Illinois General Assembly - Full Text of SB2505
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Full Text of SB2505  96th General Assembly

SB2505enr 96TH GENERAL ASSEMBLY

  
  
  

 


 
SB2505 EnrolledLRB096 16340 HLH 31604 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 1. This Act shall be known as the Taxpayer
5Accountability and Budget Stabilization Act.
 
6    Section 5. The Secretary of State Act is amended by
7changing Section 5 as follows:
 
8    (15 ILCS 305/5)  (from Ch. 124, par. 5)
9    Sec. 5. It shall be the duty of the Secretary of State:
10    1. To countersign and affix the seal of state to all
11commissions required by law to be issued by the Governor.
12    2. To make a register of all appointments by the Governor,
13specifying the person appointed, the office conferred, the date
14of the appointment, the date when bond or oath is taken and the
15date filed. If Senate confirmation is required, the date of the
16confirmation shall be included in the register.
17    3. To make proper indexes to public acts, resolutions,
18papers and documents in his office.
19    3-a. To review all rules of all State agencies adopted in
20compliance with the codification system prescribed by the
21Secretary. The review shall be for the purposes and include all
22the powers and duties provided in the Illinois Administrative

 

 

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1Procedure Act. The Secretary of State shall cooperate with the
2Legislative Information System to insure the accuracy of the
3text of the rules maintained under the Legislative Information
4System Act.
5    4. To give any person requiring the same paying the lawful
6fees therefor, a copy of any law, act, resolution, record or
7paper in his office, and attach thereto his certificate, under
8the seal of the state.
9    5. To take charge of and preserve from waste, and keep in
10repair, the houses, lots, grounds and appurtenances, situated
11in the City of Springfield, and belonging to or occupied by the
12State, the care of which is not otherwise provided for by law,
13and to take charge of and preserve from waste, and keep in
14repair, the houses, lots, grounds and appurtenances, situated
15in the State outside the City of Springfield where such houses,
16lots, grounds and appurtenances are occupied by the Secretary
17of State and no other State officer or agency.
18    6. To supervise the distribution of the laws.
19    7. To perform such other duties as may be required by law.
20The Secretary of State may, within appropriations authorized by
21the General Assembly, maintain offices in the State Capital and
22in such other places in the State as he may deem necessary to
23properly carry out the powers and duties vested in him by law.
24    8. In addition to all other authority granted to the
25Secretary by law, subject to appropriation, to make grants or
26otherwise provide assistance to, among others without

 

 

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1limitation, units of local government, school districts,
2educational institutions, private agencies, not-for-profit
3organizations, and for-profit entities for the health, safety,
4and welfare of Illinois residents for purposes related to
5education, transportation, construction, capital improvements,
6social services, and any other lawful public purpose. Upon
7request of the Secretary, all State agencies are mandated to
8provide the Secretary with assistance in administering the
9grants.
10    9. To notify the Auditor General of any Public Act filed
11with the Office of the Secretary of State making an
12appropriation or transfer of funds from the State treasury.
13This paragraph (9) applies only through June 30, 2015.
14(Source: P.A. 96-37, eff. 7-13-09.)
 
15    Section 10. The Illinois State Auditing Act is amended by
16adding Section 3-20 as follows:
 
17    (30 ILCS 5/3-20 new)
18    Sec. 3-20. Spending limitation reports. The Auditor
19General shall issue reports in accordance with Section 201.5 of
20the Illinois Income Tax Act. This Section applies through June
2130, 2015 or the effective date of a reduction in the rate of
22tax imposed by subsections (a) and (b) of Section 201 of the
23Illinois Income Tax Act pursuant to Section 201.5 of the
24Illinois Income Tax Act, whichever is earlier.
 

 

 

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1    Section 15. The State Finance Act is amended by adding
2Sections 5.786, 5.787, 6z-85, 6z-86, and 25.2 as follows:
 
3    (30 ILCS 105/5.786 new)
4    Sec. 5.786. The Fund for the Advancement of Education.
 
5    (30 ILCS 105/5.787 new)
6    Sec. 5.787. The Commitment to Human Services Fund.
 
7    (30 ILCS 105/6z-85 new)
8    Sec. 6z-85. The Fund for the Advancement of Education;
9creation. The Fund for the Advancement of Education is hereby
10created as a special fund in the State treasury. All moneys
11deposited into the fund shall be appropriated to provide
12financial assistance for education programs. Moneys
13appropriated from the Fund shall supplement and not supplant
14the current level of education funding.
 
15    (30 ILCS 105/6z-86 new)
16    Sec. 6z-86. The Commitment to Human Services Fund; uses.
17The Commitment to Human Services Fund is hereby created as a
18special fund in the State treasury. All moneys deposited into
19the fund shall be appropriated to provide financial assistance
20for community-based human service providers and for State
21funded human service programs. Moneys appropriated from the

 

 

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1Fund shall supplement and not supplant the current level of
2human services funding.
 
3    (30 ILCS 105/25.2 new)
4    Sec. 25.2. Statutory mandates not designated in law as
5being subject to appropriation. Notwithstanding any law to the
6contrary, from the effective date of this Section through
7fiscal year 2015, with respect to any statutory mandate that is
8not designated in law as being subject to appropriation, if and
9only if the Governor determines that funds appropriated for
10such statutory mandates are insufficient to satisfy those
11mandates, the Governor may reduce the amount of funds
12appropriated for some or all of those statutory mandates in
13amounts he or she deems necessary to accommodate budgetary
14limitations while attempting to implement such mandates to the
15extent reasonably practical. The reduction shall become
16effective upon the Governor giving notice of the reduction to
17the Speaker of the House of Representatives, the President of
18the Senate, the Minority Leader of the House of
19Representatives, the Minority Leader of the Senate, the State
20Comptroller, the State Treasurer, and the Commission on
21Government Forecasting and Accountability. Nothing in this
22Section prohibits adjustments to the Governor's reduction by
23law.
 
24    Section 20. The Illinois Income Tax Act is amended by

 

 

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1changing Sections 201, 207, 804, and 901 and by adding Sections
2201.5 and 202.5 as follows:
 
3    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
4    Sec. 201. Tax Imposed.
5    (a) In general. A tax measured by net income is hereby
6imposed on every individual, corporation, trust and estate for
7each taxable year ending after July 31, 1969 on the privilege
8of earning or receiving income in or as a resident of this
9State. Such tax shall be in addition to all other occupation or
10privilege taxes imposed by this State or by any municipal
11corporation or political subdivision thereof.
12    (b) Rates. The tax imposed by subsection (a) of this
13Section shall be determined as follows, except as adjusted by
14subsection (d-1):
15        (1) In the case of an individual, trust or estate, for
16    taxable years ending prior to July 1, 1989, an amount equal
17    to 2 1/2% of the taxpayer's net income for the taxable
18    year.
19        (2) In the case of an individual, trust or estate, for
20    taxable years beginning prior to July 1, 1989 and ending
21    after June 30, 1989, an amount equal to the sum of (i) 2
22    1/2% of the taxpayer's net income for the period prior to
23    July 1, 1989, as calculated under Section 202.3, and (ii)
24    3% of the taxpayer's net income for the period after June
25    30, 1989, as calculated under Section 202.3.

 

 

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1        (3) In the case of an individual, trust or estate, for
2    taxable years beginning after June 30, 1989, and ending
3    prior to January 1, 2011, an amount equal to 3% of the
4    taxpayer's net income for the taxable year.
5        (4) In the case of an individual, trust, or estate, for
6    taxable years beginning prior to January 1, 2011, and
7    ending after December 31, 2010, an amount equal to the sum
8    of (i) 3% of the taxpayer's net income for the period prior
9    to January 1, 2011, as calculated under Section 202.5, and
10    (ii) 5% of the taxpayer's net income for the period after
11    December 31, 2010, as calculated under Section 202.5.
12    (Blank).
13        (5) In the case of an individual, trust, or estate, for
14    taxable years beginning on or after January 1, 2011, and
15    ending prior to January 1, 2015, an amount equal to 5% of
16    the taxpayer's net income for the taxable year. (Blank).
17        (5.1) In the case of an individual, trust, or estate,
18    for taxable years beginning prior to January 1, 2015, and
19    ending after December 31, 2014, an amount equal to the sum
20    of (i) 5% of the taxpayer's net income for the period prior
21    to January 1, 2015, as calculated under Section 202.5, and
22    (ii) 3.75% of the taxpayer's net income for the period
23    after December 31, 2014, as calculated under Section 202.5.
24        (5.2) In the case of an individual, trust, or estate,
25    for taxable years beginning on or after January 1, 2015,
26    and ending prior to January 1, 2025, an amount equal to

 

 

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1    3.75% of the taxpayer's net income for the taxable year.
2        (5.3) In the case of an individual, trust, or estate,
3    for taxable years beginning prior to January 1, 2025, and
4    ending after December 31, 2024, an amount equal to the sum
5    of (i) 3.75% of the taxpayer's net income for the period
6    prior to January 1, 2025, as calculated under Section
7    202.5, and (ii) 3.25% of the taxpayer's net income for the
8    period after December 31, 2024, as calculated under Section
9    202.5.
10        (5.4) In the case of an individual, trust, or estate,
11    for taxable years beginning on or after January 1, 2025, an
12    amount equal to 3.25% of the taxpayer's net income for the
13    taxable year.
14        (6) In the case of a corporation, for taxable years
15    ending prior to July 1, 1989, an amount equal to 4% of the
16    taxpayer's net income for the taxable year.
17        (7) In the case of a corporation, for taxable years
18    beginning prior to July 1, 1989 and ending after June 30,
19    1989, an amount equal to the sum of (i) 4% of the
20    taxpayer's net income for the period prior to July 1, 1989,
21    as calculated under Section 202.3, and (ii) 4.8% of the
22    taxpayer's net income for the period after June 30, 1989,
23    as calculated under Section 202.3.
24        (8) In the case of a corporation, for taxable years
25    beginning after June 30, 1989, and ending prior to January
26    1, 2011, an amount equal to 4.8% of the taxpayer's net

 

 

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1    income for the taxable year.
2        (9) In the case of a corporation, for taxable years
3    beginning prior to January 1, 2011, and ending after
4    December 31, 2010, an amount equal to the sum of (i) 4.8%
5    of the taxpayer's net income for the period prior to
6    January 1, 2011, as calculated under Section 202.5, and
7    (ii) 7% of the taxpayer's net income for the period after
8    December 31, 2010, as calculated under Section 202.5.
9        (10) In the case of a corporation, for taxable years
10    beginning on or after January 1, 2011, and ending prior to
11    January 1, 2015, an amount equal to 7% of the taxpayer's
12    net income for the taxable year.
13        (11) In the case of a corporation, for taxable years
14    beginning prior to January 1, 2015, and ending after
15    December 31, 2014, an amount equal to the sum of (i) 7% of
16    the taxpayer's net income for the period prior to January
17    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
18    of the taxpayer's net income for the period after December
19    31, 2014, as calculated under Section 202.5.
20        (12) In the case of a corporation, for taxable years
21    beginning on or after January 1, 2015, and ending prior to
22    January 1, 2025, an amount equal to 5.25% of the taxpayer's
23    net income for the taxable year.
24        (13) In the case of a corporation, for taxable years
25    beginning prior to January 1, 2025, and ending after
26    December 31, 2024, an amount equal to the sum of (i) 5.25%

 

 

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

 

 

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1corporation and except as adjusted by subsection (d-1), shall
2be an additional amount equal to 2.85% of such taxpayer's net
3income for the taxable year, except that beginning on January
41, 1981, and thereafter, the rate of 2.85% specified in this
5subsection shall be reduced to 2.5%, and in the case of a
6partnership, trust or a Subchapter S corporation shall be an
7additional amount equal to 1.5% of such taxpayer's net income
8for the taxable year.
9    (d-1) Rate reduction for certain foreign insurers. In the
10case of a foreign insurer, as defined by Section 35A-5 of the
11Illinois Insurance Code, whose state or country of domicile
12imposes on insurers domiciled in Illinois a retaliatory tax
13(excluding any insurer whose premiums from reinsurance assumed
14are 50% or more of its total insurance premiums as determined
15under paragraph (2) of subsection (b) of Section 304, except
16that for purposes of this determination premiums from
17reinsurance do not include premiums from inter-affiliate
18reinsurance arrangements), beginning with taxable years ending
19on or after December 31, 1999, the sum of the rates of tax
20imposed by subsections (b) and (d) shall be reduced (but not
21increased) to the rate at which the total amount of tax imposed
22under this Act, net of all credits allowed under this Act,
23shall equal (i) the total amount of tax that would be imposed
24on the foreign insurer's net income allocable to Illinois for
25the taxable year by such foreign insurer's state or country of
26domicile if that net income were subject to all income taxes

 

 

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

 

 

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1    by subsection (b) and only after the tax imposed by
2    subsection (a) net of all credits allowed under this
3    Section other than the credit allowed under subsection (i)
4    has been reduced to zero, against the rates imposed by
5    subsection (d).
6    This subsection (d-1) is exempt from the provisions of
7Section 250.
8    (e) Investment credit. A taxpayer shall be allowed a credit
9against the Personal Property Tax Replacement Income Tax for
10investment in qualified property.
11        (1) A taxpayer shall be allowed a credit equal to .5%
12    of the basis of qualified property placed in service during
13    the taxable year, provided such property is placed in
14    service on or after July 1, 1984. There shall be allowed an
15    additional credit equal to .5% of the basis of qualified
16    property placed in service during the taxable year,
17    provided such property is placed in service on or after
18    July 1, 1986, and the taxpayer's base employment within
19    Illinois has increased by 1% or more over the preceding
20    year as determined by the taxpayer's employment records
21    filed with the Illinois Department of Employment Security.
22    Taxpayers who are new to Illinois shall be deemed to have
23    met the 1% growth in base employment for the first year in
24    which they file employment records with the Illinois
25    Department of Employment Security. The provisions added to
26    this Section by Public Act 85-1200 (and restored by Public

 

 

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1    Act 87-895) shall be construed as declaratory of existing
2    law and not as a new enactment. If, in any year, the
3    increase in base employment within Illinois over the
4    preceding year is less than 1%, the additional credit shall
5    be limited to that percentage times a fraction, the
6    numerator of which is .5% and the denominator of which is
7    1%, but shall not exceed .5%. The investment credit shall
8    not be allowed to the extent that it would reduce a
9    taxpayer's liability in any tax year below zero, nor may
10    any credit for qualified property be allowed for any year
11    other than the year in which the property was placed in
12    service in Illinois. For tax years ending on or after
13    December 31, 1987, and on or before December 31, 1988, the
14    credit shall be allowed for the tax year in which the
15    property is placed in service, or, if the amount of the
16    credit exceeds the tax liability for that year, whether it
17    exceeds the original liability or the liability as later
18    amended, such excess may be carried forward and applied to
19    the tax liability of the 5 taxable years following the
20    excess credit years if the taxpayer (i) makes investments
21    which cause the creation of a minimum of 2,000 full-time
22    equivalent jobs in Illinois, (ii) is located in an
23    enterprise zone established pursuant to the Illinois
24    Enterprise Zone Act and (iii) is certified by the
25    Department of Commerce and Community Affairs (now
26    Department of Commerce and Economic Opportunity) as

 

 

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1    complying with the requirements specified in clause (i) and
2    (ii) by July 1, 1986. The Department of Commerce and
3    Community Affairs (now Department of Commerce and Economic
4    Opportunity) shall notify the Department of Revenue of all
5    such certifications immediately. For tax years ending
6    after December 31, 1988, the credit shall be allowed for
7    the tax year in which the property is placed in service,
8    or, if the amount of the credit exceeds the tax liability
9    for that year, whether it exceeds the original liability or
10    the liability as later amended, such excess may be carried
11    forward and applied to the tax liability of the 5 taxable
12    years following the excess credit years. The credit shall
13    be applied to the earliest year for which there is a
14    liability. If there is credit from more than one tax year
15    that is available to offset a liability, earlier credit
16    shall be applied first.
17        (2) The term "qualified property" means property
18    which:
19            (A) is tangible, whether new or used, including
20        buildings and structural components of buildings and
21        signs that are real property, but not including land or
22        improvements to real property that are not a structural
23        component of a building such as landscaping, sewer
24        lines, local access roads, fencing, parking lots, and
25        other appurtenances;
26            (B) is depreciable pursuant to Section 167 of the

 

 

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1        Internal Revenue Code, except that "3-year property"
2        as defined in Section 168(c)(2)(A) of that Code is not
3        eligible for the credit provided by this subsection
4        (e);
5            (C) is acquired by purchase as defined in Section
6        179(d) of the Internal Revenue Code;
7            (D) is used in Illinois by a taxpayer who is
8        primarily engaged in manufacturing, or in mining coal
9        or fluorite, or in retailing, or was placed in service
10        on or after July 1, 2006 in a River Edge Redevelopment
11        Zone established pursuant to the River Edge
12        Redevelopment Zone Act; and
13            (E) has not previously been used in Illinois in
14        such a manner and by such a person as would qualify for
15        the credit provided by this subsection (e) or
16        subsection (f).
17        (3) For purposes of this subsection (e),
18    "manufacturing" means the material staging and production
19    of tangible personal property by procedures commonly
20    regarded as manufacturing, processing, fabrication, or
21    assembling which changes some existing material into new
22    shapes, new qualities, or new combinations. For purposes of
23    this subsection (e) the term "mining" shall have the same
24    meaning as the term "mining" in Section 613(c) of the
25    Internal Revenue Code. For purposes of this subsection (e),
26    the term "retailing" means the sale of tangible personal

 

 

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1    property for use or consumption and not for resale, or
2    services rendered in conjunction with the sale of tangible
3    personal property for use or consumption and not for
4    resale. For purposes of this subsection (e), "tangible
5    personal property" has the same meaning as when that term
6    is used in the Retailers' Occupation Tax Act, and, for
7    taxable years ending after December 31, 2008, does not
8    include the generation, transmission, or distribution of
9    electricity.
10        (4) The basis of qualified property shall be the basis
11    used to compute the depreciation deduction for federal
12    income tax purposes.
13        (5) If the basis of the property for federal income tax
14    depreciation purposes is increased after it has been placed
15    in service in Illinois by the taxpayer, the amount of such
16    increase shall be deemed property placed in service on the
17    date of such increase in basis.
18        (6) The term "placed in service" shall have the same
19    meaning as under Section 46 of the Internal Revenue Code.
20        (7) If during any taxable year, any property ceases to
21    be qualified property in the hands of the taxpayer within
22    48 months after being placed in service, or the situs of
23    any qualified property is moved outside Illinois within 48
24    months after being placed in service, the Personal Property
25    Tax Replacement Income Tax for such taxable year shall be
26    increased. Such increase shall be determined by (i)

 

 

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1    recomputing the investment credit which would have been
2    allowed for the year in which credit for such property was
3    originally allowed by eliminating such property from such
4    computation and, (ii) subtracting such recomputed credit
5    from the amount of credit previously allowed. For the
6    purposes of this paragraph (7), a reduction of the basis of
7    qualified property resulting from a redetermination of the
8    purchase price shall be deemed a disposition of qualified
9    property to the extent of such reduction.
10        (8) Unless the investment credit is extended by law,
11    the basis of qualified property shall not include costs
12    incurred after December 31, 2013, except for costs incurred
13    pursuant to a binding contract entered into on or before
14    December 31, 2013.
15        (9) Each taxable year ending before December 31, 2000,
16    a partnership may elect to pass through to its partners the
17    credits to which the partnership is entitled under this
18    subsection (e) for the taxable year. A partner may use the
19    credit allocated to him or her under this paragraph only
20    against the tax imposed in subsections (c) and (d) of this
21    Section. If the partnership makes that election, those
22    credits shall be allocated among the partners in the
23    partnership in accordance with the rules set forth in
24    Section 704(b) of the Internal Revenue Code, and the rules
25    promulgated under that Section, and the allocated amount of
26    the credits shall be allowed to the partners for that

 

 

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1    taxable year. The partnership shall make this election on
2    its Personal Property Tax Replacement Income Tax return for
3    that taxable year. The election to pass through the credits
4    shall be irrevocable.
5        For taxable years ending on or after December 31, 2000,
6    a partner that qualifies its partnership for a subtraction
7    under subparagraph (I) of paragraph (2) of subsection (d)
8    of Section 203 or a shareholder that qualifies a Subchapter
9    S corporation for a subtraction under subparagraph (S) of
10    paragraph (2) of subsection (b) of Section 203 shall be
11    allowed a credit under this subsection (e) equal to its
12    share of the credit earned under this subsection (e) during
13    the taxable year by the partnership or Subchapter S
14    corporation, determined in accordance with the
15    determination of income and distributive share of income
16    under Sections 702 and 704 and Subchapter S of the Internal
17    Revenue Code. This paragraph is exempt from the provisions
18    of Section 250.
19    (f) Investment credit; Enterprise Zone; River Edge
20Redevelopment Zone.
21        (1) A taxpayer shall be allowed a credit against the
22    tax imposed by subsections (a) and (b) of this Section for
23    investment in qualified property which is placed in service
24    in an Enterprise Zone created pursuant to the Illinois
25    Enterprise Zone Act or, for property placed in service on
26    or after July 1, 2006, a River Edge Redevelopment Zone

 

 

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

 

 

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

 

 

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1        (5) The term "placed in service" shall have the same
2    meaning as under Section 46 of the Internal Revenue Code.
3        (6) If during any taxable year, 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 the Enterprise Zone
7    or River Edge Redevelopment Zone within 48 months after
8    being placed in service, the tax imposed under subsections
9    (a) and (b) of this Section for such taxable year shall be
10    increased. Such increase shall be determined by (i)
11    recomputing the investment credit which would have been
12    allowed for the year in which credit for such property was
13    originally allowed by eliminating such property from such
14    computation, and (ii) subtracting such recomputed credit
15    from the amount of credit previously allowed. For the
16    purposes of this paragraph (6), a reduction of the basis of
17    qualified property resulting from a redetermination of the
18    purchase price shall be deemed a disposition of qualified
19    property to the extent of such reduction.
20        (7) There shall be allowed an additional credit equal
21    to 0.5% of the basis of qualified property placed in
22    service during the taxable year in a River Edge
23    Redevelopment Zone, provided such property is placed in
24    service on or after July 1, 2006, and the taxpayer's base
25    employment within Illinois has increased by 1% or more over
26    the preceding year as determined by the taxpayer's

 

 

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

 

 

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

 

 

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

 

 

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1    employees hired on or after January 1, 1986.
2    (h) Investment credit; High Impact Business.
3        (1) Subject to subsections (b) and (b-5) of Section 5.5
4    of the Illinois Enterprise Zone Act, a taxpayer shall be
5    allowed a credit against the tax imposed by subsections (a)
6    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 the
22    taxable year in which such investments have been completed.
23    The credit for additional investments beyond the minimum
24    investment by a designated high impact business authorized
25    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
26    Enterprise Zone Act shall be available only in the taxable

 

 

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

 

 

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

 

 

SB2505 Enrolled- 29 -LRB096 16340 HLH 31604 b

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

 

 

SB2505 Enrolled- 30 -LRB096 16340 HLH 31604 b

1base income, and further multiplying the product by the tax
2rate imposed by subsections (a) and (b) of this Section.
3    Any credit earned on or after December 31, 1986 under this
4subsection which is unused in the year the credit is computed
5because it exceeds the tax liability imposed by subsections (a)
6and (b) for that year (whether it exceeds the original
7liability or the liability as later amended) may be carried
8forward and applied to the tax liability imposed by subsections
9(a) and (b) of the 5 taxable years following the excess credit
10year, provided that no credit may be carried forward to any
11year ending on or after December 31, 2003. This credit shall be
12applied first to the earliest year for which there is a
13liability. If there is a credit under this subsection from more
14than one tax year that is available to offset a liability the
15earliest credit arising under this subsection shall be applied
16first.
17    If, during any taxable year ending on or after December 31,
181986, the tax imposed by subsections (c) and (d) of this
19Section for which a taxpayer has claimed a credit under this
20subsection (i) is reduced, the amount of credit for such tax
21shall also be reduced. Such reduction shall be determined by
22recomputing the credit to take into account the reduced tax
23imposed by subsections (c) and (d). If any portion of the
24reduced amount of credit has been carried to a different
25taxable year, an amended return shall be filed for such taxable
26year to reduce the amount of credit claimed.

 

 

SB2505 Enrolled- 31 -LRB096 16340 HLH 31604 b

1    (j) Training expense credit. Beginning with tax years
2ending on or after December 31, 1986 and prior to December 31,
32003, a taxpayer shall be allowed a credit against the tax
4imposed by subsections (a) and (b) under this Section for all
5amounts paid or accrued, on behalf of all persons employed by
6the taxpayer in Illinois or Illinois residents employed outside
7of Illinois by a taxpayer, for educational or vocational
8training in semi-technical or technical fields or semi-skilled
9or skilled fields, which were deducted from gross income in the
10computation of taxable income. The credit against the tax
11imposed by subsections (a) and (b) shall be 1.6% of such
12training expenses. For partners, shareholders of subchapter S
13corporations, and owners of limited liability companies, if the
14liability company is treated as a partnership for purposes of
15federal and State income taxation, there shall be allowed a
16credit under this subsection (j) to be determined in accordance
17with the determination of income and distributive share of
18income under Sections 702 and 704 and subchapter S of the
19Internal Revenue Code.
20    Any credit allowed under this subsection which is unused in
21the year the credit is earned may be carried forward to each of
22the 5 taxable years following the year for which the credit is
23first computed until it is used. This credit shall be applied
24first to the earliest year for which there is a liability. If
25there is a credit under this subsection from more than one tax
26year that is available to offset a liability the earliest

 

 

SB2505 Enrolled- 32 -LRB096 16340 HLH 31604 b

1credit arising under this subsection shall be applied first. No
2carryforward credit may be claimed in any tax year ending on or
3after December 31, 2003.
4    (k) Research and development credit.
5    For tax years ending after July 1, 1990 and prior to
6December 31, 2003, and beginning again for tax years ending on
7or after December 31, 2004, and ending prior to January 1,
82011, a taxpayer shall be allowed a credit against the tax
9imposed by subsections (a) and (b) of this Section for
10increasing research activities in this State. The credit
11allowed against the tax imposed by subsections (a) and (b)
12shall be equal to 6 1/2% of the qualifying expenditures for
13increasing research activities in this State. For partners,
14shareholders of subchapter S corporations, and owners of
15limited liability companies, if the liability company is
16treated as a partnership for purposes of federal and State
17income taxation, there shall be allowed a credit under this
18subsection to be determined in accordance with the
19determination of income and distributive share of income under
20Sections 702 and 704 and subchapter S of the Internal Revenue
21Code.
22    For purposes of this subsection, "qualifying expenditures"
23means the qualifying expenditures as defined for the federal
24credit for increasing research activities which would be
25allowable under Section 41 of the Internal Revenue Code and
26which are conducted in this State, "qualifying expenditures for

 

 

SB2505 Enrolled- 33 -LRB096 16340 HLH 31604 b

1increasing research activities in this State" means the excess
2of qualifying expenditures for the taxable year in which
3incurred over qualifying expenditures for the base period,
4"qualifying expenditures for the base period" means the average
5of the qualifying expenditures for each year in the base
6period, and "base period" means the 3 taxable years immediately
7preceding the taxable year for which the determination is being
8made.
9    Any credit in excess of the tax liability for the taxable
10year may be carried forward. A taxpayer may elect to have the
11unused credit shown on its final completed return carried over
12as a credit against the tax liability for the following 5
13taxable years or until it has been fully used, whichever occurs
14first; provided that no credit earned in a tax year ending
15prior to December 31, 2003 may be carried forward to any year
16ending on or after December 31, 2003, and no credit may be
17carried forward to any taxable year ending on or after January
181, 2011.
19    If an unused credit is carried forward to a given year from
202 or more earlier years, that credit arising in the earliest
21year will be applied first against the tax liability for the
22given year. If a tax liability for the given year still
23remains, the credit from the next earliest year will then be
24applied, and so on, until all credits have been used or no tax
25liability for the given year remains. Any remaining unused
26credit or credits then will be carried forward to the next

 

 

SB2505 Enrolled- 34 -LRB096 16340 HLH 31604 b

1following year in which a tax liability is incurred, except
2that no credit can be carried forward to a year which is more
3than 5 years after the year in which the expense for which the
4credit is given was incurred.
5    No inference shall be drawn from this amendatory Act of the
691st General Assembly in construing this Section for taxable
7years beginning before January 1, 1999.
8    (l) Environmental Remediation Tax Credit.
9        (i) For tax years ending after December 31, 1997 and on
10    or before December 31, 2001, a taxpayer shall be allowed a
11    credit against the tax imposed by subsections (a) and (b)
12    of this Section for certain amounts paid for unreimbursed
13    eligible remediation costs, as specified in this
14    subsection. For purposes of this Section, "unreimbursed
15    eligible remediation costs" means costs approved by the
16    Illinois Environmental Protection Agency ("Agency") under
17    Section 58.14 of the Environmental Protection Act that were
18    paid in performing environmental remediation at a site for
19    which a No Further Remediation Letter was issued by the
20    Agency and recorded under Section 58.10 of the
21    Environmental Protection Act. The credit must be claimed
22    for the taxable year in which Agency approval of the
23    eligible remediation costs is granted. The credit is not
24    available to any taxpayer if the taxpayer or any related
25    party caused or contributed to, in any material respect, a
26    release of regulated substances on, in, or under the site

 

 

SB2505 Enrolled- 35 -LRB096 16340 HLH 31604 b

1    that was identified and addressed by the remedial action
2    pursuant to the Site Remediation Program of the
3    Environmental Protection Act. After the Pollution Control
4    Board rules are adopted pursuant to the Illinois
5    Administrative Procedure Act for the administration and
6    enforcement of Section 58.9 of the Environmental
7    Protection Act, determinations as to credit availability
8    for purposes of this Section shall be made consistent with
9    those rules. For purposes of this Section, "taxpayer"
10    includes a person whose tax attributes the taxpayer has
11    succeeded to under Section 381 of the Internal Revenue Code
12    and "related party" includes the persons disallowed a
13    deduction for losses by paragraphs (b), (c), and (f)(1) of
14    Section 267 of the Internal Revenue Code by virtue of being
15    a related taxpayer, as well as any of its partners. The
16    credit allowed against the tax imposed by subsections (a)
17    and (b) shall be equal to 25% of the unreimbursed eligible
18    remediation costs in excess of $100,000 per site, except
19    that the $100,000 threshold shall not apply to any site
20    contained in an enterprise zone as determined by the
21    Department of Commerce and Community Affairs (now
22    Department of Commerce and Economic Opportunity). The
23    total credit allowed shall not exceed $40,000 per year with
24    a maximum total of $150,000 per site. For partners and
25    shareholders of subchapter S corporations, there shall be
26    allowed a credit under this subsection to be determined in

 

 

SB2505 Enrolled- 36 -LRB096 16340 HLH 31604 b

1    accordance with the determination of income and
2    distributive share of income under Sections 702 and 704 and
3    subchapter S of the Internal Revenue Code.
4        (ii) A credit allowed under this subsection that is
5    unused in the year the credit is earned may be carried
6    forward to each of the 5 taxable years following the year
7    for which the credit is first earned until it is used. The
8    term "unused credit" does not include any amounts of
9    unreimbursed eligible remediation costs in excess of the
10    maximum credit per site authorized under paragraph (i).
11    This credit shall be applied first to the earliest year for
12    which there is a liability. If there is a credit under this
13    subsection from more than one tax year that is available to
14    offset a liability, the earliest credit arising under this
15    subsection shall be applied first. A credit allowed under
16    this subsection may be sold to a buyer as part of a sale of
17    all or part of the remediation site for which the credit
18    was granted. The purchaser of a remediation site and the
19    tax credit shall succeed to the unused credit and remaining
20    carry-forward period of the seller. To perfect the
21    transfer, the assignor shall record the transfer in the
22    chain of title for the site and provide written notice to
23    the Director of the Illinois Department of Revenue of the
24    assignor's intent to sell the remediation site and the
25    amount of the tax credit to be transferred as a portion of
26    the sale. In no event may a credit be transferred to any

 

 

SB2505 Enrolled- 37 -LRB096 16340 HLH 31604 b

1    taxpayer if the taxpayer or a related party would not be
2    eligible under the provisions of subsection (i).
3        (iii) For purposes of this Section, the term "site"
4    shall have the same meaning as under Section 58.2 of the
5    Environmental Protection Act.
6    (m) Education expense credit. Beginning with tax years
7ending after December 31, 1999, a taxpayer who is the custodian
8of one or more qualifying pupils shall be allowed a credit
9against the tax imposed by subsections (a) and (b) of this
10Section for qualified education expenses incurred on behalf of
11the qualifying pupils. The credit shall be equal to 25% of
12qualified education expenses, but in no event may the total
13credit under this subsection claimed by a family that is the
14custodian of qualifying pupils exceed $500. In no event shall a
15credit under this subsection reduce the taxpayer's liability
16under this Act to less than zero. This subsection is exempt
17from the provisions of Section 250 of this Act.
18    For purposes of this subsection:
19    "Qualifying pupils" means individuals who (i) are
20residents of the State of Illinois, (ii) are under the age of
2121 at the close of the school year for which a credit is
22sought, and (iii) during the school year for which a credit is
23sought were full-time pupils enrolled in a kindergarten through
24twelfth grade education program at any school, as defined in
25this subsection.
26    "Qualified education expense" means the amount incurred on

 

 

SB2505 Enrolled- 38 -LRB096 16340 HLH 31604 b

1behalf of a qualifying pupil in excess of $250 for tuition,
2book fees, and lab fees at the school in which the pupil is
3enrolled during the regular school year.
4    "School" means any public or nonpublic elementary or
5secondary school in Illinois that is in compliance with Title
6VI of the Civil Rights Act of 1964 and attendance at which
7satisfies the requirements of Section 26-1 of the School Code,
8except that nothing shall be construed to require a child to
9attend any particular public or nonpublic school to qualify for
10the credit under this Section.
11    "Custodian" means, with respect to qualifying pupils, an
12Illinois resident who is a parent, the parents, a legal
13guardian, or the legal guardians of the qualifying pupils.
14    (n) River Edge Redevelopment Zone site remediation tax
15credit.
16        (i) For tax years ending on or after December 31, 2006,
17    a taxpayer shall be allowed a credit against the tax
18    imposed by subsections (a) and (b) of this Section for
19    certain amounts paid for unreimbursed eligible remediation
20    costs, as specified in this subsection. For purposes of
21    this Section, "unreimbursed eligible remediation costs"
22    means costs approved by the Illinois Environmental
23    Protection Agency ("Agency") under Section 58.14a of the
24    Environmental Protection Act that were paid in performing
25    environmental remediation at a site within a River Edge
26    Redevelopment Zone for which a No Further Remediation

 

 

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1    Letter was issued by the Agency and recorded under Section
2    58.10 of the Environmental Protection Act. The credit must
3    be claimed for the taxable year in which Agency approval of
4    the eligible remediation costs is granted. The credit is
5    not available to any taxpayer if the taxpayer or any
6    related party caused or contributed to, in any material
7    respect, a release of regulated substances on, in, or under
8    the site that was identified and addressed by the remedial
9    action pursuant to the Site Remediation Program of the
10    Environmental Protection Act. Determinations as to credit
11    availability for purposes of this Section shall be made
12    consistent with rules adopted by the Pollution Control
13    Board pursuant to the Illinois Administrative Procedure
14    Act for the administration and enforcement of Section 58.9
15    of the Environmental Protection Act. For purposes of this
16    Section, "taxpayer" includes a person whose tax attributes
17    the taxpayer has succeeded to under Section 381 of the
18    Internal Revenue Code and "related party" includes the
19    persons disallowed a deduction for losses by paragraphs
20    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
21    Code by virtue of being a related taxpayer, as well as any
22    of its partners. The credit allowed against the tax imposed
23    by subsections (a) and (b) shall be equal to 25% of the
24    unreimbursed eligible remediation costs in excess of
25    $100,000 per site.
26        (ii) A credit allowed under this subsection that is

 

 

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1    unused in the year the credit is earned may be carried
2    forward to each of the 5 taxable years following the year
3    for which the credit is first earned until it is used. This
4    credit shall be applied first to the earliest year for
5    which there is a liability. If there is a credit under this
6    subsection from more than one tax year that is available to
7    offset a liability, the earliest credit arising under this
8    subsection shall be applied first. A credit allowed under
9    this subsection may be sold to a buyer as part of a sale of
10    all or part of the remediation site for which the credit
11    was granted. The purchaser of a remediation site and the
12    tax credit shall succeed to the unused credit and remaining
13    carry-forward period of the seller. To perfect the
14    transfer, the assignor shall record the transfer in the
15    chain of title for the site and provide written notice to
16    the Director of the Illinois Department of Revenue of the
17    assignor's intent to sell the remediation site and the
18    amount of the tax credit to be transferred as a portion of
19    the sale. In no event may a credit be transferred to any
20    taxpayer if the taxpayer or a related party would not be
21    eligible under the provisions of subsection (i).
22        (iii) For purposes of this Section, the term "site"
23    shall have the same meaning as under Section 58.2 of the
24    Environmental Protection Act.
25        (iv) This subsection is exempt from the provisions of
26    Section 250.

 

 

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1(Source: P.A. 95-454, eff. 8-27-07; 96-115, eff. 7-31-09;
296-116, eff. 7-31-09; 96-937, eff. 6-23-10; 96-1000, eff.
37-2-10.)
 
4    (35 ILCS 5/201.5 new)
5    Sec. 201.5. State spending limitation and tax reduction.
6    (a) If, beginning in State fiscal year 2012 and continuing
7through State fiscal year 2015, State spending for any fiscal
8year exceeds the State spending limitation set forth in
9subsection (b) of this Section, then the tax rates set forth in
10subsection (b) of Section 201 of this Act shall be reduced,
11according to the procedures set forth in this Section, to 3% of
12the taxpayer's net income for individuals, trusts, and estates
13and to 4.8% of the taxpayer's net income for corporations. For
14all taxable years following the taxable year in which the rate
15has been reduced pursuant to this Section, the tax rate set
16forth in subsection (b) of Section 201 of this Act shall be 3%
17of the taxpayer's net income for individuals, trusts, and
18estates and 4.8% of the taxpayer's net income for corporations.
19    (b) The State spending limitation for fiscal years 2012
20through 2015 shall be as follows: (i) for fiscal year 2012,
21$36,818,000,000; (ii) for fiscal year 2013, $37,554,000,000;
22(iii) for fiscal year 2014, $38,305,000,000; and (iv) for
23fiscal year 2015, $39,072,000,000.
24    (c) Nothwithstanding any other provision of law to the
25contrary, the Auditor General shall examine each Public Act

 

 

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1authorizing State spending from State general funds and prepare
2a report no later than 30 days after receiving notification of
3the Public Act from the Secretary of State or 60 days after the
4effective date of the Public Act, whichever is earlier. The
5Auditor General shall file the report with the Secretary of
6State and copies with the Governor, the State Treasurer, the
7State Comptroller, the Senate, and the House of
8Representatives. The report shall indicate: (i) the amount of
9State spending set forth in the applicable Public Act; (ii) the
10total amount of State spending authorized by law for the
11applicable fiscal year as of the date of the report; and (iii)
12whether State spending exceeds the State spending limitation
13set forth in subsection (b). The Auditor General may examine
14multiple Public Acts in one consolidated report, provided that
15each Public Act is examined within the time period mandated by
16this subsection (c). The Auditor General shall issue reports in
17accordance with this Section through June 30, 2015 or the
18effective date of a reduction in the rate of tax imposed by
19subsections (a) and (b) of Section 201 of this Act pursuant to
20this Section, whichever is earlier.
21    At the request of the Auditor General, each State agency
22shall, without delay, make available to the Auditor General or
23his or her designated representative any record or information
24requested and shall provide for examination or copying all
25records, accounts, papers, reports, vouchers, correspondence,
26books and other documentation in the custody of that agency,

 

 

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1including information stored in electronic data processing
2systems, which is related to or within the scope of a report
3prepared under this Section. The Auditor General shall report
4to the Governor each instance in which a State agency fails to
5cooperate promptly and fully with his or her office as required
6by this Section.
7    The Auditor General's report shall not be in the nature of
8a post-audit or examination and shall not lead to the issuance
9of an opinion as that term is defined in generally accepted
10government auditing standards.
11    (d) If the Auditor General reports that State spending has
12exceeded the State spending limitation set forth in subsection
13(b) and if the Governor has not been presented with a bill or
14bills passed by the General Assembly to reduce State spending
15to a level that does not exceed the State spending limitation
16within 45 calendar days of receipt of the Auditor General's
17report, then the Governor may, for the purpose of reducing
18State spending to a level that does not exceed the State
19spending limitation set forth in subsection (b), designate
20amounts to be set aside as a reserve from the amounts
21appropriated from the State general funds for all boards,
22commissions, agencies, institutions, authorities, colleges,
23universities, and bodies politic and corporate of the State,
24but not other constitutional officers, the legislative or
25judicial branch, the office of the Executive Inspector General,
26or the Executive Ethics Commission. Such a designation must be

 

 

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1made within 15 calendar days after the end of that 45-day
2period. If the Governor designates amounts to be set aside as a
3reserve, the Governor shall give notice of the designation to
4the Auditor General, the State Treasurer, the State
5Comptroller, the Senate, and the House of Representatives. The
6amounts placed in reserves shall not be transferred, obligated,
7encumbered, expended, or otherwise committed unless so
8authorized by law. Any amount placed in reserves is not State
9spending and shall not be considered when calculating the total
10amount of State spending. Any Public Act authorizing the use of
11amounts placed in reserve by the Governor is considered State
12spending, unless such Public Act authorizes the use of amounts
13placed in reserves in response to a fiscal emergency under
14subsection (g).
15    (e) If the Auditor General reports under subsection (c)
16that State spending has exceeded the State spending limitation
17set forth in subsection (b), then the Auditor General shall
18issue a supplemental report no sooner than the 61st day and no
19later than the 65th day after issuing the report pursuant to
20subsection (c). The supplemental report shall: (i) summarize
21details of actions taken by the General Assembly and the
22Governor after the issuance of the initial report to reduce
23State spending, if any, (ii) indicate whether the level of
24State spending has changed since the initial report, and (iii)
25indicate whether State spending exceeds the State spending
26limitation. The Auditor General shall file the report with the

 

 

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1Secretary of State and copies with the Governor, the State
2Treasurer, the State Comptroller, the Senate, and the House of
3Representatives. If the supplemental report of the Auditor
4General provides that State spending exceeds the State spending
5limitation, then the rate of tax imposed by subsections (a) and
6(b) of Section 201 is reduced as provided in this Section
7beginning on the first day of the first month to occur not less
8than 30 days after issuance of the supplemental report.
9    (f) For any taxable year in which the rates of tax have
10been reduced under this Section, the tax imposed by subsections
11(a) and (b) of Section 201 shall be determined as follows:
12        (1) In the case of an individual, trust, or estate, the
13    tax shall be imposed in an amount equal to the sum of (i)
14    the rate applicable to the taxpayer under subsection (b) of
15    Section 201 (without regard to the provisions of this
16    Section) times the taxpayer's net income for any portion of
17    the taxable year prior to the effective date of the
18    reduction and (ii) 3% of the taxpayer's net income for any
19    portion of the taxable year on or after the effective date
20    of the reduction.
21        (2) In the case of a corporation, the tax shall be
22    imposed in an amount equal to the sum of (i) the rate
23    applicable to the taxpayer under subsection (b) of Section
24    201 (without regard to the provisions of this Section)
25    times the taxpayer's net income for any portion of the
26    taxable year prior to the effective date of the reduction

 

 

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1    and (ii) 4.8% of the taxpayer's net income for any portion
2    of the taxable year on or after the effective date of the
3    reduction.
4        (3) For any taxpayer for whom the rate has been reduced
5    under this Section for a portion of a taxable year, the
6    taxpayer shall determine the net income for each portion of
7    the taxable year following the rules set forth in Section
8    202.5 of this Act, using the effective date of the rate
9    reduction rather than the January 1 dates found in that
10    Section, and the day before the effective date of the rate
11    reduction rather than the December 31 dates found in that
12    Section.
13        (4) If the rate applicable to the taxpayer under
14    subsection (b) of Section 201 (without regard to the
15    provisions of this Section) changes during a portion of the
16    taxable year to which that rate is applied under paragraphs
17    (1) or (2) of this subsection (f), the tax for that portion
18    of the taxable year for purposes of paragraph (1) or (2) of
19    this subsection (f) shall be determined as if that portion
20    of the taxable year were a separate taxable year, following
21    the rules set forth in Section 202.5 of this Act. If the
22    taxpayer elects to follow the rules set forth in subsection
23    (b) of Section 202.5, the taxpayer shall follow the rules
24    set forth in subsection (b) of Section 202.5 for all
25    purposes of this Section for that taxable year.
26    (g) Notwithstanding the State spending limitation set

 

 

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1forth in subsection (b) of this Section, the Governor may
2declare a fiscal emergency by filing a declaration with the
3Secretary of State and copies with the State Treasurer, the
4State Comptroller, the Senate, and the House of
5Representatives. The declaration must be limited to only one
6State fiscal year, set forth compelling reasons for declaring a
7fiscal emergency, and request a specific dollar amount. Unless,
8within 10 calendar days of receipt of the Governor's
9declaration, the State Comptroller or State Treasurer notifies
10the Senate and the House of Representatives that he or she does
11not concur in the Governor's declaration, State spending
12authorized by law to address the fiscal emergency in an amount
13no greater than the dollar amount specified in the declaration
14shall not be considered "State spending" for purposes of the
15State spending limitation.
16    (h) As used in this Section:
17    "State general funds" means the General Revenue Fund, the
18Common School Fund, the General Revenue Common School Special
19Account Fund, the Education Assistance Fund, and the Budget
20Stabilization Fund.
21    "State spending" means (i) the total amount authorized for
22spending by appropriation or statutory transfer from the State
23general funds in the applicable fiscal year, and (ii) any
24amounts the Governor places in reserves in accordance with
25subsection (d) that are subsequently released from reserves
26following authorization by a Public Act. For the purpose of

 

 

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1this definition, "appropriation" means authority to spend
2money from a State general fund for a specific amount, purpose,
3and time period, including any supplemental appropriation or
4continuing appropriation, but does not include
5reappropriations from a previous fiscal year. For the purpose
6of this definition, "statutory transfer" means authority to
7transfer funds from one State general fund to any other fund in
8the State treasury, but does not include transfers made from
9one State general fund to another State general fund.
10    "State spending limitation" means the amount described in
11subsection (b) of this Section for the applicable fiscal year.
 
12    (35 ILCS 5/202.5 new)
13    Sec. 202.5. Net income attributable to the period beginning
14prior to January 1 of any year and ending after December 31 of
15the preceding year.
16    (a) In general. With respect to the taxable year of a
17taxpayer beginning prior to January 1 of any year and ending
18after December 31 of the preceding year, net income for the
19period after December 31 of the preceding year, is that amount
20that bears the same ratio to the taxpayer's net income for the
21entire taxable year as the number of days in that taxable year
22after December 31 bears to the total number of days in that
23taxable year, and the net income for the period prior to
24January 1 is that amount that bears the same ratio to the
25taxpayer's net income for the entire taxable year as the number

 

 

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1of days in that taxable year prior to January 1 bears to the
2total number of days in that taxable year.
3    (b) Election to attribute income and deduction items
4specifically to the respective portions of a taxable year prior
5to January 1 of any year and after December 31 of the preceding
6year. In the case of a taxpayer with a taxable year beginning
7prior to January 1 of any year and ending after December 31 of
8the preceding year, the taxpayer may elect, instead of the
9procedure established in subsection (a) of this Section, to
10determine net income on a specific accounting basis for the 2
11portions of the taxable year:
12        (1) from the beginning of the taxable year through
13    December 31; and
14        (2) from January 1 through the end of the taxable year.
15    The election provided by this subsection must be made in
16form and manner that the Department requires by rule, and must
17be made no later than the due date (including any extensions
18thereof) for the filing of the return for the taxable year, and
19is irrevocable.
20    (c) If the taxpayer elects specific accounting under
21subsection (b):
22        (1) there shall be taken into account in computing base
23    income for each of the 2 portions of the taxable year only
24    those items earned, received, paid, incurred or accrued in
25    each such period;
26        (2) for purposes of apportioning business income of the

 

 

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1    taxpayer, the provisions in Article 3 shall be applied on
2    the basis of the taxpayer's full taxable year, without
3    regard to this Section;
4        (3) the net loss carryforward deduction for the taxable
5    year under Section 207 may not exceed combined net income
6    of both portions of the taxable year, and shall be used
7    against the net income of the portion of the taxable year
8    from the beginning of the taxable year through December 31
9    before any remaining amount is used against the net income
10    of the latter portion of the taxable year.
 
11    (35 ILCS 5/207)  (from Ch. 120, par. 2-207)
12    Sec. 207. Net Losses.
13    (a) If after applying all of the (i) modifications provided
14for in paragraph (2) of Section 203(b), paragraph (2) of
15Section 203(c) and paragraph (2) of Section 203(d) and (ii) the
16allocation and apportionment provisions of Article 3 of this
17Act and subsection (c) of this Section, the taxpayer's net
18income results in a loss;
19        (1) for any taxable year ending prior to December 31,
20    1999, such loss shall be allowed as a carryover or
21    carryback deduction in the manner allowed under Section 172
22    of the Internal Revenue Code;
23        (2) for any taxable year ending on or after December
24    31, 1999 and prior to December 31, 2003, such loss shall be
25    allowed as a carryback to each of the 2 taxable years

 

 

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1    preceding the taxable year of such loss and shall be a net
2    operating loss carryover to each of the 20 taxable years
3    following the taxable year of such loss; and
4        (3) for any taxable year ending on or after December
5    31, 2003, such loss shall be allowed as a net operating
6    loss carryover to each of the 12 taxable years following
7    the taxable year of such loss, except as provided in
8    subsection (d).
9    (a-5) Election to relinquish carryback and order of
10application of losses.
11            (A) For losses incurred in tax years ending prior
12        to December 31, 2003, the taxpayer may elect to
13        relinquish the entire carryback period with respect to
14        such loss. Such election shall be made in the form and
15        manner prescribed by the Department and shall be made
16        by the due date (including extensions of time) for
17        filing the taxpayer's return for the taxable year in
18        which such loss is incurred, and such election, once
19        made, shall be irrevocable.
20            (B) The entire amount of such loss shall be carried
21        to the earliest taxable year to which such loss may be
22        carried. The amount of such loss which shall be carried
23        to each of the other taxable years shall be the excess,
24        if any, of the amount of such loss over the sum of the
25        deductions for carryback or carryover of such loss
26        allowable for each of the prior taxable years to which

 

 

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1        such loss may be carried.
2    (b) Any loss determined under subsection (a) of this
3Section must be carried back or carried forward in the same
4manner for purposes of subsections (a) and (b) of Section 201
5of this Act as for purposes of subsections (c) and (d) of
6Section 201 of this Act.
7    (c) Notwithstanding any other provision of this Act, for
8each taxable year ending on or after December 31, 2008, for
9purposes of computing the loss for the taxable year under
10subsection (a) of this Section and the deduction taken into
11account for the taxable year for a net operating loss carryover
12under paragraphs (1), (2), and (3) of subsection (a) of this
13Section, the loss and net operating loss carryover shall be
14reduced in an amount equal to the reduction to the net
15operating loss and net operating loss carryover to the taxable
16year, respectively, required under Section 108(b)(2)(A) of the
17Internal Revenue Code, multiplied by a fraction, the numerator
18of which is the amount of discharge of indebtedness income that
19is excluded from gross income for the taxable year (but only if
20the taxable year ends on or after December 31, 2008) under
21Section 108(a) of the Internal Revenue Code and that would have
22been allocated and apportioned to this State under Article 3 of
23this Act but for that exclusion, and the denominator of which
24is the total amount of discharge of indebtedness income
25excluded from gross income under Section 108(a) of the Internal
26Revenue Code for the taxable year. The reduction required under

 

 

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1this subsection (c) shall be made after the determination of
2Illinois net income for the taxable year in which the
3indebtedness is discharged.
4    (d) In the case of a corporation (other than a Subchapter S
5corporation), no carryover deduction shall be allowed under
6this Section for any taxable year ending after December 31,
72010 and prior to December 31, 2014; provided that, for
8purposes of determining the taxable years to which a net loss
9may be carried under subsection (a) of this Section, no taxable
10year for which a deduction is disallowed under this subsection
11shall be counted.
12(Source: P.A. 95-233, eff. 8-16-07.)
 
13    (35 ILCS 5/804)  (from Ch. 120, par. 8-804)
14    Sec. 804. Failure to Pay Estimated Tax.
15    (a) In general. In case of any underpayment of estimated
16tax by a taxpayer, except as provided in subsection (d) or (e),
17the taxpayer shall be liable to a penalty in an amount
18determined at the rate prescribed by Section 3-3 of the Uniform
19Penalty and Interest Act upon the amount of the underpayment
20(determined under subsection (b)) for each required
21installment.
22    (b) Amount of underpayment. For purposes of subsection (a),
23the amount of the underpayment shall be the excess of:
24        (1) the amount of the installment which would be
25    required to be paid under subsection (c), over

 

 

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1        (2) the amount, if any, of the installment paid on or
2    before the last date prescribed for payment.
3    (c) Amount of Required Installments.
4        (1) Amount.
5            (A) In General. Except as provided in paragraph
6        (2), the amount of any required installment shall be
7        25% of the required annual payment.
8            (B) Required Annual Payment. For purposes of
9        subparagraph (A), the term "required annual payment"
10        means the lesser of
11                (i) 90% of the tax shown on the return for the
12            taxable year, or if no return is filed, 90% of the
13            tax for such year, or
14                (ii) for installments due prior to February 1,
15            2011, and after January 31, 2012, 100% of the tax
16            shown on the return of the taxpayer for the
17            preceding taxable year if a return showing a
18            liability for tax was filed by the taxpayer for the
19            preceding taxable year and such preceding year was
20            a taxable year of 12 months; or .
21                (iii) for installments due after January 31,
22            2011, and prior to February 1, 2012, 150% of the
23            tax shown on the return of the taxpayer for the
24            preceding taxable year if a return showing a
25            liability for tax was filed by the taxpayer for the
26            preceding taxable year and such preceding year was

 

 

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1            a taxable year of 12 months.
2        (2) Lower Required Installment where Annualized Income
3    Installment is Less Than Amount Determined Under Paragraph
4    (1).
5            (A) In General. In the case of any required
6        installment if a taxpayer establishes that the
7        annualized income installment is less than the amount
8        determined under paragraph (1),
9                (i) the amount of such required installment
10            shall be the annualized income installment, and
11                (ii) any reduction in a required installment
12            resulting from the application of this
13            subparagraph shall be recaptured by increasing the
14            amount of the next required installment determined
15            under paragraph (1) by the amount of such
16            reduction, and by increasing subsequent required
17            installments to the extent that the reduction has
18            not previously been recaptured under this clause.
19            (B) Determination of Annualized Income
20        Installment. In the case of any required installment,
21        the annualized income installment is the excess, if
22        any, of
23                (i) an amount equal to the applicable
24            percentage of the tax for the taxable year computed
25            by placing on an annualized basis the net income
26            for months in the taxable year ending before the

 

 

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1            due date for the installment, over
2                (ii) the aggregate amount of any prior
3            required installments for the taxable year.
4            (C) Applicable Percentage.
5        In the case of the followingThe applicable
6        required installments:percentage is:
7        1st ...............................22.5%
8        2nd ...............................45%
9        3rd ...............................67.5%
10        4th ...............................90%
11            (D) Annualized Net Income; Individuals. For
12        individuals, net income shall be placed on an
13        annualized basis by:
14                (i) multiplying by 12, or in the case of a
15            taxable year of less than 12 months, by the number
16            of months in the taxable year, the net income
17            computed without regard to the standard exemption
18            for the months in the taxable year ending before
19            the month in which the installment is required to
20            be paid;
21                (ii) dividing the resulting amount by the
22            number of months in the taxable year ending before
23            the month in which such installment date falls; and
24                (iii) deducting from such amount the standard
25            exemption allowable for the taxable year, such
26            standard exemption being determined as of the last

 

 

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1            date prescribed for payment of the installment.
2            (E) Annualized Net Income; Corporations. For
3        corporations, net income shall be placed on an
4        annualized basis by multiplying by 12 the taxable
5        income
6                (i) for the first 3 months of the taxable year,
7            in the case of the installment required to be paid
8            in the 4th month,
9                (ii) for the first 3 months or for the first 5
10            months of the taxable year, in the case of the
11            installment required to be paid in the 6th month,
12                (iii) for the first 6 months or for the first 8
13            months of the taxable year, in the case of the
14            installment required to be paid in the 9th month,
15            and
16                (iv) for the first 9 months or for the first 11
17            months of the taxable year, in the case of the
18            installment required to be paid in the 12th month
19            of the taxable year,
20        then dividing the resulting amount by the number of
21        months in the taxable year (3, 5, 6, 8, 9, or 11 as the
22        case may be).
23    (d) Exceptions. Notwithstanding the provisions of the
24preceding subsections, the penalty imposed by subsection (a)
25shall not be imposed if the taxpayer was not required to file
26an Illinois income tax return for the preceding taxable year,

 

 

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1or, for individuals, if the taxpayer had no tax liability for
2the preceding taxable year and such year was a taxable year of
312 months. The penalty imposed by subsection (a) shall also not
4be imposed on any underpayments of estimated tax due before the
5effective date of this amendatory Act of 1998 which
6underpayments are solely attributable to the change in
7apportionment from subsection (a) to subsection (h) of Section
8304. The provisions of this amendatory Act of 1998 apply to tax
9years ending on or after December 31, 1998.
10    (e) The penalty imposed for underpayment of estimated tax
11by subsection (a) of this Section shall not be imposed to the
12extent that the Director or his or her designate determines,
13pursuant to Section 3-8 of the Uniform Penalty and Interest Act
14that the penalty should not be imposed.
15    (f) Definition of tax. For purposes of subsections (b) and
16(c), the term "tax" means the excess of the tax imposed under
17Article 2 of this Act, over the amounts credited against such
18tax under Sections 601(b) (3) and (4).
19    (g) Application of Section in case of tax withheld under
20Article 7. For purposes of applying this Section:
21        (1) in the case of an individual, tax withheld from
22    compensation for the taxable year shall be deemed a payment
23    of estimated tax, and an equal part of such amount shall be
24    deemed paid on each installment date for such taxable year,
25    unless the taxpayer establishes the dates on which all
26    amounts were actually withheld, in which case the amounts

 

 

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1    so withheld shall be deemed payments of estimated tax on
2    the dates on which such amounts were actually withheld;
3        (2) amounts timely paid by a partnership, Subchapter S
4    corporation, or trust on behalf of a partner, shareholder,
5    or beneficiary pursuant to subsection (f) of Section 502 or
6    Section 709.5 and claimed as a payment of estimated tax
7    shall be deemed a payment of estimated tax made on the last
8    day of the taxable year of the partnership, Subchapter S
9    corporation, or trust for which the income from the
10    withholding is made was computed; and
11        (3) all other amounts pursuant to Article 7 shall be
12    deemed a payment of estimated tax on the date the payment
13    is made to the taxpayer of the amount from which the tax is
14    withheld.
15    (g-5) Amounts withheld under the State Salary and Annuity
16Withholding Act. An individual who has amounts withheld under
17paragraph (10) of Section 4 of the State Salary and Annuity
18Withholding Act may elect to have those amounts treated as
19payments of estimated tax made on the dates on which those
20amounts are actually withheld.
21    (i) Short taxable year. The application of this Section to
22taxable years of less than 12 months shall be in accordance
23with regulations prescribed by the Department.
24    The changes in this Section made by Public Act 84-127 shall
25apply to taxable years ending on or after January 1, 1986.
26(Source: P.A. 95-233, eff. 8-16-07.)
 

 

 

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1    (35 ILCS 5/901)  (from Ch. 120, par. 9-901)
2    Sec. 901. Collection Authority.
3    (a) In general.
4    The Department shall collect the taxes imposed by this Act.
5The Department shall collect certified past due child support
6amounts under Section 2505-650 of the Department of Revenue Law
7(20 ILCS 2505/2505-650). Except as provided in subsections (c),
8and (e), (f), and (g) of this Section, money collected pursuant
9to subsections (a) and (b) of Section 201 of this Act shall be
10paid into the General Revenue Fund in the State treasury; money
11collected pursuant to subsections (c) and (d) of Section 201 of
12this Act shall be paid into the Personal Property Tax
13Replacement Fund, a special fund in the State Treasury; and
14money collected under Section 2505-650 of the Department of
15Revenue Law (20 ILCS 2505/2505-650) shall be paid into the
16Child Support Enforcement Trust Fund, a special fund outside
17the State Treasury, or to the State Disbursement Unit
18established under Section 10-26 of the Illinois Public Aid
19Code, as directed by the Department of Healthcare and Family
20Services.
21    (b) Local Government Distributive Fund.
22    Beginning August 1, 1969, and continuing through June 30,
231994, the Treasurer shall transfer each month from the General
24Revenue Fund to a special fund in the State treasury, to be
25known as the "Local Government Distributive Fund", an amount

 

 

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1equal to 1/12 of the net revenue realized from the tax imposed
2by subsections (a) and (b) of Section 201 of this Act during
3the preceding month. Beginning July 1, 1994, and continuing
4through June 30, 1995, the Treasurer shall transfer each month
5from the General Revenue Fund to the Local Government
6Distributive Fund an amount equal to 1/11 of the net revenue
7realized from the tax imposed by subsections (a) and (b) of
8Section 201 of this Act during the preceding month. Beginning
9July 1, 1995 and continuing through January 31, 2011, the
10Treasurer shall transfer each month from the General Revenue
11Fund to the Local Government Distributive Fund an amount equal
12to the net of (i) 1/10 of the net revenue realized from the tax
13imposed by subsections (a) and (b) of Section 201 of the
14Illinois Income Tax Act during the preceding month (ii) minus,
15beginning July 1, 2003 and ending June 30, 2004, $6,666,666,
16and beginning July 1, 2004, zero. Beginning February 1, 2011,
17and continuing through January 31, 2015, the Treasurer shall
18transfer each month from the General Revenue Fund to the Local
19Government Distributive Fund an amount equal to the sum of (i)
206% (10% of the ratio of the 3% individual income tax rate prior
21to 2011 to the 5% individual income tax rate after 2010) of the
22net revenue realized from the tax imposed by subsections (a)
23and (b) of Section 201 of this Act upon individuals, trusts,
24and estates during the preceding month and (ii) 6.86% (10% of
25the ratio of the 4.8% corporate income tax rate prior to 2011
26to the 7% corporate income tax rate after 2010) of the net

 

 

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1revenue realized from the tax imposed by subsections (a) and
2(b) of Section 201 of this Act upon corporations during the
3preceding month. Beginning February 1, 2015 and continuing
4through January 31, 2025, the Treasurer shall transfer each
5month from the General Revenue Fund to the Local Government
6Distributive Fund an amount equal to the sum of (i) 8% (10% of
7the ratio of the 3% individual income tax rate prior to 2011 to
8the 3.75% individual income tax rate after 2014) of the net
9revenue realized from the tax imposed by subsections (a) and
10(b) of Section 201 of this Act upon individuals, trusts, and
11estates during the preceding month and (ii) 9.14% (10% of the
12ratio of the 4.8% corporate income tax rate prior to 2011 to
13the 5.25% corporate income tax rate after 2014) of the net
14revenue realized from the tax imposed by subsections (a) and
15(b) of Section 201 of this Act upon corporations during the
16preceding month. Beginning February 1, 2025, the Treasurer
17shall transfer each month from the General Revenue Fund to the
18Local Government Distributive Fund an amount equal to the sum
19of (i) 9.23% (10% of the ratio of the 3% individual income tax
20rate prior to 2011 to the 3.25% individual income tax rate
21after 2024) of the net revenue realized from the tax imposed by
22subsections (a) and (b) of Section 201 of this Act upon
23individuals, trusts, and estates during the preceding month and
24(ii) 10% of the net revenue realized from the tax imposed by
25subsections (a) and (b) of Section 201 of this Act upon
26corporations during the preceding month. Net revenue realized

 

 

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1for a month shall be defined as the revenue from the tax
2imposed by subsections (a) and (b) of Section 201 of this Act
3which is deposited in the General Revenue Fund, the Education
4Educational Assistance Fund, and the Income Tax Surcharge Local
5Government Distributive Fund, the Fund for the Advancement of
6Education, and the Commitment to Human Services Fund during the
7month minus the amount paid out of the General Revenue Fund in
8State warrants during that same month as refunds to taxpayers
9for overpayment of liability under the tax imposed by
10subsections (a) and (b) of Section 201 of this Act.
11    (c) Deposits Into Income Tax Refund Fund.
12        (1) Beginning on January 1, 1989 and thereafter, the
13    Department shall deposit a percentage of the amounts
14    collected pursuant to subsections (a) and (b)(1), (2), and
15    (3), of Section 201 of this Act into a fund in the State
16    treasury known as the Income Tax Refund Fund. The
17    Department shall deposit 6% of such amounts during the
18    period beginning January 1, 1989 and ending on June 30,
19    1989. Beginning with State fiscal year 1990 and for each
20    fiscal year thereafter, the percentage deposited into the
21    Income Tax Refund Fund during a fiscal year shall be the
22    Annual Percentage. For fiscal years 1999 through 2001, the
23    Annual Percentage shall be 7.1%. For fiscal year 2003, the
24    Annual Percentage shall be 8%. For fiscal year 2004, the
25    Annual Percentage shall be 11.7%. Upon the effective date
26    of this amendatory Act of the 93rd General Assembly, the

 

 

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1    Annual Percentage shall be 10% for fiscal year 2005. For
2    fiscal year 2006, the Annual Percentage shall be 9.75%. For
3    fiscal year 2007, the Annual Percentage shall be 9.75%. For
4    fiscal year 2008, the Annual Percentage shall be 7.75%. For
5    fiscal year 2009, the Annual Percentage shall be 9.75%. For
6    fiscal year 2010, the Annual Percentage shall be 9.75%. For
7    fiscal year 2011, the Annual Percentage shall be 8.75%. For
8    all other fiscal years, the Annual Percentage shall be
9    calculated as a fraction, the numerator of which shall be
10    the amount of refunds approved for payment by the
11    Department during the preceding fiscal year as a result of
12    overpayment of tax liability under subsections (a) and
13    (b)(1), (2), and (3) of Section 201 of this Act plus the
14    amount of such refunds remaining approved but unpaid at the
15    end of the preceding fiscal year, minus the amounts
16    transferred into the Income Tax Refund Fund from the
17    Tobacco Settlement Recovery Fund, and the denominator of
18    which shall be the amounts which will be collected pursuant
19    to subsections (a) and (b)(1), (2), and (3) of Section 201
20    of this Act during the preceding fiscal year; except that
21    in State fiscal year 2002, the Annual Percentage shall in
22    no event exceed 7.6%. The Director of Revenue shall certify
23    the Annual Percentage to the Comptroller on the last
24    business day of the fiscal year immediately preceding the
25    fiscal year for which it is to be effective.
26        (2) Beginning on January 1, 1989 and thereafter, the

 

 

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1    Department shall deposit a percentage of the amounts
2    collected pursuant to subsections (a) and (b)(6), (7), and
3    (8), (c) and (d) of Section 201 of this Act into a fund in
4    the State treasury known as the Income Tax Refund Fund. The
5    Department shall deposit 18% of such amounts during the
6    period beginning January 1, 1989 and ending on June 30,
7    1989. Beginning with State fiscal year 1990 and for each
8    fiscal year thereafter, the percentage deposited into the
9    Income Tax Refund Fund during a fiscal year shall be the
10    Annual Percentage. For fiscal years 1999, 2000, and 2001,
11    the Annual Percentage shall be 19%. For fiscal year 2003,
12    the Annual Percentage shall be 27%. For fiscal year 2004,
13    the Annual Percentage shall be 32%. Upon the effective date
14    of this amendatory Act of the 93rd General Assembly, the
15    Annual Percentage shall be 24% for fiscal year 2005. For
16    fiscal year 2006, the Annual Percentage shall be 20%. For
17    fiscal year 2007, the Annual Percentage shall be 17.5%. For
18    fiscal year 2008, the Annual Percentage shall be 15.5%. For
19    fiscal year 2009, the Annual Percentage shall be 17.5%. For
20    fiscal year 2010, the Annual Percentage shall be 17.5%. For
21    fiscal year 2011, the Annual Percentage shall be 17.5%. For
22    all other fiscal years, the Annual Percentage shall be
23    calculated as a fraction, the numerator of which shall be
24    the amount of refunds approved for payment by the
25    Department during the preceding fiscal year as a result of
26    overpayment of tax liability under subsections (a) and

 

 

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1    (b)(6), (7), and (8), (c) and (d) of Section 201 of this
2    Act plus the amount of such refunds remaining approved but
3    unpaid at the end of the preceding fiscal year, and the
4    denominator of which shall be the amounts which will be
5    collected pursuant to subsections (a) and (b)(6), (7), and
6    (8), (c) and (d) of Section 201 of this Act during the
7    preceding fiscal year; except that in State fiscal year
8    2002, the Annual Percentage shall in no event exceed 23%.
9    The Director of Revenue shall certify the Annual Percentage
10    to the Comptroller on the last business day of the fiscal
11    year immediately preceding the fiscal year for which it is
12    to be effective.
13        (3) The Comptroller shall order transferred and the
14    Treasurer shall transfer from the Tobacco Settlement
15    Recovery Fund to the Income Tax Refund Fund (i) $35,000,000
16    in January, 2001, (ii) $35,000,000 in January, 2002, and
17    (iii) $35,000,000 in January, 2003.
18    (d) Expenditures from Income Tax Refund Fund.
19        (1) Beginning January 1, 1989, money in the Income Tax
20    Refund Fund shall be expended exclusively for the purpose
21    of paying refunds resulting from overpayment of tax
22    liability under Section 201 of this Act, for paying rebates
23    under Section 208.1 in the event that the amounts in the
24    Homeowners' Tax Relief Fund are insufficient for that
25    purpose, and for making transfers pursuant to this
26    subsection (d).

 

 

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1        (2) The Director shall order payment of refunds
2    resulting from overpayment of tax liability under Section
3    201 of this Act from the Income Tax Refund Fund only to the
4    extent that amounts collected pursuant to Section 201 of
5    this Act and transfers pursuant to this subsection (d) and
6    item (3) of subsection (c) have been deposited and retained
7    in the Fund.
8        (3) As soon as possible after the end of each fiscal
9    year, the Director shall order transferred and the State
10    Treasurer and State Comptroller shall transfer from the
11    Income Tax Refund Fund to the Personal Property Tax
12    Replacement Fund an amount, certified by the Director to
13    the Comptroller, equal to the excess of the amount
14    collected pursuant to subsections (c) and (d) of Section
15    201 of this Act deposited into the Income Tax Refund Fund
16    during the fiscal year over the amount of refunds resulting
17    from overpayment of tax liability under subsections (c) and
18    (d) of Section 201 of this Act paid from the Income Tax
19    Refund Fund during the fiscal year.
20        (4) As soon as possible after the end of each fiscal
21    year, the Director shall order transferred and the State
22    Treasurer and State Comptroller shall transfer from the
23    Personal Property Tax Replacement Fund to the Income Tax
24    Refund Fund an amount, certified by the Director to the
25    Comptroller, equal to the excess of the amount of refunds
26    resulting from overpayment of tax liability under

 

 

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1    subsections (c) and (d) of Section 201 of this Act paid
2    from the Income Tax Refund Fund during the fiscal year over
3    the amount collected pursuant to subsections (c) and (d) of
4    Section 201 of this Act deposited into the Income Tax
5    Refund Fund during the fiscal year.
6        (4.5) As soon as possible after the end of fiscal year
7    1999 and of each fiscal year thereafter, the Director shall
8    order transferred and the State Treasurer and State
9    Comptroller shall transfer from the Income Tax Refund Fund
10    to the General Revenue Fund any surplus remaining in the
11    Income Tax Refund Fund as of the end of such fiscal year;
12    excluding for fiscal years 2000, 2001, and 2002 amounts
13    attributable to transfers under item (3) of subsection (c)
14    less refunds resulting from the earned income tax credit.
15        (5) This Act shall constitute an irrevocable and
16    continuing appropriation from the Income Tax Refund Fund
17    for the purpose of paying refunds upon the order of the
18    Director in accordance with the provisions of this Section.
19    (e) Deposits into the Education Assistance Fund and the
20Income Tax Surcharge Local Government Distributive Fund.
21    On July 1, 1991, and thereafter, of the amounts collected
22pursuant to subsections (a) and (b) of Section 201 of this Act,
23minus deposits into the Income Tax Refund Fund, the Department
24shall deposit 7.3% into the Education Assistance Fund in the
25State Treasury. Beginning July 1, 1991, and continuing through
26January 31, 1993, of the amounts collected pursuant to

 

 

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1subsections (a) and (b) of Section 201 of the Illinois Income
2Tax Act, minus deposits into the Income Tax Refund Fund, the
3Department shall deposit 3.0% into the Income Tax Surcharge
4Local Government Distributive Fund in the State Treasury.
5Beginning February 1, 1993 and continuing through June 30,
61993, of the amounts collected pursuant to subsections (a) and
7(b) of Section 201 of the Illinois Income Tax Act, minus
8deposits into the Income Tax Refund Fund, the Department shall
9deposit 4.4% into the Income Tax Surcharge Local Government
10Distributive Fund in the State Treasury. Beginning July 1,
111993, and continuing through June 30, 1994, of the amounts
12collected under subsections (a) and (b) of Section 201 of this
13Act, minus deposits into the Income Tax Refund Fund, the
14Department shall deposit 1.475% into the Income Tax Surcharge
15Local Government Distributive Fund in the State Treasury.
16    (f) Deposits into the Fund for the Advancement of
17Education. Beginning February 1, 2015, the Department shall
18deposit the following portions of the revenue realized from the
19tax imposed upon individuals, trusts, and estates by
20subsections (a) and (b) of Section 201 of this Act during the
21preceding month, minus deposits into the Income Tax Refund
22Fund, into the Fund for the Advancement of Education:
23        (1) beginning February 1, 2015, and prior to February
24    1, 2025, 1/30; and
25        (2) beginning February 1, 2025, 1/26.
26    If the rate of tax imposed by subsection (a) and (b) of

 

 

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1Section 201 is reduced pursuant to Section 201.5 of this Act,
2the Department shall not make the deposits required by this
3subsection (f) on or after the effective date of the reduction.
4    (g) Deposits into the Commitment to Human Services Fund.
5Beginning February 1, 2015, the Department shall deposit the
6following portions of the revenue realized from the tax imposed
7upon individuals, trusts, and estates by subsections (a) and
8(b) of Section 201 of this Act during the preceding month,
9minus deposits into the Income Tax Refund Fund, into the
10Commitment to Human Services Fund:
11        (1) beginning February 1, 2015, and prior to February
12    1, 2025, 1/30; and
13        (2) beginning February 1, 2025, 1/26.
14    If the rate of tax imposed by subsection (a) and (b) of
15Section 201 is reduced pursuant to Section 201.5 of this Act,
16the Department shall not make the deposits required by this
17subsection (g) on or after the effective date of the reduction.
18(Source: P.A. 95-707, eff. 1-11-08; 95-744, eff. 7-18-08;
1996-45, eff. 7-15-09; 96-328, eff. 8-11-09; 96-959, eff.
207-1-10.)
 
21    Section 25. The Illinois Estate and Generation-Skipping
22Transfer Tax Act is amended by changing Section 2 as follows:
 
23    (35 ILCS 405/2)  (from Ch. 120, par. 405A-2)
24    Sec. 2. Definitions.

 

 

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1    "Federal estate tax" means the tax due to the United States
2with respect to a taxable transfer under Chapter 11 of the
3Internal Revenue Code.
4    "Federal generation-skipping transfer tax" means the tax
5due to the United States with respect to a taxable transfer
6under Chapter 13 of the Internal Revenue Code.
7    "Federal return" means the federal estate tax return with
8respect to the federal estate tax and means the federal
9generation-skipping transfer tax return with respect to the
10federal generation-skipping transfer tax.
11    "Federal transfer tax" means the federal estate tax or the
12federal generation-skipping transfer tax.
13    "Illinois estate tax" means the tax due to this State with
14respect to a taxable transfer.
15    "Illinois generation-skipping transfer tax" means the tax
16due to this State with respect to a taxable transfer that gives
17rise to a federal generation-skipping transfer tax.
18    "Illinois transfer tax" means the Illinois estate tax or
19the Illinois generation-skipping transfer tax.
20    "Internal Revenue Code" means, unless otherwise provided,
21the Internal Revenue Code of 1986, as amended from time to
22time.
23    "Non-resident trust" means a trust that is not a resident
24of this State for purposes of the Illinois Income Tax Act, as
25amended from time to time.
26    "Person" means and includes any individual, trust, estate,

 

 

SB2505 Enrolled- 72 -LRB096 16340 HLH 31604 b

1partnership, association, company or corporation.
2    "Qualified heir" means a qualified heir as defined in
3Section 2032A(e)(1) of the Internal Revenue Code.
4    "Resident trust" means a trust that is a resident of this
5State for purposes of the Illinois Income Tax Act, as amended
6from time to time.
7    "State" means any state, territory or possession of the
8United States and the District of Columbia.
9    "State tax credit" means:
10    (a) For persons dying on or after January 1, 2003 and
11through December 31, 2005, an amount equal to the full credit
12calculable under Section 2011 or Section 2604 of the Internal
13Revenue Code as the credit would have been computed and allowed
14under the Internal Revenue Code as in effect on December 31,
152001, without the reduction in the State Death Tax Credit as
16provided in Section 2011(b)(2) or the termination of the State
17Death Tax Credit as provided in Section 2011(f) as enacted by
18the Economic Growth and Tax Relief Reconciliation Act of 2001,
19but recognizing the increased applicable exclusion amount
20through December 31, 2005.
21    (b) For persons dying after December 31, 2005 and on or
22before December 31, 2009, and for persons dying after December
2331, 2010, an amount equal to the full credit calculable under
24Section 2011 or 2604 of the Internal Revenue Code as the credit
25would have been computed and allowed under the Internal Revenue
26Code as in effect on December 31, 2001, without the reduction

 

 

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1in the State Death Tax Credit as provided in Section 2011(b)(2)
2or the termination of the State Death Tax Credit as provided in
3Section 2011(f) as enacted by the Economic Growth and Tax
4Relief Reconciliation Act of 2001, but recognizing the
5exclusion amount of only $2,000,000, and with reduction to the
6adjusted taxable estate for any qualified terminable interest
7property election as defined in subsection (b-1) of this
8Section.
9    (b-1) The person required to file the Illinois return may
10elect on a timely filed Illinois return a marital deduction for
11qualified terminable interest property under Section
122056(b)(7) of the Internal Revenue Code for purposes of the
13Illinois estate tax that is separate and independent of any
14qualified terminable interest property election for federal
15estate tax purposes. For purposes of the Illinois estate tax,
16the inclusion of property in the gross estate of a surviving
17spouse is the same as under Section 2044 of the Internal
18Revenue Code.
19    In the case of any trust for which a State or federal
20qualified terminable interest property election is made, the
21trustee may not retain non-income producing assets for more
22than a reasonable amount of time without the consent of the
23surviving spouse.
24    (c) For persons dying after December 31, 2009, the credit
25for state tax allowable under Section 2011 or Section 2604 of
26the Internal Revenue Code.

 

 

SB2505 Enrolled- 74 -LRB096 16340 HLH 31604 b

1    "Taxable transfer" means an event that gives rise to a
2state tax credit, including any credit as a result of the
3imposition of an additional tax under Section 2032A(c) of the
4Internal Revenue Code.
5    "Transferee" means a transferee within the meaning of
6Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
7Code.
8    "Transferred property" means:
9        (1) With respect to a taxable transfer occurring at the
10    death of an individual, the deceased individual's gross
11    estate as defined in Section 2031 of the Internal Revenue
12    Code.
13        (2) With respect to a taxable transfer occurring as a
14    result of a taxable termination as defined in Section
15    2612(a) of the Internal Revenue Code, the taxable amount
16    determined under Section 2622(a) of the Internal Revenue
17    Code.
18        (3) With respect to a taxable transfer occurring as a
19    result of a taxable distribution as defined in Section
20    2612(b) of the Internal Revenue Code, the taxable amount
21    determined under Section 2621(a) of the Internal Revenue
22    Code.
23        (4) With respect to an event which causes the
24    imposition of an additional estate tax under Section
25    2032A(c) of the Internal Revenue Code, the qualified real
26    property that was disposed of or which ceased to be used

 

 

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1    for the qualified use, within the meaning of Section
2    2032A(c)(1) of the Internal Revenue Code.
3    "Trust" includes a trust as defined in Section 2652(b)(1)
4of the Internal Revenue Code.
5(Source: P.A. 96-789, eff. 9-8-09.)
 
6    Section 99. Effective date. This Act takes effect upon
7becoming law.