18        (2) Commercial domicile. The term "commercial
19    domicile" means the principal place from which the trade or
20    business of the taxpayer is directed or managed.
21        (3) Compensation. The term "compensation" means wages,
22    salaries, commissions and any other form of remuneration
23    paid to employees for personal services.
24        (4) Corporation. The term "corporation" includes
25    associations, joint-stock companies, insurance companies
26    and cooperatives. Any entity, including a limited

 

 

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

 

 

09700HB5342sam001- 20 -LRB097 20175 HLH 70338 a

1        Holding Company Act of 1956.
2            (B) For purposes of subparagraph (A) of this
3        paragraph, the term "bank" includes (i) any entity that
4        is regulated by the Comptroller of the Currency under
5        the National Bank Act, or by the Federal Reserve Board,
6        or by the Federal Deposit Insurance Corporation and
7        (ii) any federally or State chartered bank operating as
8        a credit card bank.
9            (C) For purposes of subparagraph (A) of this
10        paragraph, the term "sales finance company" has the
11        meaning provided in the following item (i) or (ii):
12                (i) A person primarily engaged in one or more
13            of the following businesses: the business of
14            purchasing customer receivables, the business of
15            making loans upon the security of customer
16            receivables, the business of making loans for the
17            express purpose of funding purchases of tangible
18            personal property or services by the borrower, or
19            the business of finance leasing. For purposes of
20            this item (i), "customer receivable" means:
21                    (a) a retail installment contract or
22                retail charge agreement within the meaning of
23                the Sales Finance Agency Act, the Retail
24                Installment Sales Act, or the Motor Vehicle
25                Retail Installment Sales Act;
26                    (b) an installment, charge, credit, or

 

 

09700HB5342sam001- 21 -LRB097 20175 HLH 70338 a

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

 

 

09700HB5342sam001- 22 -LRB097 20175 HLH 70338 a

1                A "qualifying loan" is a loan made to a member
2                of the corporation's affiliated group that
3                originates customer receivables (within the
4                meaning of item (i)) or to whom customer
5                receivables originated by a member of the
6                affiliated group have been transferred, to the
7                extent the average outstanding balance of
8                loans from that corporation to members of its
9                affiliated group during the taxable year do not
10                exceed the limitation amount for that
11                corporation. The "limitation amount" for a
12                corporation is the average outstanding
13                balances during the taxable year of customer
14                receivables (within the meaning of item (i))
15                originated by all members of the affiliated
16                group. If the average outstanding balances of
17                the loans made by a corporation to members of
18                its affiliated group exceed the limitation
19                amount, the interest income of that
20                corporation from qualifying loans shall be
21                equal to its interest income from loans to
22                members of its affiliated groups times a
23                fraction equal to the limitation amount
24                divided by the average outstanding balances of
25                the loans made by that corporation to members
26                of its affiliated group;

 

 

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1                    (c) the total of all shareholder's equity
2                (including, without limitation, paid-in
3                capital on common and preferred stock and
4                retained earnings) of the corporation plus the
5                total of all of its loans, advances, and other
6                obligations payable or owed to members of its
7                affiliated group may not exceed 20% of the
8                total assets of the corporation at any time
9                during the tax year; and
10                    (d) more than 50% of all interest-bearing
11                obligations of the affiliated group payable to
12                persons outside the group determined in
13                accordance with generally accepted accounting
14                principles must be obligations of the
15                corporation.
16            This amendatory Act of the 91st General Assembly is
17        declaratory of existing law.
18            (D) Subparagraphs (B) and (C) of this paragraph are
19        declaratory of existing law and apply retroactively,
20        for all tax years beginning on or before December 31,
21        1996, to all original returns, to all amended returns
22        filed no later than 30 days after the effective date of
23        this amendatory Act of 1996, and to all notices issued
24        on or before the effective date of this amendatory Act
25        of 1996 under subsection (a) of Section 903, subsection
26        (a) of Section 904, subsection (e) of Section 909, or

 

 

09700HB5342sam001- 24 -LRB097 20175 HLH 70338 a

1        Section 912. A taxpayer that is a "financial
2        organization" that engages in any transaction with an
3        affiliate shall be a "financial organization" for all
4        purposes of this Act.
5            (E) For all tax years beginning on or before
6        December 31, 1996, a taxpayer that falls within the
7        definition of a "financial organization" under
8        subparagraphs (B) or (C) of this paragraph, but who
9        does not fall within the definition of a "financial
10        organization" under the Proposed Regulations issued by
11        the Department of Revenue on July 19, 1996, may
12        irrevocably elect to apply the Proposed Regulations
13        for all of those years as though the Proposed
14        Regulations had been lawfully promulgated, adopted,
15        and in effect for all of those years. For purposes of
16        applying subparagraphs (B) or (C) of this paragraph to
17        all of those years, the election allowed by this
18        subparagraph applies only to the taxpayer making the
19        election and to those members of the taxpayer's unitary
20        business group who are ordinarily required to
21        apportion business income under the same subsection of
22        Section 304 of this Act as the taxpayer making the
23        election. No election allowed by this subparagraph
24        shall be made under a claim filed under subsection (d)
25        of Section 909 more than 30 days after the effective
26        date of this amendatory Act of 1996.

 

 

09700HB5342sam001- 25 -LRB097 20175 HLH 70338 a

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

 

 

09700HB5342sam001- 26 -LRB097 20175 HLH 70338 a

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

 

 

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

 

 

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

 

 

09700HB5342sam001- 29 -LRB097 20175 HLH 70338 a

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

 

 

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

 

 

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

 

 

09700HB5342sam001- 32 -LRB097 20175 HLH 70338 a

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

 

 

09700HB5342sam001- 33 -LRB097 20175 HLH 70338 a

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

 

 

09700HB5342sam001- 34 -LRB097 20175 HLH 70338 a

1        factor formula of property, payroll and sales
2        specified in subsection (a) of Section 304, including
3        the formula as weighted in subsection (h) of Section
4        304, such members shall not use the sales factor in the
5        computation and the results of the property and payroll
6        factor computations of subsection (a) of Section 304
7        shall be divided by 2 (by one if either the property or
8        payroll factor has a denominator of zero). The
9        computation required by the preceding sentence shall,
10        in each case, involve the division of the member's
11        property, payroll, or revenue miles in the United
12        States, insurance premiums on property or risk in the
13        United States, or financial organization business
14        income from sources within the United States, as the
15        case may be, by the respective worldwide figures for
16        such items. Common ownership in the case of
17        corporations is the direct or indirect control or
18        ownership of more than 50% of the outstanding voting
19        stock of the persons carrying on unitary business
20        activity. Unitary business activity can ordinarily be
21        illustrated where the activities of the members are:
22        (1) in the same general line (such as manufacturing,
23        wholesaling, retailing of tangible personal property,
24        insurance, transportation or finance); or (2) are
25        steps in a vertically structured enterprise or process
26        (such as the steps involved in the production of

 

 

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1        natural resources, which might include exploration,
2        mining, refining, and marketing); and, in either
3        instance, the members are functionally integrated
4        through the exercise of strong centralized management
5        (where, for example, authority over such matters as
6        purchasing, financing, tax compliance, product line,
7        personnel, marketing and capital investment is not
8        left to each member).
9            (B) In no event, shall any unitary business group
10        include members which are ordinarily required to
11        apportion business income under different subsections
12        of Section 304 except that for tax years ending on or
13        after December 31, 1987 this prohibition shall not
14        apply to a holding company that would otherwise be a
15        member of a unitary business group with taxpayers that
16        apportion business income under any of subsections
17        (b), (c), or (d) of Section 304. If a unitary business
18        group would, but for the preceding sentence, include
19        members that are ordinarily required to apportion
20        business income under different subsections of Section
21        304, then for each subsection of Section 304 for which
22        there are two or more members, there shall be a
23        separate unitary business group composed of such
24        members. For purposes of the preceding two sentences, a
25        member is "ordinarily required to apportion business
26        income" under a particular subsection of Section 304 if

 

 

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1        it would be required to use the apportionment method
2        prescribed by such subsection except for the fact that
3        it derives business income solely from Illinois. As
4        used in this paragraph, the phrase "United States"
5        means only the 50 states and the District of Columbia,
6        and but does not include any territory or possession of
7        the United States, but, for taxable years ending on or
8        after December 31, 2012, does include or any area over
9        which the United States has asserted jurisdiction or
10        claimed exclusive rights with respect to the
11        exploration for or exploitation of natural resources.
12            (C) Holding companies.
13                (i) For purposes of this subparagraph, a
14            "holding company" is a corporation (other than a
15            corporation that is a financial organization under
16            paragraph (8) of this subsection (a) of Section
17            1501 because it is a bank holding company under the
18            provisions of the Bank Holding Company Act of 1956
19            (12 U.S.C. 1841, et seq.) or because it is owned by
20            a bank or a bank holding company) that owns a
21            controlling interest in one or more other
22            taxpayers ("controlled taxpayers"); that, during
23            the period that includes the taxable year and the 2
24            immediately preceding taxable years or, if the
25            corporation was formed during the current or
26            immediately preceding taxable year, the taxable

 

 

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1            years in which the corporation has been in
2            existence, derived substantially all its gross
3            income from dividends, interest, rents, royalties,
4            fees or other charges received from controlled
5            taxpayers for the provision of services, and gains
6            on the sale or other disposition of interests in
7            controlled taxpayers or in property leased or
8            licensed to controlled taxpayers or used by the
9            taxpayer in providing services to controlled
10            taxpayers; and that incurs no substantial expenses
11            other than expenses (including interest and other
12            costs of borrowing) incurred in connection with
13            the acquisition and holding of interests in
14            controlled taxpayers and in the provision of
15            services to controlled taxpayers or in the leasing
16            or licensing of property to controlled taxpayers.
17                (ii) The income of a holding company which is a
18            member of more than one unitary business group
19            shall be included in each unitary business group of
20            which it is a member on a pro rata basis, by
21            including in each unitary business group that
22            portion of the base income of the holding company
23            that bears the same proportion to the total base
24            income of the holding company as the gross receipts
25            of the unitary business group bears to the combined
26            gross receipts of all unitary business groups (in

 

 

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1            both cases without regard to the holding company)
2            or on any other reasonable basis, consistently
3            applied.
4                (iii) A holding company shall apportion its
5            business income under the subsection of Section
6            304 used by the other members of its unitary
7            business group. The apportionment factors of a
8            holding company which would be a member of more
9            than one unitary business group shall be included
10            with the apportionment factors of each unitary
11            business group of which it is a member on a pro
12            rata basis using the same method used in clause
13            (ii).
14                (iv) The provisions of this subparagraph (C)
15            are intended to clarify existing law.
16            (D) If including the base income and factors of a
17        holding company in more than one unitary business group
18        under subparagraph (C) does not fairly reflect the
19        degree of integration between the holding company and
20        one or more of the unitary business groups, the
21        dependence of the holding company and one or more of
22        the unitary business groups upon each other, or the
23        contributions between the holding company and one or
24        more of the unitary business groups, the holding
25        company may petition the Director, under the
26        procedures provided under Section 304(f), for

 

 

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1        permission to include all base income and factors of
2        the holding company only with members of a unitary
3        business group apportioning their business income
4        under one subsection of subsections (a), (b), (c), or
5        (d) of Section 304. If the petition is granted, the
6        holding company shall be included in a unitary business
7        group only with persons apportioning their business
8        income under the selected subsection of Section 304
9        until the Director grants a petition of the holding
10        company either to be included in more than one unitary
11        business group under subparagraph (C) or to include its
12        base income and factors only with members of a unitary
13        business group apportioning their business income
14        under a different subsection of Section 304.
15            (E) If the unitary business group members'
16        accounting periods differ, the common parent's
17        accounting period or, if there is no common parent, the
18        accounting period of the member that is expected to
19        have, on a recurring basis, the greatest Illinois
20        income tax liability must be used to determine whether
21        to use the apportionment method provided in subsection
22        (a) or subsection (h) of Section 304. The prohibition
23        against membership in a unitary business group for
24        taxpayers ordinarily required to apportion income
25        under different subsections of Section 304 does not
26        apply to taxpayers required to apportion income under

 

 

09700HB5342sam001- 40 -LRB097 20175 HLH 70338 a

1        subsection (a) and subsection (h) of Section 304. The
2        provisions of this amendatory Act of 1998 apply to tax
3        years ending on or after December 31, 1998.
4        (28) Subchapter S corporation. The term "Subchapter S
5    corporation" means a corporation for which there is in
6    effect an election under Section 1362 of the Internal
7    Revenue Code, or for which there is a federal election to
8    opt out of the provisions of the Subchapter S Revision Act
9    of 1982 and have applied instead the prior federal
10    Subchapter S rules as in effect on July 1, 1982.
11        (30) Foreign person. The term "foreign person" means
12    any person who is a nonresident alien individual and any
13    nonindividual entity, regardless of where created or
14    organized, whose business activity outside the United
15    States is 80% or more of the entity's total business
16    activity.
 
17    (b) Other definitions.
18        (1) Words denoting number, gender, and so forth, when
19    used in this Act, where not otherwise distinctly expressed
20    or manifestly incompatible with the intent thereof:
21            (A) Words importing the singular include and apply
22        to several persons, parties or things;
23            (B) Words importing the plural include the
24        singular; and
25            (C) Words importing the masculine gender include

 

 

09700HB5342sam001- 41 -LRB097 20175 HLH 70338 a

1        the feminine as well.
2        (2) "Company" or "association" as including successors
3    and assigns. The word "company" or "association", when used
4    in reference to a corporation, shall be deemed to embrace
5    the words "successors and assigns of such company or
6    association", and in like manner as if these last-named
7    words, or words of similar import, were expressed.
8        (3) Other terms. Any term used in any Section of this
9    Act with respect to the application of, or in connection
10    with, the provisions of any other Section of this Act shall
11    have the same meaning as in such other Section.
12(Source: P.A. 96-641, eff. 8-24-09; 97-507, eff. 8-23-11.)
 
13    (Text of Section after amendment by P.A. 97-636)
14    Sec. 1501. Definitions.
15    (a) In general. When used in this Act, where not otherwise
16distinctly expressed or manifestly incompatible with the
17intent thereof:
18        (1) Business income. The term "business income" means
19    all income that may be treated as apportionable business
20    income under the Constitution of the United States.
21    Business income is net of the deductions allocable thereto.
22    Such term does not include compensation or the deductions
23    allocable thereto. For each taxable year beginning on or
24    after January 1, 2003, a taxpayer may elect to treat all
25    income other than compensation as business income. This

 

 

09700HB5342sam001- 42 -LRB097 20175 HLH 70338 a

1    election shall be made in accordance with rules adopted by
2    the Department and, once made, shall be irrevocable.
3        (1.5) Captive real estate investment trust:
4            (A) The term "captive real estate investment
5        trust" means a corporation, trust, or association:
6                (i) that is considered a real estate
7            investment trust for the taxable year under
8            Section 856 of the Internal Revenue Code;
9                (ii) the certificates of beneficial interest
10            or shares of which are not regularly traded on an
11            established securities market; and
12                (iii) of which more than 50% of the voting
13            power or value of the beneficial interest or
14            shares, at any time during the last half of the
15            taxable year, is owned or controlled, directly,
16            indirectly, or constructively, by a single
17            corporation.
18            (B) The term "captive real estate investment
19        trust" does not include:
20                (i) a real estate investment trust of which
21            more than 50% of the voting power or value of the
22            beneficial interest or shares is owned or
23            controlled, directly, indirectly, or
24            constructively, by:
25                    (a) a real estate investment trust, other
26                than a captive real estate investment trust;

 

 

09700HB5342sam001- 43 -LRB097 20175 HLH 70338 a

1                    (b) a person who is exempt from taxation
2                under Section 501 of the Internal Revenue Code,
3                and who is not required to treat income
4                received from the real estate investment trust
5                as unrelated business taxable income under
6                Section 512 of the Internal Revenue Code;
7                    (c) a listed Australian property trust, if
8                no more than 50% of the voting power or value
9                of the beneficial interest or shares of that
10                trust, at any time during the last half of the
11                taxable year, is owned or controlled, directly
12                or indirectly, by a single person;
13                    (d) an entity organized as a trust,
14                provided a listed Australian property trust
15                described in subparagraph (c) owns or
16                controls, directly or indirectly, or
17                constructively, 75% or more of the voting power
18                or value of the beneficial interests or shares
19                of such entity; or
20                    (e) an entity that is organized outside of
21                the laws of the United States and that
22                satisfies all of the following criteria:
23                        (1) at least 75% of the entity's total
24                    asset value at the close of its taxable
25                    year is represented by real estate assets
26                    (as defined in Section 856(c)(5)(B) of the

 

 

09700HB5342sam001- 44 -LRB097 20175 HLH 70338 a

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

 

 

09700HB5342sam001- 45 -LRB097 20175 HLH 70338 a

1                (ii) during its first taxable year for which it
2            elects to be treated as a real estate investment
3            trust under Section 856(c)(1) of the Internal
4            Revenue Code, a real estate investment trust the
5            certificates of beneficial interest or shares of
6            which are not regularly traded on an established
7            securities market, but only if the certificates of
8            beneficial interest or shares of the real estate
9            investment trust are regularly traded on an
10            established securities market prior to the earlier
11            of the due date (including extensions) for filing
12            its return under this Act for that first taxable
13            year or the date it actually files that return.
14            (C) For the purposes of this subsection (1.5), the
15        constructive ownership rules prescribed under Section
16        318(a) of the Internal Revenue Code, as modified by
17        Section 856(d)(5) of the Internal Revenue Code, apply
18        in determining the ownership of stock, assets, or net
19        profits of any person.
20        (2) Commercial domicile. The term "commercial
21    domicile" means the principal place from which the trade or
22    business of the taxpayer is directed or managed.
23        (3) Compensation. The term "compensation" means wages,
24    salaries, commissions and any other form of remuneration
25    paid to employees for personal services.
26        (4) Corporation. The term "corporation" includes

 

 

09700HB5342sam001- 46 -LRB097 20175 HLH 70338 a

1    associations, joint-stock companies, insurance companies
2    and cooperatives. Any entity, including a limited
3    liability company formed under the Illinois Limited
4    Liability Company Act, shall be treated as a corporation if
5    it is so classified for federal income tax purposes.
6        (5) Department. The term "Department" means the
7    Department of Revenue of this State.
8        (6) Director. The term "Director" means the Director of
9    Revenue of this State.
10        (7) Fiduciary. The term "fiduciary" means a guardian,
11    trustee, executor, administrator, receiver, or any person
12    acting in any fiduciary capacity for any person.
13        (8) Financial organization.
14            (A) The term "financial organization" means any
15        bank, bank holding company, trust company, savings
16        bank, industrial bank, land bank, safe deposit
17        company, private banker, savings and loan association,
18        building and loan association, credit union, currency
19        exchange, cooperative bank, small loan company, sales
20        finance company, investment company, or any person
21        which is owned by a bank or bank holding company. For
22        the purpose of this Section a "person" will include
23        only those persons which a bank holding company may
24        acquire and hold an interest in, directly or
25        indirectly, under the provisions of the Bank Holding
26        Company Act of 1956 (12 U.S.C. 1841, et seq.), except

 

 

09700HB5342sam001- 47 -LRB097 20175 HLH 70338 a

1        where interests in any person must be disposed of
2        within certain required time limits under the Bank
3        Holding Company Act of 1956.
4            (B) For purposes of subparagraph (A) of this
5        paragraph, the term "bank" includes (i) any entity that
6        is regulated by the Comptroller of the Currency under
7        the National Bank Act, or by the Federal Reserve Board,
8        or by the Federal Deposit Insurance Corporation and
9        (ii) any federally or State chartered bank operating as
10        a credit card bank.
11            (C) For purposes of subparagraph (A) of this
12        paragraph, the term "sales finance company" has the
13        meaning provided in the following item (i) or (ii):
14                (i) A person primarily engaged in one or more
15            of the following businesses: the business of
16            purchasing customer receivables, the business of
17            making loans upon the security of customer
18            receivables, the business of making loans for the
19            express purpose of funding purchases of tangible
20            personal property or services by the borrower, or
21            the business of finance leasing. For purposes of
22            this item (i), "customer receivable" means:
23                    (a) a retail installment contract or
24                retail charge agreement within the meaning of
25                the Sales Finance Agency Act, the Retail
26                Installment Sales Act, or the Motor Vehicle

 

 

09700HB5342sam001- 48 -LRB097 20175 HLH 70338 a

1                Retail Installment Sales Act;
2                    (b) an installment, charge, credit, or
3                similar contract or agreement arising from the
4                sale of tangible personal property or services
5                in a transaction involving a deferred payment
6                price payable in one or more installments
7                subsequent to the sale; or
8                    (c) the outstanding balance of a contract
9                or agreement described in provisions (a) or (b)
10                of this item (i).
11                A customer receivable need not provide for
12            payment of interest on deferred payments. A sales
13            finance company may purchase a customer receivable
14            from, or make a loan secured by a customer
15            receivable to, the seller in the original
16            transaction or to a person who purchased the
17            customer receivable directly or indirectly from
18            that seller.
19                (ii) A corporation meeting each of the
20            following criteria:
21                    (a) the corporation must be a member of an
22                "affiliated group" within the meaning of
23                Section 1504(a) of the Internal Revenue Code,
24                determined without regard to Section 1504(b)
25                of the Internal Revenue Code;
26                    (b) more than 50% of the gross income of

 

 

09700HB5342sam001- 49 -LRB097 20175 HLH 70338 a

1                the corporation for the taxable year must be
2                interest income derived from qualifying loans.
3                A "qualifying loan" is a loan made to a member
4                of the corporation's affiliated group that
5                originates customer receivables (within the
6                meaning of item (i)) or to whom customer
7                receivables originated by a member of the
8                affiliated group have been transferred, to the
9                extent the average outstanding balance of
10                loans from that corporation to members of its
11                affiliated group during the taxable year do not
12                exceed the limitation amount for that
13                corporation. The "limitation amount" for a
14                corporation is the average outstanding
15                balances during the taxable year of customer
16                receivables (within the meaning of item (i))
17                originated by all members of the affiliated
18                group. If the average outstanding balances of
19                the loans made by a corporation to members of
20                its affiliated group exceed the limitation
21                amount, the interest income of that
22                corporation from qualifying loans shall be
23                equal to its interest income from loans to
24                members of its affiliated groups times a
25                fraction equal to the limitation amount
26                divided by the average outstanding balances of

 

 

09700HB5342sam001- 50 -LRB097 20175 HLH 70338 a

1                the loans made by that corporation to members
2                of its affiliated group;
3                    (c) the total of all shareholder's equity
4                (including, without limitation, paid-in
5                capital on common and preferred stock and
6                retained earnings) of the corporation plus the
7                total of all of its loans, advances, and other
8                obligations payable or owed to members of its
9                affiliated group may not exceed 20% of the
10                total assets of the corporation at any time
11                during the tax year; and
12                    (d) more than 50% of all interest-bearing
13                obligations of the affiliated group payable to
14                persons outside the group determined in
15                accordance with generally accepted accounting
16                principles must be obligations of the
17                corporation.
18            This amendatory Act of the 91st General Assembly is
19        declaratory of existing law.
20            (D) Subparagraphs (B) and (C) of this paragraph are
21        declaratory of existing law and apply retroactively,
22        for all tax years beginning on or before December 31,
23        1996, to all original returns, to all amended returns
24        filed no later than 30 days after the effective date of
25        this amendatory Act of 1996, and to all notices issued
26        on or before the effective date of this amendatory Act

 

 

09700HB5342sam001- 51 -LRB097 20175 HLH 70338 a

1        of 1996 under subsection (a) of Section 903, subsection
2        (a) of Section 904, subsection (e) of Section 909, or
3        Section 912. A taxpayer that is a "financial
4        organization" that engages in any transaction with an
5        affiliate shall be a "financial organization" for all
6        purposes of this Act.
7            (E) For all tax years beginning on or before
8        December 31, 1996, a taxpayer that falls within the
9        definition of a "financial organization" under
10        subparagraphs (B) or (C) of this paragraph, but who
11        does not fall within the definition of a "financial
12        organization" under the Proposed Regulations issued by
13        the Department of Revenue on July 19, 1996, may
14        irrevocably elect to apply the Proposed Regulations
15        for all of those years as though the Proposed
16        Regulations had been lawfully promulgated, adopted,
17        and in effect for all of those years. For purposes of
18        applying subparagraphs (B) or (C) of this paragraph to
19        all of those years, the election allowed by this
20        subparagraph applies only to the taxpayer making the
21        election and to those members of the taxpayer's unitary
22        business group who are ordinarily required to
23        apportion business income under the same subsection of
24        Section 304 of this Act as the taxpayer making the
25        election. No election allowed by this subparagraph
26        shall be made under a claim filed under subsection (d)

 

 

09700HB5342sam001- 52 -LRB097 20175 HLH 70338 a

1        of Section 909 more than 30 days after the effective
2        date of this amendatory Act of 1996.
3            (F) Finance Leases. For purposes of this
4        subsection, a finance lease shall be treated as a loan
5        or other extension of credit, rather than as a lease,
6        regardless of how the transaction is characterized for
7        any other purpose, including the purposes of any
8        regulatory agency to which the lessor is subject. A
9        finance lease is any transaction in the form of a lease
10        in which the lessee is treated as the owner of the
11        leased asset entitled to any deduction for
12        depreciation allowed under Section 167 of the Internal
13        Revenue Code.
14        (9) Fiscal year. The term "fiscal year" means an
15    accounting period of 12 months ending on the last day of
16    any month other than December.
17        (9.5) Fixed place of business. The term "fixed place of
18    business" has the same meaning as that term is given in
19    Section 864 of the Internal Revenue Code and the related
20    Treasury regulations.
21        (10) Includes and including. The terms "includes" and
22    "including" when used in a definition contained in this Act
23    shall not be deemed to exclude other things otherwise
24    within the meaning of the term defined.
25        (11) Internal Revenue Code. The term "Internal Revenue
26    Code" means the United States Internal Revenue Code of 1954

 

 

09700HB5342sam001- 53 -LRB097 20175 HLH 70338 a

1    or any successor law or laws relating to federal income
2    taxes in effect for the taxable year.
3        (11.5) Investment partnership.
4            (A) The term "investment partnership" means any
5        entity that is treated as a partnership for federal
6        income tax purposes that meets the following
7        requirements:
8                (i) no less than 90% of the partnership's cost
9            of its total assets consists of qualifying
10            investment securities, deposits at banks or other
11            financial institutions, and office space and
12            equipment reasonably necessary to carry on its
13            activities as an investment partnership;
14                (ii) no less than 90% of its gross income
15            consists of interest, dividends, and gains from
16            the sale or exchange of qualifying investment
17            securities; and
18                (iii) the partnership is not a dealer in
19            qualifying investment securities.
20            (B) For purposes of this paragraph (11.5), the term
21        "qualifying investment securities" includes all of the
22        following:
23                (i) common stock, including preferred or debt
24            securities convertible into common stock, and
25            preferred stock;
26                (ii) bonds, debentures, and other debt

 

 

09700HB5342sam001- 54 -LRB097 20175 HLH 70338 a

1            securities;
2                (iii) foreign and domestic currency deposits
3            secured by federal, state, or local governmental
4            agencies;
5                (iv) mortgage or asset-backed securities
6            secured by federal, state, or local governmental
7            agencies;
8                (v) repurchase agreements and loan
9            participations;
10                (vi) foreign currency exchange contracts and
11            forward and futures contracts on foreign
12            currencies;
13                (vii) stock and bond index securities and
14            futures contracts and other similar financial
15            securities and futures contracts on those
16            securities;
17                (viii) options for the purchase or sale of any
18            of the securities, currencies, contracts, or
19            financial instruments described in items (i) to
20            (vii), inclusive;
21                (ix) regulated futures contracts;
22                (x) commodities (not described in Section
23            1221(a)(1) of the Internal Revenue Code) or
24            futures, forwards, and options with respect to
25            such commodities, provided, however, that any item
26            of a physical commodity to which title is actually

 

 

09700HB5342sam001- 55 -LRB097 20175 HLH 70338 a

1            acquired in the partnership's capacity as a dealer
2            in such commodity shall not be a qualifying
3            investment security;
4                (xi) derivatives; and
5                (xii) a partnership interest in another
6            partnership that is an investment partnership.
7        (12) Mathematical error. The term "mathematical error"
8    includes the following types of errors, omissions, or
9    defects in a return filed by a taxpayer which prevents
10    acceptance of the return as filed for processing:
11            (A) arithmetic errors or incorrect computations on
12        the return or supporting schedules;
13            (B) entries on the wrong lines;
14            (C) omission of required supporting forms or
15        schedules or the omission of the information in whole
16        or in part called for thereon; and
17            (D) an attempt to claim, exclude, deduct, or
18        improperly report, in a manner directly contrary to the
19        provisions of the Act and regulations thereunder any
20        item of income, exemption, deduction, or credit.
21        (13) Nonbusiness income. The term "nonbusiness income"
22    means all income other than business income or
23    compensation.
24        (14) Nonresident. The term "nonresident" means a
25    person who is not a resident.
26        (15) Paid, incurred and accrued. The terms "paid",

 

 

09700HB5342sam001- 56 -LRB097 20175 HLH 70338 a

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

 

 

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1    Section 1501(a)(20)(A)(ii) residence commences with the
2    establishment of domicile in this State and ceases with the
3    establishment of domicile in another State.
4        (18) Person. The term "person" shall be construed to
5    mean and include an individual, a trust, estate,
6    partnership, association, firm, company, corporation,
7    limited liability company, or fiduciary. For purposes of
8    Section 1301 and 1302 of this Act, a "person" means (i) an
9    individual, (ii) a corporation, (iii) an officer, agent, or
10    employee of a corporation, (iv) a member, agent or employee
11    of a partnership, or (v) a member, manager, employee,
12    officer, director, or agent of a limited liability company
13    who in such capacity commits an offense specified in
14    Section 1301 and 1302.
15        (18A) Records. The term "records" includes all data
16    maintained by the taxpayer, whether on paper, microfilm,
17    microfiche, or any type of machine-sensible data
18    compilation.
19        (19) Regulations. The term "regulations" includes
20    rules promulgated and forms prescribed by the Department.
21        (20) Resident. The term "resident" means:
22            (A) an individual (i) who is in this State for
23        other than a temporary or transitory purpose during the
24        taxable year; or (ii) who is domiciled in this State
25        but is absent from the State for a temporary or
26        transitory purpose during the taxable year;

 

 

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1            (B) The estate of a decedent who at his or her
2        death was domiciled in this State;
3            (C) A trust created by a will of a decedent who at
4        his death was domiciled in this State; and
5            (D) An irrevocable trust, the grantor of which was
6        domiciled in this State at the time such trust became
7        irrevocable. For purpose of this subparagraph, a trust
8        shall be considered irrevocable to the extent that the
9        grantor is not treated as the owner thereof under
10        Sections 671 through 678 of the Internal Revenue Code.
11        (21) Sales. The term "sales" means all gross receipts
12    of the taxpayer not allocated under Sections 301, 302 and
13    303.
14        (22) State. The term "state" when applied to a
15    jurisdiction other than this State means any state of the
16    United States, the District of Columbia, the Commonwealth
17    of Puerto Rico, any Territory or Possession of the United
18    States, and any foreign country, or any political
19    subdivision of any of the foregoing. For purposes of the
20    foreign tax credit under Section 601, the term "state"
21    means any state of the United States, the District of
22    Columbia, the Commonwealth of Puerto Rico, and any
23    territory or possession of the United States, or any
24    political subdivision of any of the foregoing, effective
25    for tax years ending on or after December 31, 1989.
26        (23) Taxable year. The term "taxable year" means the

 

 

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1    calendar year, or the fiscal year ending during such
2    calendar year, upon the basis of which the base income is
3    computed under this Act. "Taxable year" means, in the case
4    of a return made for a fractional part of a year under the
5    provisions of this Act, the period for which such return is
6    made.
7        (24) Taxpayer. The term "taxpayer" means any person
8    subject to the tax imposed by this Act.
9        (25) International banking facility. The term
10    international banking facility shall have the same meaning
11    as is set forth in the Illinois Banking Act or as is set
12    forth in the laws of the United States or regulations of
13    the Board of Governors of the Federal Reserve System.
14        (26) Income Tax Return Preparer.
15            (A) The term "income tax return preparer" means any
16        person who prepares for compensation, or who employs
17        one or more persons to prepare for compensation, any
18        return of tax imposed by this Act or any claim for
19        refund of tax imposed by this Act. The preparation of a
20        substantial portion of a return or claim for refund
21        shall be treated as the preparation of that return or
22        claim for refund.
23            (B) A person is not an income tax return preparer
24        if all he or she does is
25                (i) furnish typing, reproducing, or other
26            mechanical assistance;

 

 

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

 

 

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1        304 except that, in the case of members ordinarily
2        required to apportion business income by means of the 3
3        factor formula of property, payroll and sales
4        specified in subsection (a) of Section 304, including
5        the formula as weighted in subsection (h) of Section
6        304, such members shall not use the sales factor in the
7        computation and the results of the property and payroll
8        factor computations of subsection (a) of Section 304
9        shall be divided by 2 (by one if either the property or
10        payroll factor has a denominator of zero). The
11        computation required by the preceding sentence shall,
12        in each case, involve the division of the member's
13        property, payroll, or revenue miles in the United
14        States, insurance premiums on property or risk in the
15        United States, or financial organization business
16        income from sources within the United States, as the
17        case may be, by the respective worldwide figures for
18        such items. Common ownership in the case of
19        corporations is the direct or indirect control or
20        ownership of more than 50% of the outstanding voting
21        stock of the persons carrying on unitary business
22        activity. Unitary business activity can ordinarily be
23        illustrated where the activities of the members are:
24        (1) in the same general line (such as manufacturing,
25        wholesaling, retailing of tangible personal property,
26        insurance, transportation or finance); or (2) are

 

 

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1        steps in a vertically structured enterprise or process
2        (such as the steps involved in the production of
3        natural resources, which might include exploration,
4        mining, refining, and marketing); and, in either
5        instance, the members are functionally integrated
6        through the exercise of strong centralized management
7        (where, for example, authority over such matters as
8        purchasing, financing, tax compliance, product line,
9        personnel, marketing and capital investment is not
10        left to each member).
11            (B) In no event, shall any unitary business group
12        include members which are ordinarily required to
13        apportion business income under different subsections
14        of Section 304 except that for tax years ending on or
15        after December 31, 1987 this prohibition shall not
16        apply to a holding company that would otherwise be a
17        member of a unitary business group with taxpayers that
18        apportion business income under any of subsections
19        (b), (c), (c-1), or (d) of Section 304. If a unitary
20        business group would, but for the preceding sentence,
21        include members that are ordinarily required to
22        apportion business income under different subsections
23        of Section 304, then for each subsection of Section 304
24        for which there are two or more members, there shall be
25        a separate unitary business group composed of such
26        members. For purposes of the preceding two sentences, a

 

 

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1        member is "ordinarily required to apportion business
2        income" under a particular subsection of Section 304 if
3        it would be required to use the apportionment method
4        prescribed by such subsection except for the fact that
5        it derives business income solely from Illinois. As
6        used in this paragraph, the phrase "United States"
7        means only the 50 states and the District of Columbia,
8        and but does not include any territory or possession of
9        the United States, but, for taxable years ending on or
10        after December 31, 2012, does include or any area over
11        which the United States has asserted jurisdiction or
12        claimed exclusive rights with respect to the
13        exploration for or exploitation of natural resources.
14            (C) Holding companies.
15                (i) For purposes of this subparagraph, a
16            "holding company" is a corporation (other than a
17            corporation that is a financial organization under
18            paragraph (8) of this subsection (a) of Section
19            1501 because it is a bank holding company under the
20            provisions of the Bank Holding Company Act of 1956
21            (12 U.S.C. 1841, et seq.) or because it is owned by
22            a bank or a bank holding company) that owns a
23            controlling interest in one or more other
24            taxpayers ("controlled taxpayers"); that, during
25            the period that includes the taxable year and the 2
26            immediately preceding taxable years or, if the

 

 

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1            corporation was formed during the current or
2            immediately preceding taxable year, the taxable
3            years in which the corporation has been in
4            existence, derived substantially all its gross
5            income from dividends, interest, rents, royalties,
6            fees or other charges received from controlled
7            taxpayers for the provision of services, and gains
8            on the sale or other disposition of interests in
9            controlled taxpayers or in property leased or
10            licensed to controlled taxpayers or used by the
11            taxpayer in providing services to controlled
12            taxpayers; and that incurs no substantial expenses
13            other than expenses (including interest and other
14            costs of borrowing) incurred in connection with
15            the acquisition and holding of interests in
16            controlled taxpayers and in the provision of
17            services to controlled taxpayers or in the leasing
18            or licensing of property to controlled taxpayers.
19                (ii) The income of a holding company which is a
20            member of more than one unitary business group
21            shall be included in each unitary business group of
22            which it is a member on a pro rata basis, by
23            including in each unitary business group that
24            portion of the base income of the holding company
25            that bears the same proportion to the total base
26            income of the holding company as the gross receipts

 

 

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1            of the unitary business group bears to the combined
2            gross receipts of all unitary business groups (in
3            both cases without regard to the holding company)
4            or on any other reasonable basis, consistently
5            applied.
6                (iii) A holding company shall apportion its
7            business income under the subsection of Section
8            304 used by the other members of its unitary
9            business group. The apportionment factors of a
10            holding company which would be a member of more
11            than one unitary business group shall be included
12            with the apportionment factors of each unitary
13            business group of which it is a member on a pro
14            rata basis using the same method used in clause
15            (ii).
16                (iv) The provisions of this subparagraph (C)
17            are intended to clarify existing law.
18            (D) If including the base income and factors of a
19        holding company in more than one unitary business group
20        under subparagraph (C) does not fairly reflect the
21        degree of integration between the holding company and
22        one or more of the unitary business groups, the
23        dependence of the holding company and one or more of
24        the unitary business groups upon each other, or the
25        contributions between the holding company and one or
26        more of the unitary business groups, the holding

 

 

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1        company may petition the Director, under the
2        procedures provided under Section 304(f), for
3        permission to include all base income and factors of
4        the holding company only with members of a unitary
5        business group apportioning their business income
6        under one subsection of subsections (a), (b), (c), or
7        (d) of Section 304. If the petition is granted, the
8        holding company shall be included in a unitary business
9        group only with persons apportioning their business
10        income under the selected subsection of Section 304
11        until the Director grants a petition of the holding
12        company either to be included in more than one unitary
13        business group under subparagraph (C) or to include its
14        base income and factors only with members of a unitary
15        business group apportioning their business income
16        under a different subsection of Section 304.
17            (E) If the unitary business group members'
18        accounting periods differ, the common parent's
19        accounting period or, if there is no common parent, the
20        accounting period of the member that is expected to
21        have, on a recurring basis, the greatest Illinois
22        income tax liability must be used to determine whether
23        to use the apportionment method provided in subsection
24        (a) or subsection (h) of Section 304. The prohibition
25        against membership in a unitary business group for
26        taxpayers ordinarily required to apportion income

 

 

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1        under different subsections of Section 304 does not
2        apply to taxpayers required to apportion income under
3        subsection (a) and subsection (h) of Section 304. The
4        provisions of this amendatory Act of 1998 apply to tax
5        years ending on or after December 31, 1998.
6        (28) Subchapter S corporation. The term "Subchapter S
7    corporation" means a corporation for which there is in
8    effect an election under Section 1362 of the Internal
9    Revenue Code, or for which there is a federal election to
10    opt out of the provisions of the Subchapter S Revision Act
11    of 1982 and have applied instead the prior federal
12    Subchapter S rules as in effect on July 1, 1982.
13        (30) Foreign person. The term "foreign person" means
14    any person who is a nonresident alien individual and any
15    nonindividual entity, regardless of where created or
16    organized, whose business activity outside the United
17    States is 80% or more of the entity's total business
18    activity.
 
19    (b) Other definitions.
20        (1) Words denoting number, gender, and so forth, when
21    used in this Act, where not otherwise distinctly expressed
22    or manifestly incompatible with the intent thereof:
23            (A) Words importing the singular include and apply
24        to several persons, parties or things;
25            (B) Words importing the plural include the

 

 

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1        singular; and
2            (C) Words importing the masculine gender include
3        the feminine as well.
4        (2) "Company" or "association" as including successors
5    and assigns. The word "company" or "association", when used
6    in reference to a corporation, shall be deemed to embrace
7    the words "successors and assigns of such company or
8    association", and in like manner as if these last-named
9    words, or words of similar import, were expressed.
10        (3) Other terms. Any term used in any Section of this
11    Act with respect to the application of, or in connection
12    with, the provisions of any other Section of this Act shall
13    have the same meaning as in such other Section.
14(Source: P.A. 96-641, eff. 8-24-09; 97-507, eff. 8-23-11;
1597-636, eff. 6-1-12.)
 
16    Section 95. No acceleration or delay. Where this Act makes
17changes in a statute that is represented in this Act by text
18that is not yet or no longer in effect (for example, a Section
19represented by multiple versions), the use of that text does
20not accelerate or delay the taking effect of (i) the changes
21made by this Act or (ii) provisions derived from any other
22Public Act.
 
23    Section 99. Effective date. This Act takes effect upon
24becoming law.".