Illinois General Assembly - Full Text of SB0012
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Full Text of SB0012  93rd General Assembly

SB0012 93rd General Assembly


093_SB0012

 
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 1        AN ACT concerning taxes.

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

 4        Section  5.   The  Illinois  Income Tax Act is amended by
 5    changing Sections 304 and 901 as follows:

 6        (35 ILCS 5/304) (from Ch. 120, par. 3-304)
 7        Sec.  304.  Business  income  of   persons   other   than
 8    residents.
 9        (a)  In  general.  The  business income of a person other
10    than a resident shall be allocated  to  this  State  if  such
11    person's  business  income is derived solely from this State.
12    If a person other than a  resident  derives  business  income
13    from  this  State and one or more other states, then, for tax
14    years ending on or before December 30, 1998,  for  tax  years
15    ending  on or after December 31, 2003 and before December 31,
16    2008, and except as otherwise provided by this Section,  such
17    person's  business  income shall be apportioned to this State
18    by multiplying the income by a  fraction,  the  numerator  of
19    which is the sum of the property factor (if any), the payroll
20    factor  (if  any)  and 200% of the sales factor (if any), and
21    the denominator of which  is  4  reduced  by  the  number  of
22    factors  other than the sales factor which have a denominator
23    of zero and by an additional 2 if  the  sales  factor  has  a
24    denominator  of  zero.  For  tax  years  ending  on  or after
25    December 31, 1998, and except as otherwise provided  by  this
26    Section,  persons  other  than  residents who derive business
27    income from this State and one or  more  other  states  shall
28    compute   their   apportionment  factor  by  weighting  their
29    property,  payroll,  and  sales  factors   as   provided   in
30    subsection (h) of this Section.
31        (1)  Property factor.
 
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 1             (A)  The   property   factor   is  a  fraction,  the
 2        numerator of which is the average value of  the  person's
 3        real  and  tangible personal property owned or rented and
 4        used in the trade or business in this  State  during  the
 5        taxable  year and the denominator of which is the average
 6        value of all the  person's  real  and  tangible  personal
 7        property  owned  or  rented  and  used  in  the  trade or
 8        business during the taxable year.
 9             (B)  Property owned by the person is valued  at  its
10        original cost. Property rented by the person is valued at
11        8  times  the  net  annual rental rate. Net annual rental
12        rate is the annual rental rate paid by  the  person  less
13        any  annual  rental  rate  received  by  the  person from
14        sub-rentals.
15             (C)  The  average  value  of   property   shall   be
16        determined  by  averaging the values at the beginning and
17        ending of the taxable year but the Director  may  require
18        the  averaging  of monthly values during the taxable year
19        if reasonably required to reflect  properly  the  average
20        value of the person's property.
21        (2)  Payroll factor.
22             (A)  The payroll factor is a fraction, the numerator
23        of  which  is  the total amount paid in this State during
24        the taxable year by the person for compensation, and  the
25        denominator  of  which  is  the  total  compensation paid
26        everywhere during the taxable year.
27             (B)  Compensation is paid in this State if:
28                  (i)  The  individual's  service  is   performed
29             entirely within this State;
30                  (ii)  The  individual's  service  is  performed
31             both  within and without this State, but the service
32             performed without this State is  incidental  to  the
33             individual's service performed within this State; or
34                  (iii)  Some  of the service is performed within
 
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 1             this State and either the base of operations, or  if
 2             there is no base of operations, the place from which
 3             the service is directed or controlled is within this
 4             State,  or  the base of operations or the place from
 5             which the service is directed or controlled  is  not
 6             in  any  state  in which some part of the service is
 7             performed, but the individual's residence is in this
 8             State.
 9             Beginning with taxable  years  ending  on  or  after
10        December  31, 1992, for residents of states that impose a
11        comparable tax liability on residents of this State,  for
12        purposes  of  item (i) of this paragraph (B), in the case
13        of persons who perform personal services  under  personal
14        service  contracts  for  sports performances, services by
15        that person at a sporting event taking place in  Illinois
16        shall  be deemed to be a performance entirely within this
17        State.
18        (3)  Sales factor.
19             (A)  The sales factor is a fraction,  the  numerator
20        of  which  is the total sales of the person in this State
21        during the taxable year, and the denominator of which  is
22        the  total  sales  of  the  person  everywhere during the
23        taxable year.
24             (B)  Sales of tangible personal property are in this
25        State if:
26                  (i)  The property is delivered or shipped to  a
27             purchaser,  other than the United States government,
28             within this State regardless of the f. o.  b.  point
29             or other conditions of the sale; or
30                  (ii)  The  property  is shipped from an office,
31             store, warehouse, factory or other place of  storage
32             in this State and either the purchaser is the United
33             States  government  or  the person is not taxable in
34             the state of the purchaser; provided, however,  that
 
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 1             premises  owned  or  leased  by  a  person  who  has
 2             independently  contracted  with  the  seller for the
 3             printing of newspapers, periodicals or  books  shall
 4             not  be  deemed  to  be an office, store, warehouse,
 5             factory or other place of storage  for  purposes  of
 6             this  Section.   Sales of tangible personal property
 7             are not in this State if the  seller  and  purchaser
 8             would  be members of the same unitary business group
 9             but for the fact that either the seller or purchaser
10             is a person with  80%  or  more  of  total  business
11             activity  outside  of  the  United  States  and  the
12             property is purchased for resale.
13             (B-1)  Patents,  copyrights, trademarks, and similar
14        items of intangible personal property.
15                  (i)  Gross receipts from the  licensing,  sale,
16             or   other   disposition  of  a  patent,  copyright,
17             trademark, or similar item  of  intangible  personal
18             property are in this State to the extent the item is
19             utilized  in  this  State  during the year the gross
20             receipts are included in gross income.
21                  (ii)  Place of utilization.
22                       (I)  A patent is utilized in  a  state  to
23                  the  extent  that it is employed in production,
24                  fabrication, manufacturing, or other processing
25                  in the state or to the extent that  a  patented
26                  product  is produced in the state.  If a patent
27                  is utilized in more than one state, the  extent
28                  to  which it is utilized in any one state shall
29                  be a fraction equal to the  gross  receipts  of
30                  the  licensee or purchaser from sales or leases
31                  of items produced, fabricated, manufactured, or
32                  processed within that state  using  the  patent
33                  and  of  patented  items  produced  within that
34                  state, divided  by  the  total  of  such  gross
 
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 1                  receipts  for all states in which the patent is
 2                  utilized.
 3                       (II)  A copyright is utilized in  a  state
 4                  to   the   extent   that   printing   or  other
 5                  publication originates  in  the  state.   If  a
 6                  copyright  is  utilized in more than one state,
 7                  the extent to which it is utilized in  any  one
 8                  state  shall  be  a fraction equal to the gross
 9                  receipts from sales or  licenses  of  materials
10                  printed  or  published in that state divided by
11                  the total of such gross receipts for all states
12                  in which the copyright is utilized.
13                       (III)  Trademarks  and  other   items   of
14                  intangible  personal  property governed by this
15                  paragraph (B-1) are utilized in  the  state  in
16                  which  the  commercial domicile of the licensee
17                  or purchaser is located.
18                  (iii)  If the state of utilization of  an  item
19             of  property governed by this paragraph (B-1) cannot
20             be determined from the taxpayer's books and  records
21             or  from the books and records of any person related
22             to the taxpayer within the meaning of Section 267(b)
23             of the Internal Revenue Code,  26  U.S.C.  267,  the
24             gross  receipts  attributable  to that item shall be
25             excluded from both the numerator and the denominator
26             of the sales factor.
27             (B-2)  Gross receipts from  the  license,  sale,  or
28        other disposition of patents, copyrights, trademarks, and
29        similar  items  of  intangible  personal  property may be
30        included in the numerator or  denominator  of  the  sales
31        factor  only  if  gross receipts from licenses, sales, or
32        other disposition of such items comprise more than 50% of
33        the taxpayer's total gross  receipts  included  in  gross
34        income  during  the  tax  year  and  during each of the 2
 
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 1        immediately preceding tax years; provided  that,  when  a
 2        taxpayer  is  a  member of a unitary business group, such
 3        determination shall be made on the  basis  of  the  gross
 4        receipts of the entire unitary business group.
 5             (C)  Sales,  other than sales governed by paragraphs
 6        (B) and (B-1), are in this State if:
 7                  (i)  The income-producing activity is performed
 8             in this State; or
 9                  (ii)  The    income-producing    activity    is
10             performed both within and without this State  and  a
11             greater  proportion of the income-producing activity
12             is performed within this  State  than  without  this
13             State, based on performance costs.
14             (D)  For  taxable  years ending on or after December
15        31, 1995, the following items  of  income  shall  not  be
16        included  in  the  numerator  or denominator of the sales
17        factor: dividends; amounts included under Section  78  of
18        the  Internal  Revenue  Code;  and  Subpart  F  income as
19        defined in Section 952 of the Internal Revenue  Code.  No
20        inference  shall  be  drawn  from  the  enactment of this
21        paragraph (D) in  construing  this  Section  for  taxable
22        years ending before December 31, 1995.
23             (E)  Paragraphs  (B-1)  and (B-2) shall apply to tax
24        years ending on or after December 31, 1999, provided that
25        a taxpayer may elect to apply  the  provisions  of  these
26        paragraphs  to  prior  tax years.  Such election shall be
27        made in the form and manner prescribed by the Department,
28        shall be irrevocable, and shall apply to all  tax  years;
29        provided  that,  if  a  taxpayer's  Illinois  income  tax
30        liability for any tax year, as assessed under Section 903
31        prior  to  January  1,  1999,  was  computed  in a manner
32        contrary to the provisions of paragraphs (B-1) or  (B-2),
33        no  refund  shall be payable to the taxpayer for that tax
34        year to the extent such refund is the result of  applying
 
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 1        the provisions of paragraph (B-1) or (B-2) retroactively.
 2        In  the  case  of a unitary business group, such election
 3        shall apply to all members of such group  for  every  tax
 4        year  such  group is in existence, but shall not apply to
 5        any taxpayer for any period during which that taxpayer is
 6        not a member of such group.
 7        (b)  Insurance companies.
 8             (1)  In general. Except  as  otherwise  provided  by
 9        paragraph  (2),  business  income of an insurance company
10        for a taxable year shall be apportioned to this State  by
11        multiplying  such  income by a fraction, the numerator of
12        which is the direct premiums written for  insurance  upon
13        property  or  risk  in this State, and the denominator of
14        which is the direct premiums written for  insurance  upon
15        property   or  risk  everywhere.  For  purposes  of  this
16        subsection, the term "direct premiums written" means  the
17        total  amount of direct premiums written, assessments and
18        annuity considerations as reported for the  taxable  year
19        on  the  annual  statement  filed by the company with the
20        Illinois Director of Insurance in the  form  approved  by
21        the  National  Convention  of  Insurance Commissioners or
22        such other form as may be prescribed in lieu thereof.
23             (2)  Reinsurance.  If  the   principal   source   of
24        premiums  written  by  an  insurance  company consists of
25        premiums for reinsurance accepted  by  it,  the  business
26        income of such company shall be apportioned to this State
27        by  multiplying  such income by a fraction, the numerator
28        of which is the sum of (i) direct  premiums  written  for
29        insurance  upon property or risk in this State, plus (ii)
30        premiums written for reinsurance accepted in  respect  of
31        property  or  risk  in this State, and the denominator of
32        which is the sum of (iii)  direct  premiums  written  for
33        insurance  upon  property  or  risk everywhere, plus (iv)
34        premiums written for reinsurance accepted in  respect  of
 
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 1        property   or  risk  everywhere.  For  purposes  of  this
 2        paragraph, premiums written for reinsurance  accepted  in
 3        respect of property or risk in this State, whether or not
 4        otherwise  determinable,  may,  at  the  election  of the
 5        company, be determined on the  basis  of  the  proportion
 6        which  premiums  written  for  reinsurance  accepted from
 7        companies commercially domiciled  in  Illinois  bears  to
 8        premiums   written  for  reinsurance  accepted  from  all
 9        sources, or, alternatively, in the proportion  which  the
10        sum  of  the  direct  premiums written for insurance upon
11        property or risk in this State  by  each  ceding  company
12        from  which  reinsurance  is accepted bears to the sum of
13        the total direct premiums written  by  each  such  ceding
14        company for the taxable year.
15        (c)  Financial organizations.
16             (1)  In  general.  Business  income  of  a financial
17        organization  shall  be  apportioned  to  this  State  by
18        multiplying such income by a fraction, the  numerator  of
19        which  is  its  business  income from sources within this
20        State, and the  denominator  of  which  is  its  business
21        income  from  all  sources.  For  the  purposes  of  this
22        subsection,   the   business   income   of   a  financial
23        organization from sources within this State is the sum of
24        the amounts referred to in subparagraphs (A) through  (E)
25        following,  but  excluding  the  adjusted  income  of  an
26        international banking facility as determined in paragraph
27        (2):
28                  (A)  Fees,  commissions  or  other compensation
29             for financial services rendered within this State;
30                  (B)  Gross  profits  from  trading  in  stocks,
31             bonds or other securities managed within this State;
32                  (C)  Dividends,  and  interest  from   Illinois
33             customers, which are received within this State;
34                  (D)  Interest charged to customers at places of
 
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 1             business  maintained  within this State for carrying
 2             debit balances of margin accounts, without deduction
 3             of any costs incurred in carrying such accounts; and
 4                  (E)  Any other gross income resulting from  the
 5             operation  as  a  financial organization within this
 6             State. In  computing  the  amounts  referred  to  in
 7             paragraphs  (A)  through (E) of this subsection, any
 8             amount received by a member of an  affiliated  group
 9             (determined  under  Section  1504(a) of the Internal
10             Revenue Code but without reference  to  whether  any
11             such  corporation  is  an  "includible  corporation"
12             under  Section 1504(b) of the Internal Revenue Code)
13             from another member of such group shall be  included
14             only  to  the extent such amount exceeds expenses of
15             the recipient directly related thereto.
16             (2)  International Banking Facility.
17                  (A)  Adjusted Income.  The adjusted  income  of
18             an  international  banking  facility  is  its income
19             reduced by the amount of the floor amount.
20                  (B)  Floor Amount.  The floor amount  shall  be
21             the  amount,  if  any, determined by multiplying the
22             income of the international banking  facility  by  a
23             fraction,  not greater than one, which is determined
24             as follows:
25                       (i)  The numerator shall be:
26                       The average  aggregate,  determined  on  a
27                  quarterly     basis,     of    the    financial
28                  organization's  loans  to  banks   in   foreign
29                  countries,   to   foreign  domiciled  borrowers
30                  (except where secured primarily by real estate)
31                  and to foreign governments  and  other  foreign
32                  official  institutions,  as  reported  for  its
33                  branches, agencies and offices within the state
34                  on  its  "Consolidated  Report  of  Condition",
 
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 1                  Schedule  A,  Lines 2.c., 5.b., and 7.a., which
 2                  was filed with the  Federal  Deposit  Insurance
 3                  Corporation  and  other regulatory authorities,
 4                  for the year 1980, minus
 5                       The average  aggregate,  determined  on  a
 6                  quarterly  basis,  of  such  loans  (other than
 7                  loans of an international banking facility), as
 8                  reported by the financial institution  for  its
 9                  branches,   agencies  and  offices  within  the
10                  state, on the corresponding Schedule and  lines
11                  of the Consolidated Report of Condition for the
12                  current  taxable  year, provided, however, that
13                  in no case shall the amount determined in  this
14                  clause   (the  subtrahend)  exceed  the  amount
15                  determined  in  the   preceding   clause   (the
16                  minuend); and
17                       (ii)  the denominator shall be the average
18                  aggregate,  determined on a quarterly basis, of
19                  the international banking facility's  loans  to
20                  banks   in   foreign   countries,   to  foreign
21                  domiciled  borrowers  (except   where   secured
22                  primarily   by  real  estate)  and  to  foreign
23                  governments   and   other   foreign    official
24                  institutions,   which   were  recorded  in  its
25                  financial  accounts  for  the  current  taxable
26                  year.
27                  (C)  Change to Consolidated Report of Condition
28             and in Qualification.  In the event the Consolidated
29             Report of Condition which is filed with the  Federal
30             Deposit  Insurance  Corporation and other regulatory
31             authorities  is  altered  so  that  the  information
32             required for determining the  floor  amount  is  not
33             found  on Schedule A, lines 2.c., 5.b. and 7.a., the
34             financial institution shall  notify  the  Department
 
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 1             and the Department may, by regulations or otherwise,
 2             prescribe  or  authorize  the  use of an alternative
 3             source   for   such   information.   The   financial
 4             institution shall also notify the Department  should
 5             its  international  banking facility fail to qualify
 6             as such, in whole or in part, or should there be any
 7             amendment or change to the  Consolidated  Report  of
 8             Condition,  as  originally filed, to the extent such
 9             amendment or change alters the information  used  in
10             determining the floor amount.
11        (d)  Transportation  services.  Business  income  derived
12    from  furnishing transportation services shall be apportioned
13    to this State in accordance with paragraphs (1) and (2):
14             (1)  Such business income (other than  that  derived
15        from  transportation by pipeline) shall be apportioned to
16        this State by multiplying such income by a fraction,  the
17        numerator  of which is the revenue miles of the person in
18        this State, and the denominator of which is  the  revenue
19        miles  of  the  person  everywhere.  For purposes of this
20        paragraph, a revenue mile  is  the  transportation  of  1
21        passenger  or 1 net ton of freight the distance of 1 mile
22        for a consideration. Where a person  is  engaged  in  the
23        transportation   of  both  passengers  and  freight,  the
24        fraction above referred to shall be determined  by  means
25        of  an average of the passenger revenue mile fraction and
26        the freight revenue mile fraction,  weighted  to  reflect
27        the person's
28                  (A)  relative  railway  operating  income  from
29             total   passenger  and  total  freight  service,  as
30             reported to the Interstate Commerce  Commission,  in
31             the case of transportation by railroad, and
32                  (B)  relative gross receipts from passenger and
33             freight  transportation,  in  case of transportation
34             other than by railroad.
 
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 1             (2)  Such    business    income     derived     from
 2        transportation  by  pipeline shall be apportioned to this
 3        State by multiplying  such  income  by  a  fraction,  the
 4        numerator  of which is the revenue miles of the person in
 5        this State, and the denominator of which is  the  revenue
 6        miles  of the person everywhere. For the purposes of this
 7        paragraph,  a  revenue  mile  is  the  transportation  by
 8        pipeline of 1 barrel of oil, 1,000 cubic feet of gas,  or
 9        of  any  specified  quantity  of any other substance, the
10        distance of 1 mile for a consideration.
11        (e)  Combined apportionment.  Where 2 or more persons are
12    engaged in a unitary  business  as  described  in  subsection
13    (a)(27) of Section 1501, a part of which is conducted in this
14    State  by  one  or  more  members  of the group, the business
15    income attributable to this  State  by  any  such  member  or
16    members  shall  be  apportioned  by  means  of  the  combined
17    apportionment method.
18        (f)  Alternative   allocation.   If  the  allocation  and
19    apportionment provisions of subsections (a) through  (e)  and
20    of  subsection  (h)  do  not fairly represent the extent of a
21    person's business activity in  this  State,  the  person  may
22    petition  for, or the Director may require, in respect of all
23    or any part of the person's business activity, if reasonable:
24             (1)  Separate accounting;
25             (2)  The exclusion of any one or more factors;
26             (3)  The inclusion of one or more additional factors
27        which  will  fairly  represent  the   person's   business
28        activities in this State; or
29             (4)  The   employment   of   any   other  method  to
30        effectuate an equitable allocation and  apportionment  of
31        the person's business income.
32        (g)  Cross  reference.  For allocation of business income
33    by residents, see Section 301(a).
34        (h)  Apportionment of income.  For tax years ending on or
 
                            -13-     LRB093 03284 SJM 03301 b
 1    after December 31, 1998, the apportionment factor of  persons
 2    who  apportion  their  business  income  to  this State under
 3    subsection (a) shall be equal to:
 4             (1)  for tax years ending on or after  December  31,
 5        1998  and  before  December  31,  1999,  16  2/3%  of the
 6        property factor plus 16 2/3% of the payroll  factor  plus
 7        66 2/3% of the sales factor;
 8             (2)  for  tax  years ending on or after December 31,
 9        1999 and before December 31, 2000, 8 1/3% of the property
10        factor plus 8 1/3% of the payroll factor plus 83 1/3%  of
11        the sales factor;
12             (3)  for  tax  years ending on or after December 31,
13        2000 and before December 31, 2003, the sales factor;
14             (4)  for tax years ending on or after  December  31,
15        2003  and  before  December  31,  2008,  as  provided  in
16        subsection (a);
17             (5)  for  tax  years ending on or after December 31,
18        2008, the sales factor.
19    If, in any tax year ending on or after December 31, 1998  and
20    before  December  31,  2000,  the denominator of the payroll,
21    property, or sales factor is zero, the  apportionment  factor
22    computed  in paragraph (1) or (2) of this subsection for that
23    year shall be divided by an amount equal to  100%  minus  the
24    percentage  weight  given to each factor whose denominator is
25    equal to zero.
26    (Source: P.A. 90-562, eff.  12-16-97;  90-613,  eff.  7-9-98;
27    91-541, eff. 8-13-99.)

28    1t(35 ILCS 5/901) (from Ch. 120, par. 9-901)
29        Sec. 901.  Collection Authority.
30        (a)  In general.
31        The  Department  shall  collect the taxes imposed by this
32    Act.  The Department shall collect certified past  due  child
33    support  amounts  under Section 2505-650 of the Department of
 
                            -14-     LRB093 03284 SJM 03301 b
 1    Revenue Law (20 ILCS 2505/2505-650).  Except as  provided  in
 2    subsections  (c)  and  (e)  of  this Section, money collected
 3    pursuant to subsections (a) and (b) of Section  201  of  this
 4    Act  shall be paid into the General Revenue Fund in the State
 5    treasury; money collected pursuant to subsections (c) and (d)
 6    of Section 201 of this Act shall be paid  into  the  Personal
 7    Property  Tax  Replacement  Fund, a special fund in the State
 8    Treasury; and money collected under Section 2505-650  of  the
 9    Department  of  Revenue  Law (20 ILCS 2505/2505-650) shall be
10    paid into the Child Support Enforcement Trust Fund, a special
11    fund outside the State Treasury, or to the State Disbursement
12    Unit established under Section 10-26 of the  Illinois  Public
13    Aid Code, as directed by the Department of Public Aid.
14        (b)  Local Governmental Distributive Fund.
15        Beginning August 1, 1969, and continuing through June 30,
16    1994,  the  Treasurer  shall  transfer  each  month  from the
17    General Revenue Fund to a special fund in the State treasury,
18    to be known as the "Local Government Distributive  Fund",  an
19    amount equal to 1/12 of the net revenue realized from the tax
20    imposed by subsections (a) and (b) of Section 201 of this Act
21    during  the  preceding  month.  Beginning  July  1, 1994, and
22    continuing  through  June  30,  1995,  the  Treasurer   shall
23    transfer  each  month  from  the  General Revenue Fund to the
24    Local Government Distributive Fund an amount equal to 1/11 of
25    the net revenue realized from the tax imposed by  subsections
26    (a)  and  (b) of Section 201 of this Act during the preceding
27    month.  Beginning July 1, 1995, the Treasurer shall  transfer
28    each  month  from  the  General  Revenue  Fund  to  the Local
29    Government Distributive Fund an amount equal to 1/10  of  the
30    net  revenue realized from the tax imposed by subsections (a)
31    and (b) of Section 201 of the Illinois Income Tax Act  during
32    the  preceding  month. Net revenue realized for a month shall
33    be defined as the revenue from the tax imposed by subsections
34    (a) and (b) of Section 201 of this Act which is deposited  in
 
                            -15-     LRB093 03284 SJM 03301 b
 1    the General Revenue Fund, the Educational Assistance Fund and
 2    the  Income  Tax Surcharge Local Government Distributive Fund
 3    during the month minus the amount paid  out  of  the  General
 4    Revenue  Fund  in  State  warrants  during that same month as
 5    refunds to taxpayers for overpayment of liability  under  the
 6    tax imposed by subsections (a) and (b) of Section 201 of this
 7    Act.
 8        (c)  Deposits Into Income Tax Refund Fund.
 9             (1)  Beginning  on  January  1, 1989 and thereafter,
10        the Department shall deposit a percentage of the  amounts
11        collected  pursuant  to  subsections (a) and (b)(1), (2),
12        and (3), of Section 201 of this Act into a  fund  in  the
13        State  treasury known as the Income Tax Refund Fund.  The
14        Department shall deposit 6% of such  amounts  during  the
15        period  beginning  January 1, 1989 and ending on June 30,
16        1989.  Beginning with State fiscal year 1990 and for each
17        fiscal year thereafter, the percentage deposited into the
18        Income Tax Refund Fund during a fiscal year shall be  the
19        Annual  Percentage.   For fiscal years 1999 through 2001,
20        the Annual Percentage shall  be  7.1%.  For  fiscal  year
21        2003,  the  Annual  Percentage shall be 8%. For all other
22        fiscal years, the Annual Percentage shall  be  calculated
23        as a fraction, the numerator of which shall be the amount
24        of  refunds approved for payment by the Department during
25        the preceding fiscal year as a result of  overpayment  of
26        tax  liability under subsections (a) and (b)(1), (2), and
27        (3) of Section 201 of this Act plus the  amount  of  such
28        refunds  remaining  approved but unpaid at the end of the
29        preceding fiscal year, minus the amounts transferred into
30        the Income Tax Refund Fund from  the  Tobacco  Settlement
31        Recovery  Fund, and the denominator of which shall be the
32        amounts which will be collected pursuant  to  subsections
33        (a)  and  (b)(1), (2), and (3) of Section 201 of this Act
34        during the preceding fiscal year; except  that  in  State
 
                            -16-     LRB093 03284 SJM 03301 b
 1        fiscal year 2002, the Annual Percentage shall in no event
 2        exceed  7.6%.   The Director of Revenue shall certify the
 3        Annual Percentage to the Comptroller on the last business
 4        day of the fiscal year immediately preceding  the  fiscal
 5        year for which it is to be effective.
 6             (2)  Beginning  on  January  1, 1989 and thereafter,
 7        the Department shall deposit a percentage of the  amounts
 8        collected  pursuant  to  subsections (a) and (b)(6), (7),
 9        and (8), (c) and (d) of Section 201 of this  Act  into  a
10        fund in the State treasury known as the Income Tax Refund
11        Fund.   The  Department shall deposit 18% of such amounts
12        during the period beginning January 1, 1989 and ending on
13        June 30, 1989.  Beginning with State fiscal year 1990 and
14        for each fiscal year thereafter, the percentage deposited
15        into the Income Tax Refund  Fund  during  a  fiscal  year
16        shall  be  the Annual Percentage.  For fiscal years 1999,
17        2000, and 2001, the Annual Percentage shall be  19%.  For
18        fiscal year 2003, the Annual Percentage shall be 27%. For
19        all  other  fiscal  years, the Annual Percentage shall be
20        calculated as a fraction, the numerator of which shall be
21        the  amount  of  refunds  approved  for  payment  by  the
22        Department during the preceding fiscal year as  a  result
23        of overpayment of tax liability under subsections (a) and
24        (b)(6),  (7), and (8), (c) and (d) of Section 201 of this
25        Act plus the amount of such  refunds  remaining  approved
26        but  unpaid  at the end of the preceding fiscal year, and
27        the denominator of which shall be the amounts which  will
28        be collected pursuant to subsections (a) and (b)(6), (7),
29        and  (8),  (c)  and (d) of Section 201 of this Act during
30        the preceding fiscal year; except that  in  State  fiscal
31        year 2002, the Annual Percentage shall in no event exceed
32        23%.   The  Director  of Revenue shall certify the Annual
33        Percentage to the Comptroller on the last business day of
34        the fiscal year immediately preceding the fiscal year for
 
                            -17-     LRB093 03284 SJM 03301 b
 1        which it is to be effective.
 2             (3)  The Comptroller shall order transferred and the
 3        Treasurer shall  transfer  from  the  Tobacco  Settlement
 4        Recovery   Fund   to  the  Income  Tax  Refund  Fund  (i)
 5        $35,000,000  in  January,  2001,  (ii)   $35,000,000   in
 6        January, 2002, and (iii) $35,000,000 in January, 2003.
 7        (d)  Expenditures from Income Tax Refund Fund.
 8             (1)  Beginning  January 1, 1989, money in the Income
 9        Tax Refund Fund shall be  expended  exclusively  for  the
10        purpose  of  paying refunds resulting from overpayment of
11        tax liability under Section 201 of this Act,  for  paying
12        rebates under Section 208.1 in the event that the amounts
13        in  the  Homeowners' Tax Relief Fund are insufficient for
14        that purpose, and for making transfers pursuant  to  this
15        subsection (d).
16             (2)  The  Director  shall  order  payment of refunds
17        resulting from overpayment of tax liability under Section
18        201 of this Act from the Income Tax Refund Fund  only  to
19        the extent that amounts collected pursuant to Section 201
20        of this Act and transfers pursuant to this subsection (d)
21        and  item  (3)  of subsection (c) have been deposited and
22        retained in the Fund.
23             (3)  As soon as  possible  after  the  end  of  each
24        fiscal year, the Director shall order transferred and the
25        State Treasurer and State Comptroller shall transfer from
26        the  Income  Tax Refund Fund to the Personal Property Tax
27        Replacement Fund an amount, certified by the Director  to
28        the  Comptroller,  equal  to  the  excess  of  the amount
29        collected pursuant to subsections (c) and (d) of  Section
30        201 of this Act deposited into the Income Tax Refund Fund
31        during  the  fiscal  year  over  the  amount  of  refunds
32        resulting   from   overpayment  of  tax  liability  under
33        subsections (c) and (d) of Section 201 of this  Act  paid
34        from the Income Tax Refund Fund during the fiscal year.
 
                            -18-     LRB093 03284 SJM 03301 b
 1             (4)  As  soon  as  possible  after  the  end of each
 2        fiscal year, the Director shall order transferred and the
 3        State Treasurer and State Comptroller shall transfer from
 4        the Personal Property Tax Replacement Fund to the  Income
 5        Tax  Refund  Fund an amount, certified by the Director to
 6        the Comptroller, equal to the excess  of  the  amount  of
 7        refunds resulting from overpayment of tax liability under
 8        subsections  (c)  and (d) of Section 201 of this Act paid
 9        from the Income Tax Refund Fund during  the  fiscal  year
10        over the amount collected pursuant to subsections (c) and
11        (d)  of Section 201 of this Act deposited into the Income
12        Tax Refund Fund during the fiscal year.
13             (4.5)  As soon as possible after the end  of  fiscal
14        year  1999  and  of  each  fiscal  year  thereafter,  the
15        Director  shall order transferred and the State Treasurer
16        and State Comptroller shall transfer from the Income  Tax
17        Refund  Fund  to  the  General  Revenue  Fund any surplus
18        remaining in the Income Tax Refund Fund as of the end  of
19        such  fiscal year; excluding for fiscal years 2000, 2001,
20        and 2002 amounts attributable to transfers under item (3)
21        of subsection (c) less refunds resulting from the  earned
22        income tax credit.
23             (5)  This  Act  shall  constitute an irrevocable and
24        continuing appropriation from the Income Tax Refund  Fund
25        for  the  purpose of paying refunds upon the order of the
26        Director  in  accordance  with  the  provisions  of  this
27        Section.
28        (e)  Deposits into the Education Assistance Fund and  the
29    Income Tax Surcharge Local Government Distributive Fund.
30        Beginning on July 1, 1991 and continuing through December
31    31,  2003,  and thereafter, of the amounts collected pursuant
32    to subsections (a) and (b) of Section 201 of this Act,  minus
33    deposits  into  the  Income  Tax  Refund Fund, the Department
34    shall deposit 7.3% into the Education Assistance Fund in  the
 
                            -19-     LRB093 03284 SJM 03301 b
 1    State  Treasury. Beginning on January 1, 2004 and thereafter,
 2    of the amounts collected pursuant to subsections (a) and  (b)
 3    of  Section  201  of  this  Act from individuals, trusts, and
 4    estates, minus deposits into the Income Tax Refund Fund,  the
 5    Department  shall  deposit 7.3% into the Education Assistance
 6    Fund in the State treasury. Beginning on January 1, 2004  and
 7    thereafter,  of the amounts collected pursuant to subsections
 8    (a) and (b) of Section 201 of  this  Act  from  corporations,
 9    minus   deposits   into  the  Income  Tax  Refund  Fund,  the
10    Department shall deposit 14.6% into the Education  Assistance
11    Fund  in  the  State  treasury.  Beginning  July 1, 1991, and
12    continuing through January 31, 1993, of the amounts collected
13    pursuant to subsections (a) and (b) of  Section  201  of  the
14    Illinois  Income  Tax Act, minus deposits into the Income Tax
15    Refund Fund, the  Department  shall  deposit  3.0%  into  the
16    Income  Tax  Surcharge  Local Government Distributive Fund in
17    the  State  Treasury.   Beginning  February   1,   1993   and
18    continuing  through  June  30, 1993, of the amounts collected
19    pursuant to subsections (a) and (b) of  Section  201  of  the
20    Illinois  Income  Tax Act, minus deposits into the Income Tax
21    Refund Fund, the  Department  shall  deposit  4.4%  into  the
22    Income  Tax  Surcharge  Local Government Distributive Fund in
23    the State Treasury.  Beginning July 1, 1993,  and  continuing
24    through  June  30,  1994,  of  the  amounts  collected  under
25    subsections  (a)  and  (b)  of Section 201 of this Act, minus
26    deposits into the Income  Tax  Refund  Fund,  the  Department
27    shall  deposit  1.475%  into  the  Income Tax Surcharge Local
28    Government Distributive Fund in the State Treasury.
29    (Source: P.A. 91-212,  eff.  7-20-99;  91-239,  eff.  1-1-00;
30    91-700,  eff.  5-11-00;  91-704,  eff.  7-1-00;  91-712, eff.
31    7-1-00; 92-11, eff. 6-11-01;  92-16,  eff.  6-28-01;  92-600,
32    eff. 6-28-02.)

33        Section  99.  Effective date.  This Act takes effect upon
 
                            -20-     LRB093 03284 SJM 03301 b
 1    becoming law.