HB7012 93RD GENERAL ASSEMBLY

LRB093 16212 SJM 41845 b

93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB7012

Introduced 02/09/04, by John E. Bradley

SYNOPSIS AS INTRODUCED:

35 ILCS 5/216 new

Amends the Illinois Income Tax Act. Provides an income tax credit, for 5 taxable years, for providing broadband Internet access. Provides that the "current generation" broadband credit for any taxable year shall equal 10% of the qualified expenditures incurred with respect to qualified equipment offering current generation broadband services to rural subscribers or underserved subscribers and taken into account with respect to such taxable year and that the next generation broadband credit for any taxable year shall equal 20% of the qualified expenditures incurred with respect to qualified equipment offering next generation broadband services to all rural subscribers, all underserved subscribers, or any other residential subscribers and taken into account with respect to such taxable year. Provides that the total credit allowed for all taxpayers in any taxable year shall not exceed $750,000. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning taxes.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Income Tax Act is amended by adding Section 216 as follows:

(35 ILCS 5/216 new)

Sec. 216. Broadband Internet access tax credit.

(a) As used in this Section:

"Current generation broadband service" means the transmission of signals at a rate of at least 1,500,000 bits per second to the subscriber and at least 200,000 bits per second from the subscriber.

"Next generation broadband service" means the transmission of signals at a rate of at least 22,000,000 bits per second to the subscriber and at least 10,000,000 bits per second from the subscriber.

"Nonresidential subscriber" means a person or entity that purchases broadband services that are delivered to the permanent place of business of such person or entity.

"Qualified equipment" means equipment capable of providing current generation broadband services or next generation broadband services at any time to each subscriber who is utilizing such services.

"Qualified expenditure" means any amount chargeable to capital account with respect to the purchase and installation of qualified equipment, including any upgrades thereto, for which depreciation is allowable under Section 168 of the Internal Revenue Code.

"Residential subscriber" means an individual who purchases broadband services that are delivered to that individual's dwelling.

"Rural subscriber" means a residential subscriber residing in a dwelling located in a rural area or nonresidential subscriber maintaining a permanent place of business located in a rural area.

"Rural area" means any census tract that (i) is not within 10 miles of any incorporated or census designated place containing more than 25,000 people, and (ii) is not within a county or county equivalent that has an overall population density of more than 500 people per square mile of land.

"Subscriber" means a person who purchases current generation broadband services or next generation broadband services.

"Underserved subscriber" means a residential subscriber residing in a dwelling located in an underserved area or nonresidential subscriber maintaining a permanent place of business located in an underserved area.

"Underserved area" means any census tract (i) the poverty level of which is at least 30% based on the most recent census data, (ii) the median family income of which does not exceed (a) in the case of a census tract located in a metropolitan statistical area, 70% of the greater of the metropolitan area median family income or the statewide median family income, and (b) in the case of a census tract located in a nonmetropolitan statistical area, 70% of the nonmetropolitan statewide median family income.

(b) For taxable years beginning on or after January 1, 2004 but before January 1, 2009, a taxpayer shall be allowed a credit against the taxes imposed by subsections (a) and (b) of Section 201 as set forth in this Section for the purpose of accelerating deployment of (i) current generation broadband access to the Internet for users located in certain low income and rural areas and (ii) next generation broadband access for all Illinoisans. The tax credit for any taxable year shall equal the sum of (a) the current generation broadband credit, plus (b) the next generation broadband credit.

(c) For purposes of this Section, the current generation broadband credit for any taxable year shall equal 10% of the qualified expenditures incurred with respect to qualified equipment offering current generation broadband services to rural subscribers or underserved subscribers and taken into account with respect to such taxable year. The next generation broadband credit for any taxable year shall equal 20% of the qualified expenditures incurred with respect to qualified equipment offering next generation broadband services to all rural subscribers, all underserved subscribers, or any other residential subscribers and taken into account with respect to such taxable year.

(d) For purposes of this Section, the offer of current generation broadband services or next generation broadband services through qualified equipment occurs when such class of service is purchased by and provided to at least 10% of the subscribers described in subsection (c) that such equipment is capable of serving through the legal or contractual area access rights or obligations of the taxpayer.

(e) The total credit allowed under this Section for all taxpayers in any taxable year shall not exceed $750,000. If the amount of credits otherwise allowable under this Section exceed the $750,000 limit for any taxable year, such credits shall be allocated to taxpayers on a pro rata basis by the Department of Revenue.

(f) The amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.

(g) If the amount of the credit exceeds the tax liability for the year, the excess may not be carried forward or back to apply to the tax liability of any other taxable year.

Section 99. Effective date. This Act takes effect upon becoming law.