Illinois General Assembly - Full Text of HB4932
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Full Text of HB4932  102nd General Assembly

HB4932 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB4932

 

Introduced 1/27/2022, by Rep. Mark Batinick

 

SYNOPSIS AS INTRODUCED:
 
20 ILCS 2505/2505-805 new
35 ILCS 5/201
5 ILCS 100/5-45.21 new

    Amends the Illinois Income Tax Act. Provides that the rate of tax on individuals, trusts, and estates shall be determined in accordance with an algorithm set forth in the amendatory Act. Makes conforming changes in the Department of Revenue Law of the Civil Administrative Code of Illinois and the Illinois Administrative Procedure Act. Effective immediately.


LRB102 23180 HLH 32342 b

 

 

A BILL FOR

 

HB4932LRB102 23180 HLH 32342 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 3. The Department of Revenue Law of the Civil
5Administrative Code of Illinois is amended by adding Section
62505-805 as follows:
 
7    (20 ILCS 2505/2505-805 new)
8    Sec. 2505-805. Income tax algorithm. The Department has
9the power to calculate and publish the income tax rate
10algorithm imposed under the provisions of paragraph (5.5) of
11subsection (b) of Section 201.
 
12    Section 5. The Illinois Income Tax Act is amended by
13changing Section 201 as follows:
 
14    (35 ILCS 5/201)
15    Sec. 201. Tax imposed.
16    (a) In general. A tax measured by net income is hereby
17imposed on every individual, corporation, trust and estate for
18each taxable year ending after July 31, 1969 on the privilege
19of earning or receiving income in or as a resident of this
20State. Such tax shall be in addition to all other occupation or
21privilege taxes imposed by this State or by any municipal

 

 

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

 

 

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1        (5) In the case of an individual, trust, or estate,
2    for taxable years beginning on or after January 1, 2011,
3    and ending prior to January 1, 2015, an amount equal to 5%
4    of the taxpayer's net income for the taxable year.
5        (5.1) In the case of an individual, trust, or estate,
6    for taxable years beginning prior to January 1, 2015, and
7    ending after December 31, 2014, an amount equal to the sum
8    of (i) 5% of the taxpayer's net income for the period prior
9    to January 1, 2015, as calculated under Section 202.5, and
10    (ii) 3.75% of the taxpayer's net income for the period
11    after December 31, 2014, as calculated under Section
12    202.5.
13        (5.2) In the case of an individual, trust, or estate,
14    for taxable years beginning on or after January 1, 2015,
15    and ending prior to July 1, 2017, an amount equal to 3.75%
16    of the taxpayer's net income for the taxable year.
17        (5.3) In the case of an individual, trust, or estate,
18    for taxable years beginning prior to July 1, 2017, and
19    ending after June 30, 2017, an amount equal to the sum of
20    (i) 3.75% of the taxpayer's net income for the period
21    prior to July 1, 2017, as calculated under Section 202.5,
22    and (ii) 4.95% of the taxpayer's net income for the period
23    after June 30, 2017, as calculated under Section 202.5.
24        (5.4) Except as provided in paragraph (5.5), in In the
25    case of an individual, trust, or estate, for taxable years
26    beginning on or after July 1, 2017, an amount equal to

 

 

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1    4.95% of the taxpayer's net income for the taxable year.
2        (5.5) For taxable years beginning on or after January
3    1, 2023, in the case of an individual, trust, or estate,
4    for taxable years beginning on or after January 1, 2023,
5    an amount equal to the lesser of 4.95% or the percentage
6    generated by the algorithm set forth in this paragraph
7    (5.5).
8        Income tax rate algorithm. If (1) the estimated State
9    budget for the current fiscal year, multiplied by the
10    annual rate of growth in the population of Illinois,
11    further multiplied by Consumer Price Index inflation,
12    generates an estimated sum for the fiscal year immediately
13    after the current fiscal year of X; and (2) estimated
14    revenues from taxation in the fiscal year immediately
15    after the current fiscal year, if added to all other
16    expected non-taxation sources of State revenue for the
17    fiscal year immediately after the current fiscal year,
18    generate an estimated sum of Y; and (3) X is less than Y,
19    then the forward-looking income tax rate to be imposed
20    beginning on January 1 of the next calendar year upon
21    individuals, trusts, and estates under the algorithm
22    created by this paragraph shall be adjusted so that X
23    equals Y.
24        The Department shall calculate and publish the rate of
25    tax to be imposed by this algorithm in the next calendar
26    year upon individuals, trusts, and estates between

 

 

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1    September 1 and September 30 of each calendar year, for
2    use in the next calendar year.
3        As used in this paragraph (5.5):
4            "Consumer Price Index inflation" has the meaning
5        provided in 54 U.S.C. 101915(a)(2).
6            "Estimated revenues from taxation" has the meaning
7        provided in Section 50-5 of the State Budget Law of the
8        Civil Administrative Code of Illinois.
9            "Income tax rate in the current fiscal year" shall
10        be the income tax rate imposed in the current fiscal
11        year under the provisions of this paragraph (5.5).
12            "Population of Illinois" has the meaning provided
13        in 6 U.S.C. 601(10).
14            "State budget" has the meaning provided in Section
15        50-5 of the State Budget Law of the Civil
16        Administrative Code of Illinois.
17        (6) In the case of a corporation, for taxable years
18    ending prior to July 1, 1989, an amount equal to 4% of the
19    taxpayer's net income for the taxable year.
20        (7) In the case of a corporation, for taxable years
21    beginning prior to July 1, 1989 and ending after June 30,
22    1989, an amount equal to the sum of (i) 4% of the
23    taxpayer's net income for the period prior to July 1,
24    1989, as calculated under Section 202.3, and (ii) 4.8% of
25    the taxpayer's net income for the period after June 30,
26    1989, as calculated under Section 202.3.

 

 

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1        (8) In the case of a corporation, for taxable years
2    beginning after June 30, 1989, and ending prior to January
3    1, 2011, an amount equal to 4.8% of the taxpayer's net
4    income for the taxable year.
5        (9) In the case of a corporation, for taxable years
6    beginning prior to January 1, 2011, and ending after
7    December 31, 2010, an amount equal to the sum of (i) 4.8%
8    of the taxpayer's net income for the period prior to
9    January 1, 2011, as calculated under Section 202.5, and
10    (ii) 7% of the taxpayer's net income for the period after
11    December 31, 2010, as calculated under Section 202.5.
12        (10) In the case of a corporation, for taxable years
13    beginning on or after January 1, 2011, and ending prior to
14    January 1, 2015, an amount equal to 7% of the taxpayer's
15    net income for the taxable year.
16        (11) In the case of a corporation, for taxable years
17    beginning prior to January 1, 2015, and ending after
18    December 31, 2014, an amount equal to the sum of (i) 7% of
19    the taxpayer's net income for the period prior to January
20    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
21    of the taxpayer's net income for the period after December
22    31, 2014, as calculated under Section 202.5.
23        (12) In the case of a corporation, for taxable years
24    beginning on or after January 1, 2015, and ending prior to
25    July 1, 2017, an amount equal to 5.25% of the taxpayer's
26    net income for the taxable year.

 

 

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1        (13) In the case of a corporation, for taxable years
2    beginning prior to July 1, 2017, and ending after June 30,
3    2017, an amount equal to the sum of (i) 5.25% of the
4    taxpayer's net income for the period prior to July 1,
5    2017, as calculated under Section 202.5, and (ii) 7% of
6    the taxpayer's net income for the period after June 30,
7    2017, as calculated under Section 202.5.
8        (14) In the case of a corporation, for taxable years
9    beginning on or after July 1, 2017, an amount equal to 7%
10    of the taxpayer's net income for the taxable year.
11        (15) In the case of a corporation, for taxable years
12    beginning on or after January 1, 2023, an amount generated
13    by a rate that shall be equal to 140% of the tax rate
14    imposed upon individuals, truss, and estates under
15    paragraph (5.5).
16    The rates under this subsection (b) are subject to the
17provisions of Section 201.5.
18    (b-5) Surcharge; sale or exchange of assets, properties,
19and intangibles of organization gaming licensees. For each of
20taxable years 2019 through 2027, a surcharge is imposed on all
21taxpayers on income arising from the sale or exchange of
22capital assets, depreciable business property, real property
23used in the trade or business, and Section 197 intangibles (i)
24of an organization licensee under the Illinois Horse Racing
25Act of 1975 and (ii) of an organization gaming licensee under
26the Illinois Gambling Act. The amount of the surcharge is

 

 

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1equal to the amount of federal income tax liability for the
2taxable year attributable to those sales and exchanges. The
3surcharge imposed shall not apply if:
4        (1) the organization gaming license, organization
5    license, or racetrack property is transferred as a result
6    of any of the following:
7            (A) bankruptcy, a receivership, or a debt
8        adjustment initiated by or against the initial
9        licensee or the substantial owners of the initial
10        licensee;
11            (B) cancellation, revocation, or termination of
12        any such license by the Illinois Gaming Board or the
13        Illinois Racing Board;
14            (C) a determination by the Illinois Gaming Board
15        that transfer of the license is in the best interests
16        of Illinois gaming;
17            (D) the death of an owner of the equity interest in
18        a licensee;
19            (E) the acquisition of a controlling interest in
20        the stock or substantially all of the assets of a
21        publicly traded company;
22            (F) a transfer by a parent company to a wholly
23        owned subsidiary; or
24            (G) the transfer or sale to or by one person to
25        another person where both persons were initial owners
26        of the license when the license was issued; or

 

 

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1        (2) the controlling interest in the organization
2    gaming license, organization license, or racetrack
3    property is transferred in a transaction to lineal
4    descendants in which no gain or loss is recognized or as a
5    result of a transaction in accordance with Section 351 of
6    the Internal Revenue Code in which no gain or loss is
7    recognized; or
8        (3) live horse racing was not conducted in 2010 at a
9    racetrack located within 3 miles of the Mississippi River
10    under a license issued pursuant to the Illinois Horse
11    Racing Act of 1975.
12    The transfer of an organization gaming license,
13organization license, or racetrack property by a person other
14than the initial licensee to receive the organization gaming
15license is not subject to a surcharge. The Department shall
16adopt rules necessary to implement and administer this
17subsection.
18    (c) Personal Property Tax Replacement Income Tax.
19Beginning on July 1, 1979 and thereafter, in addition to such
20income tax, there is also hereby imposed the Personal Property
21Tax Replacement Income Tax measured by net income on every
22corporation (including Subchapter S corporations), partnership
23and trust, for each taxable year ending after June 30, 1979.
24Such taxes are imposed on the privilege of earning or
25receiving income in or as a resident of this State. The
26Personal Property Tax Replacement Income Tax shall be in

 

 

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1addition to the income tax imposed by subsections (a) and (b)
2of this Section and in addition to all other occupation or
3privilege taxes imposed by this State or by any municipal
4corporation or political subdivision thereof.
5    (d) Additional Personal Property Tax Replacement Income
6Tax Rates. The personal property tax replacement income tax
7imposed by this subsection and subsection (c) of this Section
8in the case of a corporation, other than a Subchapter S
9corporation and except as adjusted by subsection (d-1), shall
10be an additional amount equal to 2.85% of such taxpayer's net
11income for the taxable year, except that beginning on January
121, 1981, and thereafter, the rate of 2.85% specified in this
13subsection shall be reduced to 2.5%, and in the case of a
14partnership, trust or a Subchapter S corporation shall be an
15additional amount equal to 1.5% of such taxpayer's net income
16for the taxable year.
17    (d-1) Rate reduction for certain foreign insurers. In the
18case of a foreign insurer, as defined by Section 35A-5 of the
19Illinois Insurance Code, whose state or country of domicile
20imposes on insurers domiciled in Illinois a retaliatory tax
21(excluding any insurer whose premiums from reinsurance assumed
22are 50% or more of its total insurance premiums as determined
23under paragraph (2) of subsection (b) of Section 304, except
24that for purposes of this determination premiums from
25reinsurance do not include premiums from inter-affiliate
26reinsurance arrangements), beginning with taxable years ending

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        (6) The term "placed in service" shall have the same
2    meaning as under Section 46 of the Internal Revenue Code.
3        (7) If during any taxable year, any property ceases to
4    be qualified property in the hands of the taxpayer within
5    48 months after being placed in service, or the situs of
6    any qualified property is moved outside Illinois within 48
7    months after being placed in service, the Personal
8    Property Tax Replacement Income Tax for such taxable year
9    shall be increased. Such increase shall be determined by
10    (i) recomputing the investment credit which would have
11    been allowed for the year in which credit for such
12    property was originally allowed by eliminating such
13    property from such computation and, (ii) subtracting such
14    recomputed credit from the amount of credit previously
15    allowed. For the purposes of this paragraph (7), a
16    reduction of the basis of qualified property resulting
17    from a redetermination of the purchase price shall be
18    deemed a disposition of qualified property to the extent
19    of such reduction.
20        (8) Unless the investment credit is extended by law,
21    the basis of qualified property shall not include costs
22    incurred after December 31, 2018, except for costs
23    incurred pursuant to a binding contract entered into on or
24    before December 31, 2018.
25        (9) Each taxable year ending before December 31, 2000,
26    a partnership may elect to pass through to its partners

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1    allowed. For the purposes of this paragraph (6), a
2    reduction of the basis of qualified property resulting
3    from a redetermination of the purchase price shall be
4    deemed a disposition of qualified property to the extent
5    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
12    over 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
17    employment records with the Illinois Department of
18    Employment Security. If, in any year, the increase in base
19    employment within Illinois over the preceding year is less
20    than 1%, the additional credit shall be limited to that
21    percentage times a fraction, the numerator of which is
22    0.5% and the denominator of which is 1%, but shall not
23    exceed 0.5%.
24        (8) For taxable years beginning on or after January 1,
25    2021, there shall be allowed an Enterprise Zone
26    construction jobs credit against the taxes imposed under

 

 

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1    subsections (a) and (b) of this Section as provided in
2    Section 13 of the Illinois Enterprise Zone Act.
3        The credit or credits may not reduce the taxpayer's
4    liability to less than zero. If the amount of the credit or
5    credits exceeds the taxpayer's liability, the excess may
6    be carried forward and applied against the taxpayer's
7    liability in succeeding calendar years in the same manner
8    provided under paragraph (4) of Section 211 of this Act.
9    The credit or credits shall be applied to the earliest
10    year for which there is a tax liability. If there are
11    credits from more than one taxable year that are available
12    to offset a liability, the earlier credit shall be applied
13    first.
14        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    the purposes of federal and State income taxation, there
18    shall be allowed a credit under this Section to be
19    determined in accordance with the determination of income
20    and distributive share of income under Sections 702 and
21    704 and Subchapter S of the Internal Revenue Code.
22        The total aggregate amount of credits awarded under
23    the Blue Collar Jobs Act (Article 20 of Public Act 101-9)
24    shall not exceed $20,000,000 in any State fiscal year.
25        This paragraph (8) is exempt from the provisions of
26    Section 250.

 

 

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

 

 

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

 

 

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

 

 

HB4932- 27 -LRB102 23180 HLH 32342 b

1    would have been allowed for the year in which credit for
2    such property was originally allowed by eliminating such
3    property from such computation, and (ii) subtracting such
4    recomputed credit from the amount of credit previously
5    allowed. For the purposes of this paragraph (6), a
6    reduction of the basis of qualified property resulting
7    from a redetermination of the purchase price shall be
8    deemed a disposition of qualified property to the extent
9    of such reduction.
10        (7) Beginning with tax years ending after December 31,
11    1996, if a taxpayer qualifies for the credit under this
12    subsection (h) and thereby is granted a tax abatement and
13    the taxpayer relocates its entire facility in violation of
14    the explicit terms and length of the contract under
15    Section 18-183 of the Property Tax Code, the tax imposed
16    under subsections (a) and (b) of this Section shall be
17    increased for the taxable year in which the taxpayer
18    relocated its facility by an amount equal to the amount of
19    credit received by the taxpayer under this subsection (h).
20    (h-5) High Impact Business construction jobs credit. For
21taxable years beginning on or after January 1, 2021, there
22shall also be allowed a High Impact Business construction jobs
23credit against the tax imposed under subsections (a) and (b)
24of this Section as provided in subsections (i) and (j) of
25Section 5.5 of the Illinois Enterprise Zone Act.
26    The credit or credits may not reduce the taxpayer's

 

 

HB4932- 28 -LRB102 23180 HLH 32342 b

1liability to less than zero. If the amount of the credit or
2credits exceeds the taxpayer's liability, the excess may be
3carried forward and applied against the taxpayer's liability
4in succeeding calendar years in the manner provided under
5paragraph (4) of Section 211 of this Act. The credit or credits
6shall be applied to the earliest year for which there is a tax
7liability. If there are credits from more than one taxable
8year that are available to offset a liability, the earlier
9credit shall be applied first.
10    For partners, shareholders of Subchapter S corporations,
11and owners of limited liability companies, if the liability
12company is treated as a partnership for the purposes of
13federal and State income taxation, there shall be allowed a
14credit under this Section to be determined in accordance with
15the determination of income and distributive share of income
16under Sections 702 and 704 and Subchapter S of the Internal
17Revenue Code.
18    The total aggregate amount of credits awarded under the
19Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
20exceed $20,000,000 in any State fiscal year.
21    This subsection (h-5) is exempt from the provisions of
22Section 250.
23    (i) Credit for Personal Property Tax Replacement Income
24Tax. For tax years ending prior to December 31, 2003, a credit
25shall be allowed against the tax imposed by subsections (a)
26and (b) of this Section for the tax imposed by subsections (c)

 

 

HB4932- 29 -LRB102 23180 HLH 32342 b

1and (d) of this Section. This credit shall be computed by
2multiplying the tax imposed by subsections (c) and (d) of this
3Section by a fraction, the numerator of which is base income
4allocable to Illinois and the denominator of which is Illinois
5base income, and further multiplying the product by the tax
6rate imposed by subsections (a) and (b) of this Section.
7    Any credit earned on or after December 31, 1986 under this
8subsection which is unused in the year the credit is computed
9because it exceeds the tax liability imposed by subsections
10(a) and (b) for that year (whether it exceeds the original
11liability or the liability as later amended) may be carried
12forward and applied to the tax liability imposed by
13subsections (a) and (b) of the 5 taxable years following the
14excess credit year, provided that no credit may be carried
15forward to any year ending on or after December 31, 2003. This
16credit shall be applied first to the earliest year for which
17there is a liability. If there is a credit under this
18subsection from more than one tax year that is available to
19offset a liability the earliest credit arising under this
20subsection shall be applied first.
21    If, during any taxable year ending on or after December
2231, 1986, the tax imposed by subsections (c) and (d) of this
23Section for which a taxpayer has claimed a credit under this
24subsection (i) is reduced, the amount of credit for such tax
25shall also be reduced. Such reduction shall be determined by
26recomputing the credit to take into account the reduced tax

 

 

HB4932- 30 -LRB102 23180 HLH 32342 b

1imposed by subsections (c) and (d). If any portion of the
2reduced amount of credit has been carried to a different
3taxable year, an amended return shall be filed for such
4taxable year to reduce the amount of credit claimed.
5    (j) Training expense credit. Beginning with tax years
6ending on or after December 31, 1986 and prior to December 31,
72003, a taxpayer shall be allowed a credit against the tax
8imposed by subsections (a) and (b) under this Section for all
9amounts paid or accrued, on behalf of all persons employed by
10the taxpayer in Illinois or Illinois residents employed
11outside of Illinois by a taxpayer, for educational or
12vocational training in semi-technical or technical fields or
13semi-skilled or skilled fields, which were deducted from gross
14income in the computation of taxable income. The credit
15against the tax imposed by subsections (a) and (b) shall be
161.6% of such training expenses. For partners, shareholders of
17subchapter S corporations, and owners of limited liability
18companies, if the liability company is treated as a
19partnership for purposes of federal and State income taxation,
20there shall be allowed a credit under this subsection (j) to be
21determined in accordance with the determination of income and
22distributive share of income under Sections 702 and 704 and
23subchapter S of the Internal Revenue Code.
24    Any credit allowed under this subsection which is unused
25in the year the credit is earned may be carried forward to each
26of the 5 taxable years following the year for which the credit

 

 

HB4932- 31 -LRB102 23180 HLH 32342 b

1is first computed until it is used. This credit shall be
2applied first to the earliest year for which there is a
3liability. If there is a credit under this subsection from
4more than one tax year that is available to offset a liability,
5the earliest credit arising under this subsection shall be
6applied first. No carryforward credit may be claimed in any
7tax year ending on or after December 31, 2003.
8    (k) Research and development credit. For tax years ending
9after July 1, 1990 and prior to December 31, 2003, and
10beginning again for tax years ending on or after December 31,
112004, and ending prior to January 1, 2027, a taxpayer shall be
12allowed a credit against the tax imposed by subsections (a)
13and (b) of this Section for increasing research activities in
14this State. The credit allowed against the tax imposed by
15subsections (a) and (b) shall be equal to 6 1/2% of the
16qualifying expenditures for increasing research activities in
17this State. For partners, shareholders of subchapter S
18corporations, and owners of limited liability companies, if
19the liability company is treated as a partnership for purposes
20of federal and State income taxation, there shall be allowed a
21credit under this subsection 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    For purposes of this subsection, "qualifying expenditures"
26means the qualifying expenditures as defined for the federal

 

 

HB4932- 32 -LRB102 23180 HLH 32342 b

1credit for increasing research activities which would be
2allowable under Section 41 of the Internal Revenue Code and
3which are conducted in this State, "qualifying expenditures
4for increasing research activities in this State" means the
5excess of qualifying expenditures for the taxable year in
6which incurred over qualifying expenditures for the base
7period, "qualifying expenditures for the base period" means
8the average of the qualifying expenditures for each year in
9the base period, and "base period" means the 3 taxable years
10immediately preceding the taxable year for which the
11determination is being made.
12    Any credit in excess of the tax liability for the taxable
13year may be carried forward. A taxpayer may elect to have the
14unused credit shown on its final completed return carried over
15as a credit against the tax liability for the following 5
16taxable years or until it has been fully used, whichever
17occurs first; provided that no credit earned in a tax year
18ending prior to December 31, 2003 may be carried forward to any
19year ending on or after December 31, 2003.
20    If an unused credit is carried forward to a given year from
212 or more earlier years, that credit arising in the earliest
22year will be applied first against the tax liability for the
23given year. If a tax liability for the given year still
24remains, the credit from the next earliest year will then be
25applied, and so on, until all credits have been used or no tax
26liability for the given year remains. Any remaining unused

 

 

HB4932- 33 -LRB102 23180 HLH 32342 b

1credit or credits then will be carried forward to the next
2following year in which a tax liability is incurred, except
3that no credit can be carried forward to a year which is more
4than 5 years after the year in which the expense for which the
5credit is given was incurred.
6    No inference shall be drawn from Public Act 91-644 in
7construing this Section for taxable years beginning before
8January 1, 1999.
9    It is the intent of the General Assembly that the research
10and development credit under this subsection (k) shall apply
11continuously for all tax years ending on or after December 31,
122004 and ending prior to January 1, 2027, including, but not
13limited to, the period beginning on January 1, 2016 and ending
14on July 6, 2017 (the effective date of Public Act 100-22). All
15actions taken in reliance on the continuation of the credit
16under this subsection (k) by any taxpayer are hereby
17validated.
18    (l) Environmental Remediation Tax Credit.
19        (i) For tax years ending after December 31, 1997 and
20    on or before December 31, 2001, a taxpayer shall be
21    allowed a credit against the tax imposed by subsections
22    (a) and (b) of this Section for certain amounts paid for
23    unreimbursed eligible remediation costs, as specified in
24    this subsection. For purposes of this Section,
25    "unreimbursed eligible remediation costs" means costs
26    approved by the Illinois Environmental Protection Agency

 

 

HB4932- 34 -LRB102 23180 HLH 32342 b

1    ("Agency") under Section 58.14 of the Environmental
2    Protection Act that were paid in performing environmental
3    remediation at a site for which a No Further Remediation
4    Letter was issued by the Agency and recorded under Section
5    58.10 of the Environmental Protection Act. The credit must
6    be claimed for the taxable year in which Agency approval
7    of the eligible remediation costs is granted. The credit
8    is not available to any taxpayer if the taxpayer or any
9    related party caused or contributed to, in any material
10    respect, a release of regulated substances on, in, or
11    under the site that was identified and addressed by the
12    remedial action pursuant to the Site Remediation Program
13    of the Environmental Protection Act. After the Pollution
14    Control Board rules are adopted pursuant to the Illinois
15    Administrative Procedure Act for the administration and
16    enforcement of Section 58.9 of the Environmental
17    Protection Act, determinations as to credit availability
18    for purposes of this Section shall be made consistent with
19    those rules. For purposes of this Section, "taxpayer"
20    includes a person whose tax attributes the taxpayer has
21    succeeded to under Section 381 of the Internal Revenue
22    Code and "related party" includes the persons disallowed a
23    deduction for losses by paragraphs (b), (c), and (f)(1) of
24    Section 267 of the Internal Revenue Code by virtue of
25    being a related taxpayer, as well as any of its partners.
26    The credit allowed against the tax imposed by subsections

 

 

HB4932- 35 -LRB102 23180 HLH 32342 b

1    (a) and (b) shall be equal to 25% of the unreimbursed
2    eligible remediation costs in excess of $100,000 per site,
3    except that the $100,000 threshold shall not apply to any
4    site contained in an enterprise zone as determined by the
5    Department of Commerce and Community Affairs (now
6    Department of Commerce and Economic Opportunity). The
7    total credit allowed shall not exceed $40,000 per year
8    with a maximum total of $150,000 per site. For partners
9    and shareholders of subchapter S corporations, there shall
10    be allowed a credit under this subsection to be determined
11    in accordance with the determination of income and
12    distributive share of income under Sections 702 and 704
13    and subchapter S of the Internal Revenue Code.
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. The
18    term "unused credit" does not include any amounts of
19    unreimbursed eligible remediation costs in excess of the
20    maximum credit per site authorized under paragraph (i).
21    This credit shall be applied first to the earliest year
22    for which there is a liability. If there is a credit under
23    this subsection from more than one tax year that is
24    available to offset a liability, the earliest credit
25    arising under this subsection shall be applied first. A
26    credit allowed under this subsection may be sold to a

 

 

HB4932- 36 -LRB102 23180 HLH 32342 b

1    buyer as part of a sale of all or part of the remediation
2    site for which the credit was granted. The purchaser of a
3    remediation site and the tax credit shall succeed to the
4    unused credit and remaining carry-forward period of the
5    seller. To perfect the transfer, the assignor shall record
6    the transfer in the chain of title for the site and provide
7    written notice to the Director of the Illinois Department
8    of Revenue of the assignor's intent to sell the
9    remediation site and the amount of the tax credit to be
10    transferred as a portion of the sale. In no event may a
11    credit be transferred to any taxpayer if the taxpayer or a
12    related party would not be eligible under the provisions
13    of subsection (i).
14        (iii) For purposes of this Section, the term "site"
15    shall have the same meaning as under Section 58.2 of the
16    Environmental Protection Act.
17    (m) Education expense credit. Beginning with tax years
18ending after December 31, 1999, a taxpayer who is the
19custodian of one or more qualifying pupils shall be allowed a
20credit against the tax imposed by subsections (a) and (b) of
21this Section for qualified education expenses incurred on
22behalf of the qualifying pupils. The credit shall be equal to
2325% of qualified education expenses, but in no event may the
24total credit under this subsection claimed by a family that is
25the custodian of qualifying pupils exceed (i) $500 for tax
26years ending prior to December 31, 2017, and (ii) $750 for tax

 

 

HB4932- 37 -LRB102 23180 HLH 32342 b

1years ending on or after December 31, 2017. In no event shall a
2credit under this subsection reduce the taxpayer's liability
3under this Act to less than zero. Notwithstanding any other
4provision of law, for taxable years beginning on or after
5January 1, 2017, no taxpayer may claim a credit under this
6subsection (m) if the taxpayer's adjusted gross income for the
7taxable year exceeds (i) $500,000, in the case of spouses
8filing a joint federal tax return or (ii) $250,000, in the case
9of all other taxpayers. This subsection is exempt from the
10provisions 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
17through twelfth grade education program at any school, as
18defined in this 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
3for the 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,
10    2006, 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
23    of the eligible remediation costs is granted. The credit
24    is 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

 

 

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1    under the site that was identified and addressed by the
2    remedial action pursuant to the Site Remediation Program
3    of the Environmental Protection Act. Determinations as to
4    credit availability for purposes of this Section shall be
5    made consistent with rules adopted by the Pollution
6    Control Board pursuant to the Illinois Administrative
7    Procedure Act for the administration and enforcement of
8    Section 58.9 of the Environmental Protection Act. For
9    purposes of this Section, "taxpayer" includes a person
10    whose tax attributes the taxpayer has succeeded to under
11    Section 381 of the Internal Revenue Code and "related
12    party" includes the persons disallowed a deduction for
13    losses by paragraphs (b), (c), and (f)(1) of Section 267
14    of the Internal Revenue Code by virtue of being a related
15    taxpayer, as well as any of its partners. The credit
16    allowed against the tax imposed by subsections (a) and (b)
17    shall be equal to 25% of the unreimbursed eligible
18    remediation costs in excess of $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
26    to offset a liability, the earliest credit arising under

 

 

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1    this subsection shall be applied first. A credit allowed
2    under this subsection may be sold to a buyer as part of a
3    sale of all or part of the remediation site for which the
4    credit was granted. The purchaser of a remediation site
5    and the tax credit shall succeed to the unused credit and
6    remaining carry-forward period of the seller. To perfect
7    the transfer, the assignor shall record the transfer in
8    the chain of title for the site and provide written notice
9    to the Director of the Illinois Department of Revenue of
10    the 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    (o) For each of taxable years during the Compassionate Use
19of Medical Cannabis Program, a surcharge is imposed on all
20taxpayers on income arising from the sale or exchange of
21capital assets, depreciable business property, real property
22used in the trade or business, and Section 197 intangibles of
23an organization registrant under the Compassionate Use of
24Medical Cannabis Program Act. The amount of the surcharge is
25equal to the amount of federal income tax liability for the
26taxable year attributable to those sales and exchanges. The

 

 

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1surcharge imposed does not apply if:
2        (1) the medical cannabis cultivation center
3    registration, medical cannabis dispensary registration, or
4    the property of a registration is transferred as a result
5    of any of the following:
6            (A) bankruptcy, a receivership, or a debt
7        adjustment initiated by or against the initial
8        registration or the substantial owners of the initial
9        registration;
10            (B) cancellation, revocation, or termination of
11        any registration by the Illinois Department of Public
12        Health;
13            (C) a determination by the Illinois Department of
14        Public Health that transfer of the registration is in
15        the best interests of Illinois qualifying patients as
16        defined by the Compassionate Use of Medical Cannabis
17        Program Act;
18            (D) the death of an owner of the equity interest in
19        a registrant;
20            (E) the acquisition of a controlling interest in
21        the stock or substantially all of the assets of a
22        publicly traded company;
23            (F) a transfer by a parent company to a wholly
24        owned subsidiary; or
25            (G) the transfer or sale to or by one person to
26        another person where both persons were initial owners

 

 

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1        of the registration when the registration was issued;
2        or
3        (2) the cannabis cultivation center registration,
4    medical cannabis dispensary registration, or the
5    controlling interest in a registrant's property is
6    transferred in a transaction to lineal descendants in
7    which no gain or loss is recognized or as a result of a
8    transaction in accordance with Section 351 of the Internal
9    Revenue Code in which no gain or loss is recognized.
10    (p) Pass-through entity tax.
11        (1) For taxable years ending on or after December 31,
12    2021 and beginning prior to January 1, 2026, a partnership
13    (other than a publicly traded partnership under Section
14    7704 of the Internal Revenue Code) or Subchapter S
15    corporation may elect to apply the provisions of this
16    subsection. A separate election shall be made for each
17    taxable year. Such election shall be made at such time,
18    and in such form and manner as prescribed by the
19    Department, and, once made, is irrevocable.
20        (2) Entity-level tax. A partnership or Subchapter S
21    corporation electing to apply the provisions of this
22    subsection shall be subject to a tax for the privilege of
23    earning or receiving income in this State in an amount
24    equal to 4.95% of the taxpayer's net income for the
25    taxable year.
26        (3) Net income defined.

 

 

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1            (A) In general. For purposes of paragraph (2), the
2        term net income has the same meaning as defined in
3        Section 202 of this Act, except that the following
4        provisions shall not apply:
5                (i) the standard exemption allowed under
6            Section 204;
7                (ii) the deduction for net losses allowed
8            under Section 207;
9                (iii) in the case of an S corporation, the
10            modification under Section 203(b)(2)(S); and
11                (iv) in the case of a partnership, the
12            modifications under Section 203(d)(2)(H) and
13            Section 203(d)(2)(I).
14            (B) Special rule for tiered partnerships. If a
15        taxpayer making the election under paragraph (1) is a
16        partner of another taxpayer making the election under
17        paragraph (1), net income shall be computed as
18        provided in subparagraph (A), except that the taxpayer
19        shall subtract its distributive share of the net
20        income of the electing partnership (including its
21        distributive share of the net income of the electing
22        partnership derived as a distributive share from
23        electing partnerships in which it is a partner).
24        (4) Credit for entity level tax. Each partner or
25    shareholder of a taxpayer making the election under this
26    Section shall be allowed a credit against the tax imposed

 

 

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1    under subsections (a) and (b) of Section 201 of this Act
2    for the taxable year of the partnership or Subchapter S
3    corporation for which an election is in effect ending
4    within or with the taxable year of the partner or
5    shareholder in an amount equal to 4.95% times the partner
6    or shareholder's distributive share of the net income of
7    the electing partnership or Subchapter S corporation, but
8    not to exceed the partner's or shareholder's share of the
9    tax imposed under paragraph (1) which is actually paid by
10    the partnership or Subchapter S corporation. If the
11    taxpayer is a partnership or Subchapter S corporation that
12    is itself a partner of a partnership making the election
13    under paragraph (1), the credit under this paragraph shall
14    be allowed to the taxpayer's partners or shareholders (or
15    if the partner is a partnership or Subchapter S
16    corporation then its partners or shareholders) in
17    accordance with the determination of income and
18    distributive share of income under Sections 702 and 704
19    and Subchapter S of the Internal Revenue Code. If the
20    amount of the credit allowed under this paragraph exceeds
21    the partner's or shareholder's liability for tax imposed
22    under subsections (a) and (b) of Section 201 of this Act
23    for the taxable year, such excess shall be treated as an
24    overpayment for purposes of Section 909 of this Act.
25        (5) Nonresidents. A nonresident individual who is a
26    partner or shareholder of a partnership or Subchapter S

 

 

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1    corporation for a taxable year for which an election is in
2    effect under paragraph (1) shall not be required to file
3    an income tax return under this Act for such taxable year
4    if the only source of net income of the individual (or the
5    individual and the individual's spouse in the case of a
6    joint return) is from an entity making the election under
7    paragraph (1) and the credit allowed to the partner or
8    shareholder under paragraph (4) equals or exceeds the
9    individual's liability for the tax imposed under
10    subsections (a) and (b) of Section 201 of this Act for the
11    taxable year.
12        (6) Liability for tax. Except as provided in this
13    paragraph, a partnership or Subchapter S making the
14    election under paragraph (1) is liable for the
15    entity-level tax imposed under paragraph (2). If the
16    electing partnership or corporation fails to pay the full
17    amount of tax deemed assessed under paragraph (2), the
18    partners or shareholders shall be liable to pay the tax
19    assessed (including penalties and interest). Each partner
20    or shareholder shall be liable for the unpaid assessment
21    based on the ratio of the partner's or shareholder's share
22    of the net income of the partnership over the total net
23    income of the partnership. If the partnership or
24    Subchapter S corporation fails to pay the tax assessed
25    (including penalties and interest) and thereafter an
26    amount of such tax is paid by the partners or

 

 

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1    shareholders, such amount shall not be collected from the
2    partnership or corporation.
3        (7) Foreign tax. For purposes of the credit allowed
4    under Section 601(b)(3) of this Act, tax paid by a
5    partnership or Subchapter S corporation to another state
6    which, as determined by the Department, is substantially
7    similar to the tax imposed under this subsection, shall be
8    considered tax paid by the partner or shareholder to the
9    extent that the partner's or shareholder's share of the
10    income of the partnership or Subchapter S corporation
11    allocated and apportioned to such other state bears to the
12    total income of the partnership or Subchapter S
13    corporation allocated or apportioned to such other state.
14        (8) Suspension of withholding. The provisions of
15    Section 709.5 of this Act shall not apply to a partnership
16    or Subchapter S corporation for the taxable year for which
17    an election under paragraph (1) is in effect.
18        (9) Requirement to pay estimated tax. For each taxable
19    year for which an election under paragraph (1) is in
20    effect, a partnership or Subchapter S corporation is
21    required to pay estimated tax for such taxable year under
22    Sections 803 and 804 of this Act if the amount payable as
23    estimated tax can reasonably be expected to exceed $500.
24        (10) The provisions of this subsection shall apply
25    only with respect to taxable years for which the
26    limitation on individual deductions applies under Section

 

 

HB4932- 47 -LRB102 23180 HLH 32342 b

1    164(b)(6) of the Internal Revenue Code.
2(Source: P.A. 101-9, eff. 6-5-19; 101-31, eff. 6-28-19;
3101-207, eff. 8-2-19; 101-363, eff. 8-9-19; 102-558, eff.
48-20-21; 102-658, eff. 8-27-21.)
 
5    Section 15. The Illinois Administrative Procedure Act is
6amended by adding Section 5-45.21 as follows:
 
7    (5 ILCS 100/5-45.21 new)
8    Sec. 5-45.21. Emergency rulemaking. To provide for the
9expeditious and timely implementation of this amendatory Act
10of the 102nd General Assembly, emergency rules implementing
11this amendatory Act of the 102nd General Assembly may be
12adopted in accordance with Section 5-45 by the Department of
13Revenue. The adoption of emergency rules authorized by Section
145-45 and this Section is deemed to be necessary for the public
15interest, safety, and welfare.
16    This Section is repealed one year after the effective date
17of this amendatory Act of the 102nd General Assembly.
 
18    Section 99. Effective date. This Act takes effect upon
19becoming law.