97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5795

 

Introduced 2/16/2012, by Rep. Jason Barickman

 

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

    Amends the Illinois Income Tax Act. Provides that the research and development credit is effective for all taxable years ending on or after December 31, 2004 and is not subject to the Act's automatic sunset provisions. Provides that amounts paid or incurred for ethanol and biodiesel research are included in the definition of "qualified expenditure". Effective immediately.


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FISCAL NOTE ACT MAY APPLY
HOUSING AFFORDABILITY IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 10. The Illinois Income Tax Act is amended by
5changing Section 201 as follows:
 
6    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
7    (Text of Section before amendment by P.A. 97-636)
8    Sec. 201. Tax Imposed.
9    (a) In general. A tax measured by net income is hereby
10imposed on every individual, corporation, trust and estate for
11each taxable year ending after July 31, 1969 on the privilege
12of earning or receiving income in or as a resident of this
13State. Such tax shall be in addition to all other occupation or
14privilege taxes imposed by this State or by any municipal
15corporation or political subdivision thereof.
16    (b) Rates. The tax imposed by subsection (a) of this
17Section shall be determined as follows, except as adjusted by
18subsection (d-1):
19        (1) In the case of an individual, trust or estate, for
20    taxable years ending prior to July 1, 1989, an amount equal
21    to 2 1/2% of the taxpayer's net income for the taxable
22    year.
23        (2) In the case of an individual, trust or estate, for

 

 

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1    taxable years beginning prior to July 1, 1989 and ending
2    after June 30, 1989, an amount equal to the sum of (i) 2
3    1/2% of the taxpayer's net income for the period prior to
4    July 1, 1989, as calculated under Section 202.3, and (ii)
5    3% of the taxpayer's net income for the period after June
6    30, 1989, as calculated under Section 202.3.
7        (3) In the case of an individual, trust or estate, for
8    taxable years beginning after June 30, 1989, and ending
9    prior to January 1, 2011, an amount equal to 3% of the
10    taxpayer's net income for the taxable year.
11        (4) In the case of an individual, trust, or estate, for
12    taxable years beginning prior to January 1, 2011, and
13    ending after December 31, 2010, an amount equal to the sum
14    of (i) 3% of the taxpayer's net income for the period prior
15    to January 1, 2011, as calculated under Section 202.5, and
16    (ii) 5% of the taxpayer's net income for the period after
17    December 31, 2010, as calculated under Section 202.5.
18        (5) In the case of an individual, trust, or estate, for
19    taxable years beginning on or after January 1, 2011, and
20    ending prior to January 1, 2015, an amount equal to 5% of
21    the taxpayer's net income for the taxable year.
22        (5.1) In the case of an individual, trust, or estate,
23    for taxable years beginning prior to January 1, 2015, and
24    ending after December 31, 2014, an amount equal to the sum
25    of (i) 5% of the taxpayer's net income for the period prior
26    to January 1, 2015, as calculated under Section 202.5, and

 

 

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1    (ii) 3.75% of the taxpayer's net income for the period
2    after December 31, 2014, as calculated under Section 202.5.
3        (5.2) In the case of an individual, trust, or estate,
4    for taxable years beginning on or after January 1, 2015,
5    and ending prior to January 1, 2025, an amount equal to
6    3.75% of the taxpayer's net income for the taxable year.
7        (5.3) In the case of an individual, trust, or estate,
8    for taxable years beginning prior to January 1, 2025, and
9    ending after December 31, 2024, an amount equal to the sum
10    of (i) 3.75% of the taxpayer's net income for the period
11    prior to January 1, 2025, as calculated under Section
12    202.5, and (ii) 3.25% of the taxpayer's net income for the
13    period after December 31, 2024, as calculated under Section
14    202.5.
15        (5.4) In the case of an individual, trust, or estate,
16    for taxable years beginning on or after January 1, 2025, an
17    amount equal to 3.25% of the taxpayer's net income for the
18    taxable year.
19        (6) In the case of a corporation, for taxable years
20    ending prior to July 1, 1989, an amount equal to 4% of the
21    taxpayer's net income for the taxable year.
22        (7) In the case of a corporation, for taxable years
23    beginning prior to July 1, 1989 and ending after June 30,
24    1989, an amount equal to the sum of (i) 4% of the
25    taxpayer's net income for the period prior to July 1, 1989,
26    as calculated under Section 202.3, and (ii) 4.8% of the

 

 

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1    taxpayer's net income for the period after June 30, 1989,
2    as calculated under Section 202.3.
3        (8) In the case of a corporation, for taxable years
4    beginning after June 30, 1989, and ending prior to January
5    1, 2011, an amount equal to 4.8% of the taxpayer's net
6    income for the taxable year.
7        (9) In the case of a corporation, for taxable years
8    beginning prior to January 1, 2011, and ending after
9    December 31, 2010, an amount equal to the sum of (i) 4.8%
10    of the taxpayer's net income for the period prior to
11    January 1, 2011, as calculated under Section 202.5, and
12    (ii) 7% of the taxpayer's net income for the period after
13    December 31, 2010, as calculated under Section 202.5.
14        (10) In the case of a corporation, for taxable years
15    beginning on or after January 1, 2011, and ending prior to
16    January 1, 2015, an amount equal to 7% of the taxpayer's
17    net income for the taxable year.
18        (11) In the case of a corporation, for taxable years
19    beginning prior to January 1, 2015, and ending after
20    December 31, 2014, an amount equal to the sum of (i) 7% of
21    the taxpayer's net income for the period prior to January
22    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
23    of the taxpayer's net income for the period after December
24    31, 2014, as calculated under Section 202.5.
25        (12) In the case of a corporation, for taxable years
26    beginning on or after January 1, 2015, and ending prior to

 

 

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1    January 1, 2025, an amount equal to 5.25% of the taxpayer's
2    net income for the taxable year.
3        (13) In the case of a corporation, for taxable years
4    beginning prior to January 1, 2025, and ending after
5    December 31, 2024, an amount equal to the sum of (i) 5.25%
6    of the taxpayer's net income for the period prior to
7    January 1, 2025, as calculated under Section 202.5, and
8    (ii) 4.8% of the taxpayer's net income for the period after
9    December 31, 2024, as calculated under Section 202.5.
10        (14) In the case of a corporation, for taxable years
11    beginning on or after January 1, 2025, an amount equal to
12    4.8% of the taxpayer's net income for the taxable year.
13    The rates under this subsection (b) are subject to the
14provisions of Section 201.5.
15    (c) Personal Property Tax Replacement Income Tax.
16Beginning on July 1, 1979 and thereafter, in addition to such
17income tax, there is also hereby imposed the Personal Property
18Tax Replacement Income Tax measured by net income on every
19corporation (including Subchapter S corporations), partnership
20and trust, for each taxable year ending after June 30, 1979.
21Such taxes are imposed on the privilege of earning or receiving
22income in or as a resident of this State. The Personal Property
23Tax Replacement Income Tax shall be in addition to the income
24tax imposed by subsections (a) and (b) of this Section and in
25addition to all other occupation or privilege taxes imposed by
26this State or by any municipal corporation or political

 

 

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1subdivision thereof.
2    (d) Additional Personal Property Tax Replacement Income
3Tax Rates. The personal property tax replacement income tax
4imposed by this subsection and subsection (c) of this Section
5in the case of a corporation, other than a Subchapter S
6corporation and except as adjusted by subsection (d-1), shall
7be an additional amount equal to 2.85% of such taxpayer's net
8income for the taxable year, except that beginning on January
91, 1981, and thereafter, the rate of 2.85% specified in this
10subsection shall be reduced to 2.5%, and in the case of a
11partnership, trust or a Subchapter S corporation shall be an
12additional amount equal to 1.5% of such taxpayer's net income
13for the taxable year.
14    (d-1) Rate reduction for certain foreign insurers. In the
15case of a foreign insurer, as defined by Section 35A-5 of the
16Illinois Insurance Code, whose state or country of domicile
17imposes on insurers domiciled in Illinois a retaliatory tax
18(excluding any insurer whose premiums from reinsurance assumed
19are 50% or more of its total insurance premiums as determined
20under paragraph (2) of subsection (b) of Section 304, except
21that for purposes of this determination premiums from
22reinsurance do not include premiums from inter-affiliate
23reinsurance arrangements), beginning with taxable years ending
24on or after December 31, 1999, the sum of the rates of tax
25imposed by subsections (b) and (d) shall be reduced (but not
26increased) to the rate at which the total amount of tax imposed

 

 

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

 

 

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1    409 of the Illinois Insurance Code. This paragraph will in
2    no event increase the rates imposed under subsections (b)
3    and (d).
4        (2) Any reduction in the rates of tax imposed by this
5    subsection shall be applied first against the rates imposed
6    by subsection (b) and only after the tax imposed by
7    subsection (a) net of all credits allowed under this
8    Section other than the credit allowed under subsection (i)
9    has been reduced to zero, against the rates imposed by
10    subsection (d).
11    This subsection (d-1) is exempt from the provisions of
12Section 250.
13    (e) Investment credit. A taxpayer shall be allowed a credit
14against the Personal Property Tax Replacement Income Tax for
15investment in qualified property.
16        (1) A taxpayer shall be allowed a credit equal to .5%
17    of the basis of qualified property placed in service during
18    the taxable year, provided such property is placed in
19    service on or after July 1, 1984. There shall be allowed an
20    additional credit equal to .5% of the basis of qualified
21    property placed in service during the taxable year,
22    provided such property is placed in service on or after
23    July 1, 1986, and the taxpayer's base employment within
24    Illinois has increased by 1% or more over the preceding
25    year as determined by the taxpayer's employment records
26    filed with the Illinois Department of Employment Security.

 

 

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1    Taxpayers who are new to Illinois shall be deemed to have
2    met the 1% growth in base employment for the first year in
3    which they file employment records with the Illinois
4    Department of Employment Security. The provisions added to
5    this Section by Public Act 85-1200 (and restored by Public
6    Act 87-895) shall be construed as declaratory of existing
7    law and not as a new enactment. If, in any year, the
8    increase in base employment within Illinois over the
9    preceding year is less than 1%, the additional credit shall
10    be limited to that percentage times a fraction, the
11    numerator of which is .5% and the denominator of which is
12    1%, but shall not exceed .5%. The investment credit shall
13    not be allowed to the extent that it would reduce a
14    taxpayer's liability in any tax year below zero, nor may
15    any credit for qualified property be allowed for any year
16    other than the year in which the property was placed in
17    service in Illinois. For tax years ending on or after
18    December 31, 1987, and on or before December 31, 1988, the
19    credit shall be allowed for the tax year in which the
20    property is placed in service, or, if the amount of the
21    credit exceeds the tax liability for that year, whether it
22    exceeds the original liability or the liability as later
23    amended, such excess may be carried forward and applied to
24    the tax liability of the 5 taxable years following the
25    excess credit years if the taxpayer (i) makes investments
26    which cause the creation of a minimum of 2,000 full-time

 

 

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1    equivalent jobs in Illinois, (ii) is located in an
2    enterprise zone established pursuant to the Illinois
3    Enterprise Zone Act and (iii) is certified by the
4    Department of Commerce and Community Affairs (now
5    Department of Commerce and Economic Opportunity) as
6    complying with the requirements specified in clause (i) and
7    (ii) by July 1, 1986. The Department of Commerce and
8    Community Affairs (now Department of Commerce and Economic
9    Opportunity) shall notify the Department of Revenue of all
10    such certifications immediately. For tax years ending
11    after December 31, 1988, the credit shall be allowed for
12    the tax year in which the property is placed in service,
13    or, if the amount of the credit exceeds the tax liability
14    for that year, whether it exceeds the original liability or
15    the liability as later amended, such excess may be carried
16    forward and applied to the tax liability of the 5 taxable
17    years following the excess credit years. The credit shall
18    be applied to the earliest year for which there is a
19    liability. If there is credit from more than one tax year
20    that is available to offset a liability, earlier credit
21    shall be applied first.
22        (2) The term "qualified property" means property
23    which:
24            (A) is tangible, whether new or used, including
25        buildings and structural components of buildings and
26        signs that are real property, but not including land or

 

 

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1        improvements to real property that are not a structural
2        component of a building such as landscaping, sewer
3        lines, local access roads, fencing, parking lots, and
4        other appurtenances;
5            (B) is depreciable pursuant to Section 167 of the
6        Internal Revenue Code, except that "3-year property"
7        as defined in Section 168(c)(2)(A) of that Code is not
8        eligible for the credit provided by this subsection
9        (e);
10            (C) is acquired by purchase as defined in Section
11        179(d) of the Internal Revenue Code;
12            (D) is used in Illinois by a taxpayer who is
13        primarily engaged in manufacturing, or in mining coal
14        or fluorite, or in retailing, or was placed in service
15        on or after July 1, 2006 in a River Edge Redevelopment
16        Zone established pursuant to the River Edge
17        Redevelopment Zone Act; and
18            (E) has not previously been used in Illinois in
19        such a manner and by such a person as would qualify for
20        the credit provided by this subsection (e) or
21        subsection (f).
22        (3) For purposes of this subsection (e),
23    "manufacturing" means the material staging and production
24    of tangible personal property by procedures commonly
25    regarded as manufacturing, processing, fabrication, or
26    assembling which changes some existing material into new

 

 

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1    shapes, new qualities, or new combinations. For purposes of
2    this subsection (e) the term "mining" shall have the same
3    meaning as the term "mining" in Section 613(c) of the
4    Internal Revenue Code. For purposes of this subsection (e),
5    the term "retailing" means the sale of tangible personal
6    property for use or consumption and not for resale, or
7    services rendered in conjunction with the sale of tangible
8    personal property for use or consumption and not for
9    resale. For purposes of this subsection (e), "tangible
10    personal property" has the same meaning as when that term
11    is used in the Retailers' Occupation Tax Act, and, for
12    taxable years ending after December 31, 2008, does not
13    include the generation, transmission, or distribution of
14    electricity.
15        (4) The basis of qualified property shall be the basis
16    used to compute the depreciation deduction for federal
17    income tax purposes.
18        (5) If the basis of the property for federal income tax
19    depreciation purposes is increased after it has been placed
20    in service in Illinois by the taxpayer, the amount of such
21    increase shall be deemed property placed in service on the
22    date of such increase in basis.
23        (6) The term "placed in service" shall have the same
24    meaning as under Section 46 of the Internal Revenue Code.
25        (7) If during any taxable year, any property ceases to
26    be qualified property in the hands of the taxpayer within

 

 

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1    48 months after being placed in service, or the situs of
2    any qualified property is moved outside Illinois within 48
3    months after being placed in service, the Personal Property
4    Tax Replacement Income Tax for such taxable year shall be
5    increased. Such increase shall be determined by (i)
6    recomputing the investment credit which would have been
7    allowed for the year in which credit for such property was
8    originally allowed by eliminating such property from such
9    computation and, (ii) subtracting such recomputed credit
10    from the amount of credit previously allowed. For the
11    purposes of this paragraph (7), a reduction of the basis of
12    qualified property resulting from a redetermination of the
13    purchase price shall be deemed a disposition of qualified
14    property to the extent of such reduction.
15        (8) Unless the investment credit is extended by law,
16    the basis of qualified property shall not include costs
17    incurred after December 31, 2013, except for costs incurred
18    pursuant to a binding contract entered into on or before
19    December 31, 2013.
20        (9) Each taxable year ending before December 31, 2000,
21    a partnership may elect to pass through to its partners the
22    credits to which the partnership is entitled under this
23    subsection (e) for the taxable year. A partner may use the
24    credit allocated to him or her under this paragraph only
25    against the tax imposed in subsections (c) and (d) of this
26    Section. If the partnership makes that election, those

 

 

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1    credits shall be allocated among the partners in the
2    partnership in accordance with the rules set forth in
3    Section 704(b) of the Internal Revenue Code, and the rules
4    promulgated under that Section, and the allocated amount of
5    the credits shall be allowed to the partners for that
6    taxable year. The partnership shall make this election on
7    its Personal Property Tax Replacement Income Tax return for
8    that taxable year. The election to pass through the credits
9    shall be irrevocable.
10        For taxable years ending on or after December 31, 2000,
11    a partner that qualifies its partnership for a subtraction
12    under subparagraph (I) of paragraph (2) of subsection (d)
13    of Section 203 or a shareholder that qualifies a Subchapter
14    S corporation for a subtraction under subparagraph (S) of
15    paragraph (2) of subsection (b) of Section 203 shall be
16    allowed a credit under this subsection (e) equal to its
17    share of the credit earned under this subsection (e) during
18    the taxable year by the partnership or Subchapter S
19    corporation, determined in accordance with the
20    determination of income and distributive share of income
21    under Sections 702 and 704 and Subchapter S of the Internal
22    Revenue Code. This paragraph is exempt from the provisions
23    of Section 250.
24    (f) Investment credit; Enterprise Zone; River Edge
25Redevelopment Zone.
26        (1) A taxpayer shall be allowed a credit against the

 

 

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1    tax imposed by subsections (a) and (b) of this Section for
2    investment in qualified property which is placed in service
3    in an Enterprise Zone created pursuant to the Illinois
4    Enterprise Zone Act or, for property placed in service on
5    or after July 1, 2006, a River Edge Redevelopment Zone
6    established pursuant to the River Edge Redevelopment Zone
7    Act. For partners, shareholders of Subchapter S
8    corporations, and owners of limited liability companies,
9    if the liability company is treated as a partnership for
10    purposes of federal and State income taxation, there shall
11    be allowed a credit under this subsection (f) to be
12    determined in accordance with the determination of income
13    and distributive share of income under Sections 702 and 704
14    and Subchapter S of the Internal Revenue Code. The credit
15    shall be .5% of the basis for such property. The credit
16    shall be available only in the taxable year in which the
17    property is placed in service in the Enterprise Zone or
18    River Edge Redevelopment Zone and shall not be allowed to
19    the extent that it would reduce a taxpayer's liability for
20    the tax imposed by subsections (a) and (b) of this Section
21    to below zero. For tax years ending on or after December
22    31, 1985, the credit shall be allowed for the tax year in
23    which the property is placed in service, or, if the amount
24    of the credit exceeds the tax liability for that year,
25    whether it exceeds the original liability or the liability
26    as later amended, such excess may be carried forward and

 

 

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1    applied to the tax liability of the 5 taxable years
2    following the excess credit year. The credit shall be
3    applied to the earliest year for which there is a
4    liability. If there is credit from more than one tax year
5    that is available to offset a liability, the credit
6    accruing first in time shall be applied first.
7        (2) The term qualified property means property which:
8            (A) is tangible, whether new or used, including
9        buildings and structural components of buildings;
10            (B) is depreciable pursuant to Section 167 of the
11        Internal Revenue Code, except that "3-year property"
12        as defined in Section 168(c)(2)(A) of that Code is not
13        eligible for the credit provided by this subsection
14        (f);
15            (C) is acquired by purchase as defined in Section
16        179(d) of the Internal Revenue Code;
17            (D) is used in the Enterprise Zone or River Edge
18        Redevelopment Zone by the taxpayer; and
19            (E) has not been previously used in Illinois in
20        such a manner and by such a person as would qualify for
21        the credit provided by this subsection (f) or
22        subsection (e).
23        (3) The basis of qualified property shall be the basis
24    used to compute the depreciation deduction for federal
25    income tax purposes.
26        (4) If the basis of the property for federal income tax

 

 

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1    depreciation purposes is increased after it has been placed
2    in service in the Enterprise Zone or River Edge
3    Redevelopment Zone by the taxpayer, the amount of such
4    increase shall be deemed property placed in service on the
5    date of such increase in basis.
6        (5) The term "placed in service" shall have the same
7    meaning as under Section 46 of the Internal Revenue Code.
8        (6) If during any taxable year, any property ceases to
9    be qualified property in the hands of the taxpayer within
10    48 months after being placed in service, or the situs of
11    any qualified property is moved outside the Enterprise Zone
12    or River Edge Redevelopment Zone within 48 months after
13    being placed in service, the tax imposed under subsections
14    (a) and (b) of this Section for such taxable year shall be
15    increased. Such increase shall be determined by (i)
16    recomputing the investment credit which would have been
17    allowed for the year in which credit for such property was
18    originally allowed by eliminating such property from such
19    computation, and (ii) subtracting such recomputed credit
20    from the amount of credit previously allowed. For the
21    purposes of this paragraph (6), a reduction of the basis of
22    qualified property resulting from a redetermination of the
23    purchase price shall be deemed a disposition of qualified
24    property to the extent of such reduction.
25        (7) There shall be allowed an additional credit equal
26    to 0.5% of the basis of qualified property placed in

 

 

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

 

 

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

 

 

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1            (B) Hired after the enterprise zone, River Edge
2        Redevelopment Zone, or federally designated Foreign
3        Trade Zone or Sub-Zone was designated or the trade or
4        business was located in that zone, whichever is later.
5            (C) Employed in the enterprise zone, River Edge
6        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
7        An employee is employed in an enterprise zone or
8        federally designated Foreign Trade Zone or Sub-Zone if
9        his services are rendered there or it is the base of
10        operations for the services performed.
11            (D) A full-time employee working 30 or more hours
12        per week.
13        (4) For tax years ending on or after December 31, 1985
14    and prior to December 31, 1988, the credit shall be allowed
15    for the tax year in which the eligible employees are hired.
16    For tax years ending on or after December 31, 1988, the
17    credit shall be allowed for the tax year immediately
18    following the tax year in which the eligible employees are
19    hired. If the amount of the credit exceeds the tax
20    liability for that year, whether it exceeds the original
21    liability or the liability as later amended, such excess
22    may be carried forward and applied to the tax liability of
23    the 5 taxable years following the excess credit year. The
24    credit shall be applied to the earliest year for which
25    there is a liability. If there is credit from more than one
26    tax year that is available to offset a liability, earlier

 

 

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1    credit shall be applied first.
2        (5) The Department of Revenue shall promulgate such
3    rules and regulations as may be deemed necessary to carry
4    out the purposes of this subsection (g).
5        (6) The credit shall be available for eligible
6    employees hired on or after January 1, 1986.
7    (h) Investment credit; High Impact Business.
8        (1) Subject to subsections (b) and (b-5) of Section 5.5
9    of the Illinois Enterprise Zone Act, a taxpayer shall be
10    allowed a credit against the tax imposed by subsections (a)
11    and (b) of this Section for investment in qualified
12    property which is placed in service by a Department of
13    Commerce and Economic Opportunity designated High Impact
14    Business. The credit shall be .5% of the basis for such
15    property. The credit shall not be available (i) until the
16    minimum investments in qualified property set forth in
17    subdivision (a)(3)(A) of Section 5.5 of the Illinois
18    Enterprise Zone Act have been satisfied or (ii) until the
19    time authorized in subsection (b-5) of the Illinois
20    Enterprise Zone Act for entities designated as High Impact
21    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
22    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
23    Act, and shall not be allowed to the extent that it would
24    reduce a taxpayer's liability for the tax imposed by
25    subsections (a) and (b) of this Section to below zero. The
26    credit applicable to such investments shall be taken in the

 

 

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1    taxable year in which such investments have been completed.
2    The credit for additional investments beyond the minimum
3    investment by a designated high impact business authorized
4    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
5    Enterprise Zone Act shall be available only in the taxable
6    year in which the property is placed in service and shall
7    not be allowed to the extent that it would reduce a
8    taxpayer's liability for the tax imposed by subsections (a)
9    and (b) of this Section to below zero. For tax years ending
10    on or after December 31, 1987, the credit shall be allowed
11    for the tax year in which the property is placed in
12    service, or, if the amount of the credit exceeds the tax
13    liability for that year, whether it exceeds the original
14    liability or the liability as later amended, such excess
15    may be carried forward and applied to the tax liability of
16    the 5 taxable years following the excess credit year. The
17    credit shall be applied to the earliest year for which
18    there is a liability. If there is credit from more than one
19    tax year that is available to offset a liability, the
20    credit accruing first in time shall be applied first.
21        Changes made in this subdivision (h)(1) by Public Act
22    88-670 restore changes made by Public Act 85-1182 and
23    reflect existing law.
24        (2) The term qualified property means property which:
25            (A) is tangible, whether new or used, including
26        buildings and structural components of buildings;

 

 

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1            (B) is depreciable pursuant to Section 167 of the
2        Internal Revenue Code, except that "3-year property"
3        as defined in Section 168(c)(2)(A) of that Code is not
4        eligible for the credit provided by this subsection
5        (h);
6            (C) is acquired by purchase as defined in Section
7        179(d) of the Internal Revenue Code; and
8            (D) is not eligible for the Enterprise Zone
9        Investment Credit provided by subsection (f) of this
10        Section.
11        (3) The basis of qualified property shall be the basis
12    used to compute the depreciation deduction for federal
13    income tax purposes.
14        (4) If the basis of the property for federal income tax
15    depreciation purposes is increased after it has been placed
16    in service in a federally designated Foreign Trade Zone or
17    Sub-Zone located in Illinois by the taxpayer, the amount of
18    such increase shall be deemed property placed in service on
19    the date of such increase in basis.
20        (5) The term "placed in service" shall have the same
21    meaning as under Section 46 of the Internal Revenue Code.
22        (6) If during any taxable year ending on or before
23    December 31, 1996, any property ceases to be qualified
24    property in the hands of the taxpayer within 48 months
25    after being placed in service, or the situs of any
26    qualified property is moved outside Illinois within 48

 

 

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1    months after being placed in service, the tax imposed under
2    subsections (a) and (b) of this Section for such taxable
3    year shall be increased. Such increase shall be determined
4    by (i) recomputing the investment credit which would have
5    been allowed for the year in which credit for such property
6    was originally allowed by eliminating such property from
7    such computation, and (ii) subtracting such recomputed
8    credit from the amount of credit previously allowed. For
9    the purposes of this paragraph (6), a reduction of the
10    basis of qualified property resulting from a
11    redetermination of the purchase price shall be deemed a
12    disposition of qualified property to the extent of such
13    reduction.
14        (7) Beginning with tax years ending after December 31,
15    1996, if a taxpayer qualifies for the credit under this
16    subsection (h) and thereby is granted a tax abatement and
17    the taxpayer relocates its entire facility in violation of
18    the explicit terms and length of the contract under Section
19    18-183 of the Property Tax Code, the tax imposed under
20    subsections (a) and (b) of this Section shall be increased
21    for the taxable year in which the taxpayer relocated its
22    facility by an amount equal to the amount of credit
23    received by the taxpayer under this subsection (h).
24    (i) Credit for Personal Property Tax Replacement Income
25Tax. For tax years ending prior to December 31, 2003, a credit
26shall be allowed against the tax imposed by subsections (a) and

 

 

HB5795- 25 -LRB097 18212 HLH 63436 b

1(b) of this Section for the tax imposed by subsections (c) and
2(d) of this Section. This credit shall be computed by
3multiplying the tax imposed by subsections (c) and (d) of this
4Section by a fraction, the numerator of which is base income
5allocable to Illinois and the denominator of which is Illinois
6base income, and further multiplying the product by the tax
7rate imposed by subsections (a) and (b) of this Section.
8    Any credit earned on or after December 31, 1986 under this
9subsection which is unused in the year the credit is computed
10because it exceeds the tax liability imposed by subsections (a)
11and (b) for that year (whether it exceeds the original
12liability or the liability as later amended) may be carried
13forward and applied to the tax liability imposed by subsections
14(a) and (b) of the 5 taxable years following the excess credit
15year, provided that no credit may be carried forward to any
16year ending on or after December 31, 2003. This credit shall be
17applied first to the earliest year for which there is a
18liability. If there is a credit under this subsection from more
19than one tax year that is available to offset a liability the
20earliest credit arising under this subsection shall be applied
21first.
22    If, during any taxable year ending on or after December 31,
231986, the tax imposed by subsections (c) and (d) of this
24Section for which a taxpayer has claimed a credit under this
25subsection (i) is reduced, the amount of credit for such tax
26shall also be reduced. Such reduction shall be determined by

 

 

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1recomputing the credit to take into account the reduced tax
2imposed by subsections (c) and (d). If any portion of the
3reduced amount of credit has been carried to a different
4taxable year, an amended return shall be filed for such taxable
5year to reduce the amount of credit claimed.
6    (j) Training expense credit. Beginning with tax years
7ending on or after December 31, 1986 and prior to December 31,
82003, a taxpayer shall be allowed a credit against the tax
9imposed by subsections (a) and (b) under this Section for all
10amounts paid or accrued, on behalf of all persons employed by
11the taxpayer in Illinois or Illinois residents employed outside
12of Illinois by a taxpayer, for educational or vocational
13training in semi-technical or technical fields or semi-skilled
14or skilled fields, which were deducted from gross income in the
15computation of taxable income. The credit against the tax
16imposed by subsections (a) and (b) shall be 1.6% of such
17training expenses. For partners, shareholders of subchapter S
18corporations, and owners of limited liability companies, if the
19liability company is treated as a partnership for purposes of
20federal and State income taxation, there shall be allowed a
21credit under this subsection (j) to be determined in accordance
22with the determination of income and distributive share of
23income under Sections 702 and 704 and subchapter S of the
24Internal Revenue Code.
25    Any credit allowed under this subsection which is unused in
26the year the credit is earned may be carried forward to each of

 

 

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1the 5 taxable years following the year for which the credit is
2first computed until it is used. This credit shall be applied
3first to the earliest year for which there is a liability. If
4there is a credit under this subsection from more than one tax
5year that is available to offset a liability the earliest
6credit arising under this subsection shall be applied first. No
7carryforward credit may be claimed in any tax year ending on or
8after December 31, 2003.
9    (k) Research and development credit.
10    For tax years ending after July 1, 1990 and prior to
11December 31, 2003, and beginning again for tax years ending on
12or after December 31, 2004, and ending prior to January 1,
132011, a taxpayer shall be allowed a credit against the tax
14imposed by subsections (a) and (b) of this Section for
15increasing research activities in this State. The credit
16allowed against the tax imposed by subsections (a) and (b)
17shall be equal to 6 1/2% of the qualifying expenditures for
18increasing research activities in this State. For partners,
19shareholders of subchapter S corporations, and owners of
20limited liability companies, if the liability company is
21treated as a partnership for purposes of federal and State
22income taxation, there shall be allowed a credit under this
23subsection to be determined in accordance with the
24determination of income and distributive share of income under
25Sections 702 and 704 and subchapter S of the Internal Revenue
26Code. It is the intention of the General Assembly that the

 

 

HB5795- 28 -LRB097 18212 HLH 63436 b

1credit awarded under this subsection (k) be available for all
2tax years ending on or after December, 31, 2004, including, but
3not limited to, tax years ending on or after December, 31, 2004
4and prior to the effective date of this amendatory Act of the
597th General Assembly.
6    For purposes of this subsection, "qualifying expenditures"
7means the qualifying expenditures as defined for the federal
8credit for increasing research activities which would be
9allowable under Section 41 of the Internal Revenue Code and
10which are conducted in this State, "qualifying expenditures for
11increasing research activities in this State" means the excess
12of qualifying expenditures for the taxable year in which
13incurred over qualifying expenditures for the base period,
14"qualifying expenditures for the base period" means the average
15of the qualifying expenditures for each year in the base
16period, and "base period" means the 3 taxable years immediately
17preceding the taxable year for which the determination is being
18made. For purposes of this subsection, the term "qualifying
19expenditures" also includes amounts paid or incurred for
20ethanol and biodiesel research conducted in this State.
21    Any credit in excess of the tax liability for the taxable
22year may be carried forward. A taxpayer may elect to have the
23unused credit shown on its final completed return carried over
24as a credit against the tax liability for the following 5
25taxable years or until it has been fully used, whichever occurs
26first; provided that no credit earned in a tax year ending

 

 

HB5795- 29 -LRB097 18212 HLH 63436 b

1prior to December 31, 2003 may be carried forward to any year
2ending on or after December 31, 2003, and no credit may be
3carried forward to any taxable year ending on or after January
41, 2011.
5    If an unused credit is carried forward to a given year from
62 or more earlier years, that credit arising in the earliest
7year will be applied first against the tax liability for the
8given year. If a tax liability for the given year still
9remains, the credit from the next earliest year will then be
10applied, and so on, until all credits have been used or no tax
11liability for the given year remains. Any remaining unused
12credit or credits then will be carried forward to the next
13following year in which a tax liability is incurred, except
14that no credit can be carried forward to a year which is more
15than 5 years after the year in which the expense for which the
16credit is given was incurred.
17    No inference shall be drawn from this amendatory Act of the
1891st General Assembly in construing this Section for taxable
19years beginning before January 1, 1999.
20    This subsection (k) is exempt from the provisions of
21Section 250.
22    (l) Environmental Remediation Tax Credit.
23        (i) For tax years ending after December 31, 1997 and on
24    or before December 31, 2001, a taxpayer shall be allowed a
25    credit against the tax imposed by subsections (a) and (b)
26    of this Section for certain amounts paid for unreimbursed

 

 

HB5795- 30 -LRB097 18212 HLH 63436 b

1    eligible remediation costs, as specified in this
2    subsection. For purposes of this Section, "unreimbursed
3    eligible remediation costs" means costs approved by the
4    Illinois Environmental Protection Agency ("Agency") under
5    Section 58.14 of the Environmental Protection Act that were
6    paid in performing environmental remediation at a site for
7    which a No Further Remediation Letter was issued by the
8    Agency and recorded under Section 58.10 of the
9    Environmental Protection Act. The credit must be claimed
10    for the taxable year in which Agency approval of the
11    eligible remediation costs is granted. The credit is not
12    available to any taxpayer if the taxpayer or any related
13    party caused or contributed to, in any material respect, a
14    release of regulated substances on, in, or under the site
15    that was identified and addressed by the remedial action
16    pursuant to the Site Remediation Program of the
17    Environmental Protection Act. After the Pollution Control
18    Board rules are adopted pursuant to the Illinois
19    Administrative Procedure Act for the administration and
20    enforcement of Section 58.9 of the Environmental
21    Protection Act, determinations as to credit availability
22    for purposes of this Section shall be made consistent with
23    those rules. For purposes of this Section, "taxpayer"
24    includes a person whose tax attributes the taxpayer has
25    succeeded to under Section 381 of the Internal Revenue Code
26    and "related party" includes the persons disallowed a

 

 

HB5795- 31 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 32 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 33 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 34 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 35 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 36 -LRB097 18212 HLH 63436 b

1    carry-forward period of the seller. To perfect the
2    transfer, the assignor shall record the transfer in the
3    chain of title for the site and provide written notice to
4    the Director of the Illinois Department of Revenue of the
5    assignor's intent to sell the remediation site and the
6    amount of the tax credit to be transferred as a portion of
7    the sale. In no event may a credit be transferred to any
8    taxpayer if the taxpayer or a related party would not be
9    eligible under the provisions of subsection (i).
10        (iii) For purposes of this Section, the term "site"
11    shall have the same meaning as under Section 58.2 of the
12    Environmental Protection Act.
13(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
1496-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
151-13-11; 97-2, eff. 5-6-11.)
 
16    (Text of Section after amendment by P.A. 97-636)
17    Sec. 201. Tax Imposed.
18    (a) In general. A tax measured by net income is hereby
19imposed on every individual, corporation, trust and estate for
20each taxable year ending after July 31, 1969 on the privilege
21of earning or receiving income in or as a resident of this
22State. Such tax shall be in addition to all other occupation or
23privilege taxes imposed by this State or by any municipal
24corporation or political subdivision thereof.
25    (b) Rates. The tax imposed by subsection (a) of this

 

 

HB5795- 37 -LRB097 18212 HLH 63436 b

1Section shall be determined as follows, except as adjusted by
2subsection (d-1):
3        (1) In the case of an individual, trust or estate, for
4    taxable years ending prior to July 1, 1989, an amount equal
5    to 2 1/2% of the taxpayer's net income for the taxable
6    year.
7        (2) In the case of an individual, trust or estate, for
8    taxable years beginning prior to July 1, 1989 and ending
9    after June 30, 1989, an amount equal to the sum of (i) 2
10    1/2% of the taxpayer's net income for the period prior to
11    July 1, 1989, as calculated under Section 202.3, and (ii)
12    3% of the taxpayer's net income for the period after June
13    30, 1989, as calculated under Section 202.3.
14        (3) In the case of an individual, trust or estate, for
15    taxable years beginning after June 30, 1989, and ending
16    prior to January 1, 2011, an amount equal to 3% of the
17    taxpayer's net income for the taxable year.
18        (4) In the case of an individual, trust, or estate, for
19    taxable years beginning prior to January 1, 2011, and
20    ending after December 31, 2010, an amount equal to the sum
21    of (i) 3% of the taxpayer's net income for the period prior
22    to January 1, 2011, as calculated under Section 202.5, and
23    (ii) 5% of the taxpayer's net income for the period after
24    December 31, 2010, as calculated under Section 202.5.
25        (5) In the case of an individual, trust, or estate, for
26    taxable years beginning on or after January 1, 2011, and

 

 

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1    ending prior to January 1, 2015, an amount equal to 5% of
2    the taxpayer's net income for the taxable year.
3        (5.1) In the case of an individual, trust, or estate,
4    for taxable years beginning prior to January 1, 2015, and
5    ending after December 31, 2014, an amount equal to the sum
6    of (i) 5% of the taxpayer's net income for the period prior
7    to January 1, 2015, as calculated under Section 202.5, and
8    (ii) 3.75% of the taxpayer's net income for the period
9    after December 31, 2014, as calculated under Section 202.5.
10        (5.2) In the case of an individual, trust, or estate,
11    for taxable years beginning on or after January 1, 2015,
12    and ending prior to January 1, 2025, an amount equal to
13    3.75% of the taxpayer's net income for the taxable year.
14        (5.3) In the case of an individual, trust, or estate,
15    for taxable years beginning prior to January 1, 2025, and
16    ending after December 31, 2024, an amount equal to the sum
17    of (i) 3.75% of the taxpayer's net income for the period
18    prior to January 1, 2025, as calculated under Section
19    202.5, and (ii) 3.25% of the taxpayer's net income for the
20    period after December 31, 2024, as calculated under Section
21    202.5.
22        (5.4) In the case of an individual, trust, or estate,
23    for taxable years beginning on or after January 1, 2025, an
24    amount equal to 3.25% of the taxpayer's net income for the
25    taxable year.
26        (6) In the case of a corporation, for taxable years

 

 

HB5795- 39 -LRB097 18212 HLH 63436 b

1    ending prior to July 1, 1989, an amount equal to 4% of the
2    taxpayer's net income for the taxable year.
3        (7) In the case of a corporation, for taxable years
4    beginning prior to July 1, 1989 and ending after June 30,
5    1989, an amount equal to the sum of (i) 4% of the
6    taxpayer's net income for the period prior to July 1, 1989,
7    as calculated under Section 202.3, and (ii) 4.8% of the
8    taxpayer's net income for the period after June 30, 1989,
9    as calculated under Section 202.3.
10        (8) In the case of a corporation, for taxable years
11    beginning after June 30, 1989, and ending prior to January
12    1, 2011, an amount equal to 4.8% of the taxpayer's net
13    income for the taxable year.
14        (9) In the case of a corporation, for taxable years
15    beginning prior to January 1, 2011, and ending after
16    December 31, 2010, an amount equal to the sum of (i) 4.8%
17    of the taxpayer's net income for the period prior to
18    January 1, 2011, as calculated under Section 202.5, and
19    (ii) 7% of the taxpayer's net income for the period after
20    December 31, 2010, as calculated under Section 202.5.
21        (10) In the case of a corporation, for taxable years
22    beginning on or after January 1, 2011, and ending prior to
23    January 1, 2015, an amount equal to 7% of the taxpayer's
24    net income for the taxable year.
25        (11) In the case of a corporation, for taxable years
26    beginning prior to January 1, 2015, and ending after

 

 

HB5795- 40 -LRB097 18212 HLH 63436 b

1    December 31, 2014, an amount equal to the sum of (i) 7% of
2    the taxpayer's net income for the period prior to January
3    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
4    of the taxpayer's net income for the period after December
5    31, 2014, as calculated under Section 202.5.
6        (12) In the case of a corporation, for taxable years
7    beginning on or after January 1, 2015, and ending prior to
8    January 1, 2025, an amount equal to 5.25% of the taxpayer's
9    net income for the taxable year.
10        (13) In the case of a corporation, for taxable years
11    beginning prior to January 1, 2025, and ending after
12    December 31, 2024, an amount equal to the sum of (i) 5.25%
13    of the taxpayer's net income for the period prior to
14    January 1, 2025, as calculated under Section 202.5, and
15    (ii) 4.8% of the taxpayer's net income for the period after
16    December 31, 2024, as calculated under Section 202.5.
17        (14) In the case of a corporation, for taxable years
18    beginning on or after January 1, 2025, an amount equal to
19    4.8% of the taxpayer's net income for the taxable year.
20    The rates under this subsection (b) are subject to the
21provisions of Section 201.5.
22    (c) Personal Property Tax Replacement Income Tax.
23Beginning on July 1, 1979 and thereafter, in addition to such
24income tax, there is also hereby imposed the Personal Property
25Tax Replacement Income Tax measured by net income on every
26corporation (including Subchapter S corporations), partnership

 

 

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1and trust, for each taxable year ending after June 30, 1979.
2Such taxes are imposed on the privilege of earning or receiving
3income in or as a resident of this State. The Personal Property
4Tax Replacement Income Tax shall be in addition to the income
5tax imposed by subsections (a) and (b) of this Section and in
6addition to all other occupation or privilege taxes imposed by
7this State or by any municipal corporation or political
8subdivision thereof.
9    (d) Additional Personal Property Tax Replacement Income
10Tax Rates. The personal property tax replacement income tax
11imposed by this subsection and subsection (c) of this Section
12in the case of a corporation, other than a Subchapter S
13corporation and except as adjusted by subsection (d-1), shall
14be an additional amount equal to 2.85% of such taxpayer's net
15income for the taxable year, except that beginning on January
161, 1981, and thereafter, the rate of 2.85% specified in this
17subsection shall be reduced to 2.5%, and in the case of a
18partnership, trust or a Subchapter S corporation shall be an
19additional amount equal to 1.5% of such taxpayer's net income
20for the taxable year.
21    (d-1) Rate reduction for certain foreign insurers. In the
22case of a foreign insurer, as defined by Section 35A-5 of the
23Illinois Insurance Code, whose state or country of domicile
24imposes on insurers domiciled in Illinois a retaliatory tax
25(excluding any insurer whose premiums from reinsurance assumed
26are 50% or more of its total insurance premiums as determined

 

 

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1under paragraph (2) of subsection (b) of Section 304, except
2that for purposes of this determination premiums from
3reinsurance do not include premiums from inter-affiliate
4reinsurance arrangements), beginning with taxable years ending
5on or after December 31, 1999, the sum of the rates of tax
6imposed by subsections (b) and (d) shall be reduced (but not
7increased) to the rate at which the total amount of tax imposed
8under this Act, net of all credits allowed under this Act,
9shall equal (i) the total amount of tax that would be imposed
10on the foreign insurer's net income allocable to Illinois for
11the taxable year by such foreign insurer's state or country of
12domicile if that net income were subject to all income taxes
13and taxes measured by net income imposed by such foreign
14insurer's state or country of domicile, net of all credits
15allowed or (ii) a rate of zero if no such tax is imposed on such
16income by the foreign insurer's state of domicile. For the
17purposes of this subsection (d-1), an inter-affiliate includes
18a mutual insurer under common management.
19        (1) For the purposes of subsection (d-1), in no event
20    shall the sum of the rates of tax imposed by subsections
21    (b) and (d) be reduced below the rate at which the sum of:
22            (A) the total amount of tax imposed on such foreign
23        insurer under this Act for a taxable year, net of all
24        credits allowed under this Act, plus
25            (B) the privilege tax imposed by Section 409 of the
26        Illinois Insurance Code, the fire insurance company

 

 

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1        tax imposed by Section 12 of the Fire Investigation
2        Act, and the fire department taxes imposed under
3        Section 11-10-1 of the Illinois Municipal Code,
4    equals 1.25% for taxable years ending prior to December 31,
5    2003, or 1.75% for taxable years ending on or after
6    December 31, 2003, of the net taxable premiums written for
7    the taxable year, as described by subsection (1) of Section
8    409 of the Illinois Insurance Code. This paragraph will in
9    no event increase the rates imposed under subsections (b)
10    and (d).
11        (2) Any reduction in the rates of tax imposed by this
12    subsection shall be applied first against the rates imposed
13    by subsection (b) and only after the tax imposed by
14    subsection (a) net of all credits allowed under this
15    Section other than the credit allowed under subsection (i)
16    has been reduced to zero, against the rates imposed by
17    subsection (d).
18    This subsection (d-1) is exempt from the provisions of
19Section 250.
20    (e) Investment credit. A taxpayer shall be allowed a credit
21against the Personal Property Tax Replacement Income Tax for
22investment in qualified property.
23        (1) A taxpayer shall be allowed a credit equal to .5%
24    of the basis of qualified property placed in service during
25    the taxable year, provided such property is placed in
26    service on or after July 1, 1984. There shall be allowed an

 

 

HB5795- 44 -LRB097 18212 HLH 63436 b

1    additional credit equal to .5% of the basis of qualified
2    property placed in service during the taxable year,
3    provided such property is placed in service on or after
4    July 1, 1986, and the taxpayer's base employment within
5    Illinois has increased by 1% or more over the preceding
6    year as determined by the taxpayer's employment records
7    filed with the Illinois Department of Employment Security.
8    Taxpayers who are new to Illinois shall be deemed to have
9    met the 1% growth in base employment for the first year in
10    which they file employment records with the Illinois
11    Department of Employment Security. The provisions added to
12    this Section by Public Act 85-1200 (and restored by Public
13    Act 87-895) shall be construed as declaratory of existing
14    law and not as a new enactment. If, in any year, the
15    increase in base employment within Illinois over the
16    preceding year is less than 1%, the additional credit shall
17    be limited to that percentage times a fraction, the
18    numerator of which is .5% and the denominator of which is
19    1%, but shall not exceed .5%. The investment credit shall
20    not be allowed to the extent that it would reduce a
21    taxpayer's liability in any tax year below zero, nor may
22    any credit for qualified property be allowed for any year
23    other than the year in which the property was placed in
24    service in Illinois. For tax years ending on or after
25    December 31, 1987, and on or before December 31, 1988, the
26    credit shall be allowed for the tax year in which the

 

 

HB5795- 45 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 46 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 47 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 48 -LRB097 18212 HLH 63436 b

1    in service in Illinois by the taxpayer, the amount of such
2    increase shall be deemed property placed in service on the
3    date of such increase in basis.
4        (6) The term "placed in service" shall have the same
5    meaning as under Section 46 of the Internal Revenue Code.
6        (7) If during any taxable year, any property ceases to
7    be qualified property in the hands of the taxpayer within
8    48 months after being placed in service, or the situs of
9    any qualified property is moved outside Illinois within 48
10    months after being placed in service, the Personal Property
11    Tax Replacement Income Tax for such taxable year shall be
12    increased. Such increase shall be determined by (i)
13    recomputing the investment credit which would have been
14    allowed for the year in which credit for such property was
15    originally allowed by eliminating such property from such
16    computation and, (ii) subtracting such recomputed credit
17    from the amount of credit previously allowed. For the
18    purposes of this paragraph (7), a reduction of the basis of
19    qualified property resulting from a redetermination of the
20    purchase price shall be deemed a disposition of qualified
21    property to the extent of such reduction.
22        (8) Unless the investment credit is extended by law,
23    the basis of qualified property shall not include costs
24    incurred after December 31, 2018, except for costs incurred
25    pursuant to a binding contract entered into on or before
26    December 31, 2018.

 

 

HB5795- 49 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 50 -LRB097 18212 HLH 63436 b

1    determination of income and distributive share of income
2    under Sections 702 and 704 and Subchapter S of the Internal
3    Revenue Code. This paragraph is exempt from the provisions
4    of Section 250.
5    (f) Investment credit; Enterprise Zone; River Edge
6Redevelopment Zone.
7        (1) A taxpayer shall be allowed a credit against the
8    tax imposed by subsections (a) and (b) of this Section for
9    investment in qualified property which is placed in service
10    in an Enterprise Zone created pursuant to the Illinois
11    Enterprise Zone Act or, for property placed in service on
12    or after July 1, 2006, a River Edge Redevelopment Zone
13    established pursuant to the River Edge Redevelopment Zone
14    Act. For partners, shareholders of Subchapter S
15    corporations, and owners of limited liability companies,
16    if the liability company is treated as a partnership for
17    purposes of federal and State income taxation, there shall
18    be allowed a credit under this subsection (f) to be
19    determined in accordance with the determination of income
20    and distributive share of income under Sections 702 and 704
21    and Subchapter S of the Internal Revenue Code. The credit
22    shall be .5% of the basis for such property. The credit
23    shall be available only in the taxable year in which the
24    property is placed in service in the Enterprise Zone or
25    River Edge Redevelopment Zone and shall not be allowed to
26    the extent that it would reduce a taxpayer's liability for

 

 

HB5795- 51 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 52 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 53 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 54 -LRB097 18212 HLH 63436 b

1    Department of Commerce and Economic Opportunity or for
2    taxable years ending on or after December 31, 2006, in a
3    River Edge Redevelopment Zone conducting a trade or
4    business in a federally designated Foreign Trade Zone or
5    Sub-Zone shall be allowed a credit against the tax imposed
6    by subsections (a) and (b) of this Section in the amount of
7    $500 per eligible employee hired to work in the zone during
8    the taxable year.
9        (2) To qualify for the credit:
10            (A) the taxpayer must hire 5 or more eligible
11        employees to work in an enterprise zone, River Edge
12        Redevelopment Zone, or federally designated Foreign
13        Trade Zone or Sub-Zone during the taxable year;
14            (B) the taxpayer's total employment within the
15        enterprise zone, River Edge Redevelopment Zone, or
16        federally designated Foreign Trade Zone or Sub-Zone
17        must increase by 5 or more full-time employees beyond
18        the total employed in that zone at the end of the
19        previous tax year for which a jobs tax credit under
20        this Section was taken, or beyond the total employed by
21        the taxpayer as of December 31, 1985, whichever is
22        later; and
23            (C) the eligible employees must be employed 180
24        consecutive days in order to be deemed hired for
25        purposes of this subsection.
26        (3) An "eligible employee" means an employee who is:

 

 

HB5795- 55 -LRB097 18212 HLH 63436 b

1            (A) Certified by the Department of Commerce and
2        Economic Opportunity as "eligible for services"
3        pursuant to regulations promulgated in accordance with
4        Title II of the Job Training Partnership Act, Training
5        Services for the Disadvantaged or Title III of the Job
6        Training Partnership Act, Employment and Training
7        Assistance for Dislocated Workers Program.
8            (B) Hired after the enterprise zone, River Edge
9        Redevelopment Zone, or federally designated Foreign
10        Trade Zone or Sub-Zone was designated or the trade or
11        business was located in that zone, whichever is later.
12            (C) Employed in the enterprise zone, River Edge
13        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
14        An employee is employed in an enterprise zone or
15        federally designated Foreign Trade Zone or Sub-Zone if
16        his services are rendered there or it is the base of
17        operations for the services performed.
18            (D) A full-time employee working 30 or more hours
19        per week.
20        (4) For tax years ending on or after December 31, 1985
21    and prior to December 31, 1988, the credit shall be allowed
22    for the tax year in which the eligible employees are hired.
23    For tax years ending on or after December 31, 1988, the
24    credit shall be allowed for the tax year immediately
25    following the tax year in which the eligible employees are
26    hired. If the amount of the credit exceeds the tax

 

 

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1    liability for that year, whether it exceeds the original
2    liability or the liability as later amended, such excess
3    may be carried forward and applied to the tax liability of
4    the 5 taxable years following the excess credit year. The
5    credit shall be applied to the earliest year for which
6    there is a liability. If there is credit from more than one
7    tax year that is available to offset a liability, earlier
8    credit shall be applied first.
9        (5) The Department of Revenue shall promulgate such
10    rules and regulations as may be deemed necessary to carry
11    out the purposes of this subsection (g).
12        (6) The credit shall be available for eligible
13    employees hired on or after January 1, 1986.
14    (h) Investment credit; High Impact Business.
15        (1) Subject to subsections (b) and (b-5) of Section 5.5
16    of the Illinois Enterprise Zone Act, a taxpayer shall be
17    allowed a credit against the tax imposed by subsections (a)
18    and (b) of this Section for investment in qualified
19    property which is placed in service by a Department of
20    Commerce and Economic Opportunity designated High Impact
21    Business. The credit shall be .5% of the basis for such
22    property. The credit shall not be available (i) until the
23    minimum investments in qualified property set forth in
24    subdivision (a)(3)(A) of Section 5.5 of the Illinois
25    Enterprise Zone Act have been satisfied or (ii) until the
26    time authorized in subsection (b-5) of the Illinois

 

 

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1    Enterprise Zone Act for entities designated as High Impact
2    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
3    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
4    Act, and shall not be allowed to the extent that it would
5    reduce a taxpayer's liability for the tax imposed by
6    subsections (a) and (b) of this Section to below zero. The
7    credit applicable to such investments shall be taken in the
8    taxable year in which such investments have been completed.
9    The credit for additional investments beyond the minimum
10    investment by a designated high impact business authorized
11    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
12    Enterprise Zone Act shall be available only in the taxable
13    year in which the property is placed in service and shall
14    not be allowed to the extent that it would reduce a
15    taxpayer's liability for the tax imposed by subsections (a)
16    and (b) of this Section to below zero. For tax years ending
17    on or after December 31, 1987, the credit shall be allowed
18    for the tax year in which the property is placed in
19    service, or, if the amount of the credit exceeds the tax
20    liability for that year, whether it exceeds the original
21    liability or the liability as later amended, such excess
22    may be carried forward and applied to the tax liability of
23    the 5 taxable years following the excess credit year. The
24    credit shall be applied to the earliest year for which
25    there is a liability. If there is credit from more than one
26    tax year that is available to offset a liability, the

 

 

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1    credit accruing first in time shall be applied first.
2        Changes made in this subdivision (h)(1) by Public Act
3    88-670 restore changes made by Public Act 85-1182 and
4    reflect existing law.
5        (2) The term qualified property means property which:
6            (A) is tangible, whether new or used, including
7        buildings and structural components of buildings;
8            (B) is depreciable pursuant to Section 167 of the
9        Internal Revenue Code, except that "3-year property"
10        as defined in Section 168(c)(2)(A) of that Code is not
11        eligible for the credit provided by this subsection
12        (h);
13            (C) is acquired by purchase as defined in Section
14        179(d) of the Internal Revenue Code; and
15            (D) is not eligible for the Enterprise Zone
16        Investment Credit provided by subsection (f) of this
17        Section.
18        (3) The basis of qualified property shall be the basis
19    used to compute the depreciation deduction for federal
20    income tax purposes.
21        (4) If the basis of the property for federal income tax
22    depreciation purposes is increased after it has been placed
23    in service in a federally designated Foreign Trade Zone or
24    Sub-Zone located in Illinois by the taxpayer, the amount of
25    such increase shall be deemed property placed in service on
26    the date of such increase in basis.

 

 

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1        (5) The term "placed in service" shall have the same
2    meaning as under Section 46 of the Internal Revenue Code.
3        (6) If during any taxable year ending on or before
4    December 31, 1996, any property ceases to be qualified
5    property in the hands of the taxpayer within 48 months
6    after being placed in service, or the situs of any
7    qualified property is moved outside Illinois within 48
8    months after being placed in service, the tax imposed under
9    subsections (a) and (b) of this Section for such taxable
10    year shall be increased. Such increase shall be determined
11    by (i) recomputing the investment credit which would have
12    been allowed for the year in which credit for such property
13    was originally allowed by eliminating such property from
14    such computation, and (ii) subtracting such recomputed
15    credit from the amount of credit previously allowed. For
16    the purposes of this paragraph (6), a reduction of the
17    basis of qualified property resulting from a
18    redetermination of the purchase price shall be deemed a
19    disposition of qualified property to the extent of such
20    reduction.
21        (7) Beginning with tax years ending after December 31,
22    1996, if a taxpayer qualifies for the credit under this
23    subsection (h) and thereby is granted a tax abatement and
24    the taxpayer relocates its entire facility in violation of
25    the explicit terms and length of the contract under Section
26    18-183 of the Property Tax Code, the tax imposed under

 

 

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1    subsections (a) and (b) of this Section shall be increased
2    for the taxable year in which the taxpayer relocated its
3    facility by an amount equal to the amount of credit
4    received by the taxpayer under this subsection (h).
5    (i) Credit for Personal Property Tax Replacement Income
6Tax. For tax years ending prior to December 31, 2003, a credit
7shall be allowed against the tax imposed by subsections (a) and
8(b) of this Section for the tax imposed by subsections (c) and
9(d) of this Section. This credit shall be computed by
10multiplying the tax imposed by subsections (c) and (d) of this
11Section by a fraction, the numerator of which is base income
12allocable to Illinois and the denominator of which is Illinois
13base income, and further multiplying the product by the tax
14rate imposed by subsections (a) and (b) of this Section.
15    Any credit earned on or after December 31, 1986 under this
16subsection which is unused in the year the credit is computed
17because it exceeds the tax liability imposed by subsections (a)
18and (b) for that year (whether it exceeds the original
19liability or the liability as later amended) may be carried
20forward and applied to the tax liability imposed by subsections
21(a) and (b) of the 5 taxable years following the excess credit
22year, provided that no credit may be carried forward to any
23year ending on or after December 31, 2003. This credit shall be
24applied first to the earliest year for which there is a
25liability. If there is a credit under this subsection from more
26than one tax year that is available to offset a liability the

 

 

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1earliest credit arising under this subsection shall be applied
2first.
3    If, during any taxable year ending on or after December 31,
41986, the tax imposed by subsections (c) and (d) of this
5Section for which a taxpayer has claimed a credit under this
6subsection (i) is reduced, the amount of credit for such tax
7shall also be reduced. Such reduction shall be determined by
8recomputing the credit to take into account the reduced tax
9imposed by subsections (c) and (d). If any portion of the
10reduced amount of credit has been carried to a different
11taxable year, an amended return shall be filed for such taxable
12year to reduce the amount of credit claimed.
13    (j) Training expense credit. Beginning with tax years
14ending on or after December 31, 1986 and prior to December 31,
152003, a taxpayer shall be allowed a credit against the tax
16imposed by subsections (a) and (b) under this Section for all
17amounts paid or accrued, on behalf of all persons employed by
18the taxpayer in Illinois or Illinois residents employed outside
19of Illinois by a taxpayer, for educational or vocational
20training in semi-technical or technical fields or semi-skilled
21or skilled fields, which were deducted from gross income in the
22computation of taxable income. The credit against the tax
23imposed by subsections (a) and (b) shall be 1.6% of such
24training expenses. For partners, shareholders of subchapter S
25corporations, and owners of limited liability companies, if the
26liability company is treated as a partnership for purposes of

 

 

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1federal and State income taxation, there shall be allowed a
2credit under this subsection (j) to be determined in accordance
3with the determination of income and distributive share of
4income under Sections 702 and 704 and subchapter S of the
5Internal Revenue Code.
6    Any credit allowed under this subsection which is unused in
7the year the credit is earned may be carried forward to each of
8the 5 taxable years following the year for which the credit is
9first computed until it is used. This credit shall be applied
10first to the earliest year for which there is a liability. If
11there is a credit under this subsection from more than one tax
12year that is available to offset a liability the earliest
13credit arising under this subsection shall be applied first. No
14carryforward credit may be claimed in any tax year ending on or
15after December 31, 2003.
16    (k) Research and development credit.
17    For tax years ending after July 1, 1990 and prior to
18December 31, 2003, and beginning again for tax years ending on
19or after December 31, 2004, and ending prior to January 1,
202016, a taxpayer shall be allowed a credit against the tax
21imposed by subsections (a) and (b) of this Section for
22increasing research activities in this State. The credit
23allowed against the tax imposed by subsections (a) and (b)
24shall be equal to 6 1/2% of the qualifying expenditures for
25increasing research activities in this State. For partners,
26shareholders of subchapter S corporations, and owners of

 

 

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1limited liability companies, if the liability company is
2treated as a partnership for purposes of federal and State
3income taxation, there shall be allowed a credit under this
4subsection to be determined in accordance with the
5determination of income and distributive share of income under
6Sections 702 and 704 and subchapter S of the Internal Revenue
7Code. It is the intention of the General Assembly that the
8credit awarded under this subsection (k) be available for all
9tax years ending on or after December, 31, 2004, including, but
10not limited to, tax years ending on or after December, 31, 2004
11and prior to the effective date of this amendatory Act of the
1297th General Assembly.
13    For purposes of this subsection, "qualifying expenditures"
14means the qualifying expenditures as defined for the federal
15credit for increasing research activities which would be
16allowable under Section 41 of the Internal Revenue Code and
17which are conducted in this State, "qualifying expenditures for
18increasing research activities in this State" means the excess
19of qualifying expenditures for the taxable year in which
20incurred over qualifying expenditures for the base period,
21"qualifying expenditures for the base period" means the average
22of the qualifying expenditures for each year in the base
23period, and "base period" means the 3 taxable years immediately
24preceding the taxable year for which the determination is being
25made. For purposes of this subsection, the term "qualifying
26expenditures" also includes amounts paid or incurred for

 

 

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1ethanol and biodiesel research conducted in this State.
2    Any credit in excess of the tax liability for the taxable
3year may be carried forward. A taxpayer may elect to have the
4unused credit shown on its final completed return carried over
5as a credit against the tax liability for the following 5
6taxable years or until it has been fully used, whichever occurs
7first; provided that no credit earned in a tax year ending
8prior to December 31, 2003 may be carried forward to any year
9ending on or after December 31, 2003.
10    If an unused credit is carried forward to a given year from
112 or more earlier years, that credit arising in the earliest
12year will be applied first against the tax liability for the
13given year. If a tax liability for the given year still
14remains, the credit from the next earliest year will then be
15applied, and so on, until all credits have been used or no tax
16liability for the given year remains. Any remaining unused
17credit or credits then will be carried forward to the next
18following year in which a tax liability is incurred, except
19that no credit can be carried forward to a year which is more
20than 5 years after the year in which the expense for which the
21credit is given was incurred.
22    No inference shall be drawn from this amendatory Act of the
2391st General Assembly in construing this Section for taxable
24years beginning before January 1, 1999.
25    This subsection (k) is exempt from the provisions of
26Section 250.

 

 

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

 

 

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

 

 

HB5795- 67 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 68 -LRB097 18212 HLH 63436 b

1of one or more qualifying pupils shall be allowed a credit
2against the tax imposed by subsections (a) and (b) of this
3Section for qualified education expenses incurred on behalf of
4the qualifying pupils. The credit shall be equal to 25% of
5qualified education expenses, but in no event may the total
6credit under this subsection claimed by a family that is the
7custodian of qualifying pupils exceed $500. In no event shall a
8credit under this subsection reduce the taxpayer's liability
9under this Act to less than zero. This subsection is exempt
10from the provisions of Section 250 of this Act.
11    For purposes of this subsection:
12    "Qualifying pupils" means individuals who (i) are
13residents of the State of Illinois, (ii) are under the age of
1421 at the close of the school year for which a credit is
15sought, and (iii) during the school year for which a credit is
16sought were full-time pupils enrolled in a kindergarten through
17twelfth grade education program at any school, as defined in
18this subsection.
19    "Qualified education expense" means the amount incurred on
20behalf of a qualifying pupil in excess of $250 for tuition,
21book fees, and lab fees at the school in which the pupil is
22enrolled during the regular school year.
23    "School" means any public or nonpublic elementary or
24secondary school in Illinois that is in compliance with Title
25VI of the Civil Rights Act of 1964 and attendance at which
26satisfies the requirements of Section 26-1 of the School Code,

 

 

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

 

 

HB5795- 70 -LRB097 18212 HLH 63436 b

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

 

 

HB5795- 71 -LRB097 18212 HLH 63436 b

1    subsection shall be applied first. A credit allowed under
2    this subsection may be sold to a buyer as part of a sale of
3    all or part of the remediation site for which the credit
4    was granted. The purchaser of a remediation site and the
5    tax credit shall succeed to the unused credit and remaining
6    carry-forward period of the seller. To perfect the
7    transfer, the assignor shall record the transfer in the
8    chain of title for the site and provide written notice to
9    the Director of the Illinois Department of Revenue of the
10    assignor's intent to sell the remediation site and the
11    amount of the tax credit to be transferred as a portion of
12    the sale. In no event may a credit be transferred to any
13    taxpayer if the taxpayer or a related party would not be
14    eligible under the provisions of subsection (i).
15        (iii) For purposes of this Section, the term "site"
16    shall have the same meaning as under Section 58.2 of the
17    Environmental Protection Act.
18(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
1996-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
201-13-11; 97-2, eff. 5-6-11; 97-636, eff. 6-1-12.)
 
21    Section 95. No acceleration or delay. Where this Act makes
22changes in a statute that is represented in this Act by text
23that is not yet or no longer in effect (for example, a Section
24represented by multiple versions), the use of that text does
25not accelerate or delay the taking effect of (i) the changes

 

 

HB5795- 72 -LRB097 18212 HLH 63436 b

1made by this Act or (ii) provisions derived from any other
2Public Act.
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.