Full Text of HB3590 101st General Assembly
HB3590enr 101ST GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning revenue.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Income Tax Act is amended by | 5 | | changing Sections 303, 304, and 710 as follows:
| 6 | | (35 ILCS 5/303) (from Ch. 120, par. 3-303)
| 7 | | Sec. 303. (a) In general. Any item of capital gain or loss, | 8 | | and any
item of income from rents or royalties from real or | 9 | | tangible personal
property, interest, dividends, and patent or | 10 | | copyright royalties, and prizes
awarded under the Illinois | 11 | | Lottery Law, and, for taxable years ending on or after December | 12 | | 31, 2019, wagering and gambling winnings from Illinois sources | 13 | | as set forth in subsection (e), to the extent such item | 14 | | constitutes
nonbusiness income, together with any item of | 15 | | deduction directly allocable
thereto, shall be allocated by any | 16 | | person other than a resident as provided
in this Section.
| 17 | | (b) Capital gains and losses. | 18 | | (1) Real property. Capital gains and
losses from sales | 19 | | or exchanges of real property are allocable to this State
| 20 | | if the property is located in this State.
| 21 | | (2) Tangible personal property. Capital gains and | 22 | | losses from sales
or exchanges of tangible personal | 23 | | property are allocable to this State if,
at the time of |
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| 1 | | such sale or exchange:
| 2 | | (A) The property had its situs in this State; or
| 3 | | (B) The taxpayer had its commercial domicile in | 4 | | this State and was not
taxable in the state in which | 5 | | the property had its situs.
| 6 | | (3) Intangibles. Capital gains and losses from sales or | 7 | | exchanges of
intangible personal property are allocable to | 8 | | this State if the taxpayer
had its commercial domicile in | 9 | | this State at the time of such sale or
exchange.
| 10 | | (c) Rents and royalties. | 11 | | (1) Real property. Rents and royalties
from real | 12 | | property are allocable to this State if the property is | 13 | | located
in this State.
| 14 | | (2) Tangible personal property. Rents and royalties | 15 | | from tangible
personal property are allocable to this | 16 | | State:
| 17 | | (A) If and to the extent that the property is | 18 | | utilized in this State; or
| 19 | | (B) In their entirety if, at the time such rents or | 20 | | royalties were paid
or accrued, the taxpayer had its | 21 | | commercial domicile in this State and was
not organized | 22 | | under the laws of or taxable with respect to such rents | 23 | | or
royalties in the state in which the property was | 24 | | utilized.
The extent of utilization of tangible | 25 | | personal property in a state is
determined by | 26 | | multiplying the rents or royalties derived from such |
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| 1 | | property
by a fraction, the numerator of which is the | 2 | | number of days of physical
location of the property in | 3 | | the state during the rental or royalty period
in the | 4 | | taxable year and the denominator of which is the number | 5 | | of days of
physical location of the property everywhere | 6 | | during all rental or royalty
periods in the taxable | 7 | | year. If the physical location of the property
during | 8 | | the rental or royalty period is unknown or | 9 | | unascertainable by the
taxpayer, tangible personal | 10 | | property is utilized in the state in which the
property | 11 | | was located at the time the rental or royalty payer | 12 | | obtained
possession.
| 13 | | (d) Patent and copyright royalties.
| 14 | | (1) Allocation. Patent and copyright royalties are | 15 | | allocable to this
State:
| 16 | | (A) If and to the extent that the patent or | 17 | | copyright is utilized by the
payer in this State; or
| 18 | | (B) If and to the extent that the patent or | 19 | | copyright is utilized by the
payer in a state in which | 20 | | the taxpayer is not taxable with respect to such
| 21 | | royalties and, at the time such royalties were paid or | 22 | | accrued, the
taxpayer had its commercial domicile in | 23 | | this State.
| 24 | | (2) Utilization.
| 25 | | (A) A patent is utilized in a state to the extent | 26 | | that it is employed in
production, fabrication, |
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| 1 | | manufacturing or other processing in the state or
to | 2 | | the extent that a patented product is produced in the | 3 | | state. If the
basis of receipts from patent royalties | 4 | | does not permit allocation to
states or if the | 5 | | accounting procedures do not reflect states of
| 6 | | utilization, the patent is utilized in this State if | 7 | | the taxpayer has its
commercial domicile in this State.
| 8 | | (B) A copyright is utilized in a state to the | 9 | | extent that printing or
other publication originates | 10 | | in the state. If the basis of receipts from
copyright | 11 | | royalties does not permit allocation to states or if | 12 | | the
accounting procedures do not reflect states of | 13 | | utilization, the copyright
is utilized in this State if | 14 | | the taxpayer has its commercial domicile in
this State.
| 15 | | (e) Illinois lottery ; wagering and gambling winnings | 16 | | prizes . Prizes awarded under the Illinois Lottery Law are | 17 | | allocable to this State. Payments received in taxable years | 18 | | ending on or after December 31, 2013, from the assignment of a | 19 | | prize under Section 13.1 of the Illinois Lottery Law are | 20 | | allocable to this State. For taxable years ending on or after | 21 | | December 31, 2019, payments of winnings from pari-mutuel | 22 | | wagering conducted at a wagering facility licensed under the | 23 | | Illinois Horse Racing Act of 1975 and from gambling games | 24 | | conducted on a riverboat licensed under the Riverboat Gambling | 25 | | Act are allocable to this State.
| 26 | | (e-5) Unemployment benefits. Unemployment benefits paid by |
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| 1 | | the Illinois Department of Employment Security are allocable to | 2 | | this State. | 3 | | (f) Taxability in other state. For purposes of allocation | 4 | | of income
pursuant to this Section, a taxpayer is taxable in | 5 | | another state if:
| 6 | | (1) In that state he is subject to a net income tax, a | 7 | | franchise tax
measured by net income, a franchise tax for | 8 | | the privilege of doing
business, or a corporate stock tax; | 9 | | or
| 10 | | (2) That state has jurisdiction to subject the taxpayer | 11 | | to a net income
tax regardless of whether, in fact, the | 12 | | state does or does not.
| 13 | | (g) Cross references. | 14 | | (1) For allocation of interest and dividends by
persons | 15 | | other than residents, see Section 301(c)(2).
| 16 | | (2) For allocation of nonbusiness income by residents, | 17 | | see Section
301(a).
| 18 | | (Source: P.A. 97-709, eff. 7-1-12; 98-496, eff. 1-1-14.)
| 19 | | (35 ILCS 5/304) (from Ch. 120, par. 3-304)
| 20 | | Sec. 304. Business income of persons other than residents.
| 21 | | (a) In general. The business income of a person other than | 22 | | a
resident shall be allocated to this State if such person's | 23 | | business
income is derived solely from this State. If a person | 24 | | other than a
resident derives business income from this State | 25 | | and one or more other
states, then, for tax years ending on or |
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| 1 | | before December 30, 1998, and
except as otherwise provided by | 2 | | this Section, such
person's business income shall be | 3 | | apportioned to this State by
multiplying the income by a | 4 | | fraction, the numerator of which is the sum
of the property | 5 | | factor (if any), the payroll factor (if any) and 200% of the
| 6 | | sales factor (if any), and the denominator of which is 4 | 7 | | reduced by the
number of factors other than the sales factor | 8 | | which have a denominator
of zero and by an additional 2 if the | 9 | | sales factor has a denominator of zero.
For tax years ending on | 10 | | or after December 31, 1998, and except as otherwise
provided by | 11 | | this Section, persons other than
residents who derive business | 12 | | income from this State and one or more other
states shall | 13 | | compute their apportionment factor by weighting their | 14 | | property,
payroll, and sales factors as provided in
subsection | 15 | | (h) of this Section.
| 16 | | (1) Property factor.
| 17 | | (A) The property factor is a fraction, the numerator of | 18 | | which is the
average value of the person's real and | 19 | | tangible personal property owned
or rented and used in the | 20 | | trade or business in this State during the
taxable year and | 21 | | the denominator of which is the average value of all
the | 22 | | person's real and tangible personal property owned or | 23 | | rented and
used in the trade or business during the taxable | 24 | | year.
| 25 | | (B) Property owned by the person is valued at its | 26 | | original cost.
Property rented by the person is valued at 8 |
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| 1 | | times the net annual rental
rate. Net annual rental rate is | 2 | | the annual rental rate paid by the
person less any annual | 3 | | rental rate received by the person from
sub-rentals.
| 4 | | (C) The average value of property shall be determined | 5 | | by averaging
the values at the beginning and ending of the | 6 | | taxable year but the
Director may require the averaging of | 7 | | monthly values during the taxable
year if reasonably | 8 | | required to reflect properly the average value of the
| 9 | | person's property.
| 10 | | (2) Payroll factor.
| 11 | | (A) The payroll factor is a fraction, the numerator of | 12 | | which is the
total amount paid in this State during the | 13 | | taxable year by the person
for compensation, and the | 14 | | denominator of which is the total compensation
paid | 15 | | everywhere during the taxable year.
| 16 | | (B) Compensation is paid in this State if:
| 17 | | (i) The individual's service is performed entirely | 18 | | within this
State;
| 19 | | (ii) The individual's service is performed both | 20 | | within and without
this State, but the service | 21 | | performed without this State is incidental
to the | 22 | | individual's service performed within this State; or
| 23 | | (iii) Some of the service is performed within this | 24 | | State and either
the base of operations, or if there is | 25 | | no base of operations, the place
from which the service | 26 | | is directed or controlled is within this State,
or the |
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| 1 | | base of operations or the place from which the service | 2 | | is
directed or controlled is not in any state in which | 3 | | some part of the
service is performed, but the | 4 | | individual's residence is in this State.
| 5 | | (iv) Compensation paid to nonresident professional | 6 | | athletes. | 7 | | (a) General. The Illinois source income of a | 8 | | nonresident individual who is a member of a | 9 | | professional athletic team includes the portion of the | 10 | | individual's total compensation for services performed | 11 | | as a member of a professional athletic team during the | 12 | | taxable year which the number of duty days spent within | 13 | | this State performing services for the team in any | 14 | | manner during the taxable year bears to the total | 15 | | number of duty days spent both within and without this | 16 | | State during the taxable year. | 17 | | (b) Travel days. Travel days that do not involve | 18 | | either a game, practice, team meeting, or other similar | 19 | | team event are not considered duty days spent in this | 20 | | State. However, such travel days are considered in the | 21 | | total duty days spent both within and without this | 22 | | State. | 23 | | (c) Definitions. For purposes of this subpart | 24 | | (iv): | 25 | | (1) The term "professional athletic team" | 26 | | includes, but is not limited to, any professional |
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| 1 | | baseball, basketball, football, soccer, or hockey | 2 | | team. | 3 | | (2) The term "member of a professional | 4 | | athletic team" includes those employees who are | 5 | | active players, players on the disabled list, and | 6 | | any other persons required to travel and who travel | 7 | | with and perform services on behalf of a | 8 | | professional athletic team on a regular basis. | 9 | | This includes, but is not limited to, coaches, | 10 | | managers, and trainers. | 11 | | (3) Except as provided in items (C) and (D) of | 12 | | this subpart (3), the term "duty days" means all | 13 | | days during the taxable year from the beginning of | 14 | | the professional athletic team's official | 15 | | pre-season training period through the last game | 16 | | in which the team competes or is scheduled to | 17 | | compete. Duty days shall be counted for the year in | 18 | | which they occur, including where a team's | 19 | | official pre-season training period through the | 20 | | last game in which the team competes or is | 21 | | scheduled to compete, occurs during more than one | 22 | | tax year. | 23 | | (A) Duty days shall also include days on | 24 | | which a member of a professional athletic team | 25 | | performs service for a team on a date that does | 26 | | not fall within the foregoing period (e.g., |
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| 1 | | participation in instructional leagues, the | 2 | | "All Star Game", or promotional "caravans"). | 3 | | Performing a service for a professional | 4 | | athletic team includes conducting training and | 5 | | rehabilitation activities, when such | 6 | | activities are conducted at team facilities. | 7 | | (B) Also included in duty days are game | 8 | | days, practice days, days spent at team | 9 | | meetings, promotional caravans, preseason | 10 | | training camps, and days served with the team | 11 | | through all post-season games in which the team | 12 | | competes or is scheduled to compete. | 13 | | (C) Duty days for any person who joins a | 14 | | team during the period from the beginning of | 15 | | the professional athletic team's official | 16 | | pre-season training period through the last | 17 | | game in which the team competes, or is | 18 | | scheduled to compete, shall begin on the day | 19 | | that person joins the team. Conversely, duty | 20 | | days for any person who leaves a team during | 21 | | this period shall end on the day that person | 22 | | leaves the team. Where a person switches teams | 23 | | during a taxable year, a separate duty-day | 24 | | calculation shall be made for the period the | 25 | | person was with each team. | 26 | | (D) Days for which a member of a |
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| 1 | | professional athletic team is not compensated | 2 | | and is not performing services for the team in | 3 | | any manner, including days when such member of | 4 | | a professional athletic team has been | 5 | | suspended without pay and prohibited from | 6 | | performing any services for the team, shall not | 7 | | be treated as duty days. | 8 | | (E) Days for which a member of a | 9 | | professional athletic team is on the disabled | 10 | | list and does not conduct rehabilitation | 11 | | activities at facilities of the team, and is | 12 | | not otherwise performing services for the team | 13 | | in Illinois, shall not be considered duty days | 14 | | spent in this State. All days on the disabled | 15 | | list, however, are considered to be included in | 16 | | total duty days spent both within and without | 17 | | this State. | 18 | | (4) The term "total compensation for services | 19 | | performed as a member of a professional athletic | 20 | | team" means the total compensation received during | 21 | | the taxable year for services performed: | 22 | | (A) from the beginning of the official | 23 | | pre-season training period through the last | 24 | | game in which the team competes or is scheduled | 25 | | to compete during that taxable year; and | 26 | | (B) during the taxable year on a date which |
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| 1 | | does not fall within the foregoing period | 2 | | (e.g., participation in instructional leagues, | 3 | | the "All Star Game", or promotional caravans). | 4 | | This compensation shall include, but is not | 5 | | limited to, salaries, wages, bonuses as described | 6 | | in this subpart, and any other type of compensation | 7 | | paid during the taxable year to a member of a | 8 | | professional athletic team for services performed | 9 | | in that year. This compensation does not include | 10 | | strike benefits, severance pay, termination pay, | 11 | | contract or option year buy-out payments, | 12 | | expansion or relocation payments, or any other | 13 | | payments not related to services performed for the | 14 | | team. | 15 | | For purposes of this subparagraph, "bonuses" | 16 | | included in "total compensation for services | 17 | | performed as a member of a professional athletic | 18 | | team" subject to the allocation described in | 19 | | Section 302(c)(1) are: bonuses earned as a result | 20 | | of play (i.e., performance bonuses) during the | 21 | | season, including bonuses paid for championship, | 22 | | playoff or "bowl" games played by a team, or for | 23 | | selection to all-star league or other honorary | 24 | | positions; and bonuses paid for signing a | 25 | | contract, unless the payment of the signing bonus | 26 | | is not conditional upon the signee playing any |
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| 1 | | games for the team or performing any subsequent | 2 | | services for the team or even making the team, the | 3 | | signing bonus is payable separately from the | 4 | | salary and any other compensation, and the signing | 5 | | bonus is nonrefundable.
| 6 | | (3) Sales factor.
| 7 | | (A) The sales factor is a fraction, the numerator of | 8 | | which is the
total sales of the person in this State during | 9 | | the taxable year, and the
denominator of which is the total | 10 | | sales of the person everywhere during
the taxable year.
| 11 | | (B) Sales of tangible personal property are in this | 12 | | State if:
| 13 | | (i) The property is delivered or shipped to a | 14 | | purchaser, other than
the United States government, | 15 | | within this State regardless of the f. o.
b. point or | 16 | | other conditions of the sale; or
| 17 | | (ii) The property is shipped from an office, store, | 18 | | warehouse,
factory or other place of storage in this | 19 | | State and either the purchaser
is the United States | 20 | | government or the person is not taxable in the
state of | 21 | | the purchaser; provided, however, that premises owned | 22 | | or leased
by a person who has independently contracted | 23 | | with the seller for the printing
of newspapers, | 24 | | periodicals or books shall not be deemed to be an | 25 | | office,
store, warehouse, factory or other place of | 26 | | storage for purposes of this
Section.
Sales of tangible |
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| 1 | | personal property are not in this State if the
seller | 2 | | and purchaser would be members of the same unitary | 3 | | business group
but for the fact that either the seller | 4 | | or purchaser is a person with 80%
or more of total | 5 | | business activity outside of the United States and the
| 6 | | property is purchased for resale.
| 7 | | (B-1) Patents, copyrights, trademarks, and similar | 8 | | items of intangible
personal property.
| 9 | | (i) Gross receipts from the licensing, sale, or | 10 | | other disposition of a
patent, copyright, trademark, | 11 | | or similar item of intangible personal property, other | 12 | | than gross receipts governed by paragraph (B-7) of this | 13 | | item (3),
are in this State to the extent the item is | 14 | | utilized in this State during the
year the gross | 15 | | receipts are included in gross income.
| 16 | | (ii) Place of utilization.
| 17 | | (I) A patent is utilized in a state to the | 18 | | extent that it is employed
in production, | 19 | | fabrication, manufacturing, or other processing in | 20 | | the state or
to the extent that a patented product | 21 | | is produced in the state. If a patent is
utilized | 22 | | in
more than one state, the extent to which it is | 23 | | utilized in any one state shall
be a fraction equal | 24 | | to the gross receipts of the licensee or purchaser | 25 | | from
sales or leases of items produced, | 26 | | fabricated, manufactured, or processed
within that |
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| 1 | | state using the patent and of patented items | 2 | | produced within that
state, divided by the total of | 3 | | such gross receipts for all states in which the
| 4 | | patent is utilized.
| 5 | | (II) A copyright is utilized in a state to the | 6 | | extent that printing or
other publication | 7 | | originates in the state. If a copyright is utilized | 8 | | in more
than one state, the extent to which it is | 9 | | utilized in any one state shall be a
fraction equal | 10 | | to the gross receipts from sales or licenses of | 11 | | materials
printed or published in that state | 12 | | divided by the total of such gross receipts
for all | 13 | | states in which the copyright is utilized.
| 14 | | (III) Trademarks and other items of intangible | 15 | | personal property
governed by this paragraph (B-1) | 16 | | are utilized in the state in which the
commercial | 17 | | domicile of the licensee or purchaser is located.
| 18 | | (iii) If the state of utilization of an item of | 19 | | property governed by
this paragraph (B-1) cannot be | 20 | | determined from the taxpayer's books and
records or | 21 | | from the books and records of any person related to the | 22 | | taxpayer
within the meaning of Section 267(b) of the | 23 | | Internal Revenue Code, 26 U.S.C.
267, the gross
| 24 | | receipts attributable to that item shall be excluded | 25 | | from both the numerator
and the denominator of the | 26 | | sales factor.
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| 1 | | (B-2) Gross receipts from the license, sale, or other | 2 | | disposition of
patents, copyrights, trademarks, and | 3 | | similar items of intangible personal
property, other than | 4 | | gross receipts governed by paragraph (B-7) of this item | 5 | | (3), may be included in the numerator or denominator of the | 6 | | sales factor
only if gross receipts from licenses, sales, | 7 | | or other disposition of such items
comprise more than 50% | 8 | | of the taxpayer's total gross receipts included in gross
| 9 | | income during the tax year and during each of the 2 | 10 | | immediately preceding tax
years; provided that, when a | 11 | | taxpayer is a member of a unitary business group,
such | 12 | | determination shall be made on the basis of the gross | 13 | | receipts of the
entire unitary business group.
| 14 | | (B-5) For taxable years ending on or after December 31, | 15 | | 2008, except as provided in subsections (ii) through (vii), | 16 | | receipts from the sale of telecommunications service or | 17 | | mobile telecommunications service are in this State if the | 18 | | customer's service address is in this State. | 19 | | (i) For purposes of this subparagraph (B-5), the | 20 | | following terms have the following meanings: | 21 | | "Ancillary services" means services that are | 22 | | associated with or incidental to the provision of | 23 | | "telecommunications services", including but not | 24 | | limited to "detailed telecommunications billing", | 25 | | "directory assistance", "vertical service", and "voice | 26 | | mail services". |
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| 1 | | "Air-to-Ground Radiotelephone service" means a | 2 | | radio service, as that term is defined in 47 CFR 22.99, | 3 | | in which common carriers are authorized to offer and | 4 | | provide radio telecommunications service for hire to | 5 | | subscribers in aircraft. | 6 | | "Call-by-call Basis" means any method of charging | 7 | | for telecommunications services where the price is | 8 | | measured by individual calls. | 9 | | "Communications Channel" means a physical or | 10 | | virtual path of communications over which signals are | 11 | | transmitted between or among customer channel | 12 | | termination points. | 13 | | "Conference bridging service" means an "ancillary | 14 | | service" that links two or more participants of an | 15 | | audio or video conference call and may include the | 16 | | provision of a telephone number. "Conference bridging | 17 | | service" does not include the "telecommunications | 18 | | services" used to reach the conference bridge. | 19 | | "Customer Channel Termination Point" means the | 20 | | location where the customer either inputs or receives | 21 | | the communications. | 22 | | "Detailed telecommunications billing service" | 23 | | means an "ancillary service" of separately stating | 24 | | information pertaining to individual calls on a | 25 | | customer's billing statement. | 26 | | "Directory assistance" means an "ancillary |
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| 1 | | service" of providing telephone number information, | 2 | | and/or address information. | 3 | | "Home service provider" means the facilities based | 4 | | carrier or reseller with which the customer contracts | 5 | | for the provision of mobile telecommunications | 6 | | services. | 7 | | "Mobile telecommunications service" means | 8 | | commercial mobile radio service, as defined in Section | 9 | | 20.3 of Title 47 of the Code of Federal Regulations as | 10 | | in effect on June 1, 1999. | 11 | | "Place of primary use" means the street address | 12 | | representative of where the customer's use of the | 13 | | telecommunications service primarily occurs, which | 14 | | must be the residential street address or the primary | 15 | | business street address of the customer. In the case of | 16 | | mobile telecommunications services, "place of primary | 17 | | use" must be within the licensed service area of the | 18 | | home service provider. | 19 | | "Post-paid telecommunication service" means the | 20 | | telecommunications service obtained by making a | 21 | | payment on a call-by-call basis either through the use | 22 | | of a credit card or payment mechanism such as a bank | 23 | | card, travel card, credit card, or debit card, or by | 24 | | charge made to a telephone number which is not | 25 | | associated with the origination or termination of the | 26 | | telecommunications service. A post-paid calling |
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| 1 | | service includes telecommunications service, except a | 2 | | prepaid wireless calling service, that would be a | 3 | | prepaid calling service except it is not exclusively a | 4 | | telecommunication service. | 5 | | "Prepaid telecommunication service" means the | 6 | | right to access exclusively telecommunications | 7 | | services, which must be paid for in advance and which | 8 | | enables the origination of calls using an access number | 9 | | or authorization code, whether manually or | 10 | | electronically dialed, and that is sold in | 11 | | predetermined units or dollars of which the number | 12 | | declines with use in a known amount. | 13 | | "Prepaid Mobile telecommunication service" means a | 14 | | telecommunications service that provides the right to | 15 | | utilize mobile wireless service as well as other | 16 | | non-telecommunication services, including but not | 17 | | limited to ancillary services, which must be paid for | 18 | | in advance that is sold in predetermined units or | 19 | | dollars of which the number declines with use in a | 20 | | known amount. | 21 | | "Private communication service" means a | 22 | | telecommunication service that entitles the customer | 23 | | to exclusive or priority use of a communications | 24 | | channel or group of channels between or among | 25 | | termination points, regardless of the manner in which | 26 | | such channel or channels are connected, and includes |
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| 1 | | switching capacity, extension lines, stations, and any | 2 | | other associated services that are provided in | 3 | | connection with the use of such channel or channels. | 4 | | "Service address" means: | 5 | | (a) The location of the telecommunications | 6 | | equipment to which a customer's call is charged and | 7 | | from which the call originates or terminates, | 8 | | regardless of where the call is billed or paid; | 9 | | (b) If the location in line (a) is not known, | 10 | | service address means the origination point of the | 11 | | signal of the telecommunications services first | 12 | | identified by either the seller's | 13 | | telecommunications system or in information | 14 | | received by the seller from its service provider | 15 | | where the system used to transport such signals is | 16 | | not that of the seller; and | 17 | | (c) If the locations in line (a) and line (b) | 18 | | are not known, the service address means the | 19 | | location of the customer's place of primary use. | 20 | | "Telecommunications service" means the electronic | 21 | | transmission, conveyance, or routing of voice, data, | 22 | | audio, video, or any other information or signals to a | 23 | | point, or between or among points. The term | 24 | | "telecommunications service" includes such | 25 | | transmission, conveyance, or routing in which computer | 26 | | processing applications are used to act on the form, |
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| 1 | | code or protocol of the content for purposes of | 2 | | transmission, conveyance or routing without regard to | 3 | | whether such service is referred to as voice over | 4 | | Internet protocol services or is classified by the | 5 | | Federal Communications Commission as enhanced or value | 6 | | added. "Telecommunications service" does not include: | 7 | | (a) Data processing and information services | 8 | | that allow data to be generated, acquired, stored, | 9 | | processed, or retrieved and delivered by an | 10 | | electronic transmission to a purchaser when such | 11 | | purchaser's primary purpose for the underlying | 12 | | transaction is the processed data or information; | 13 | | (b) Installation or maintenance of wiring or | 14 | | equipment on a customer's premises; | 15 | | (c) Tangible personal property; | 16 | | (d) Advertising, including but not limited to | 17 | | directory advertising; | 18 | | (e) Billing and collection services provided | 19 | | to third parties; | 20 | | (f) Internet access service; | 21 | | (g) Radio and television audio and video | 22 | | programming services, regardless of the medium, | 23 | | including the furnishing of transmission, | 24 | | conveyance and routing of such services by the | 25 | | programming service provider. Radio and television | 26 | | audio and video programming services shall include |
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| 1 | | but not be limited to cable service as defined in | 2 | | 47 USC 522(6) and audio and video programming | 3 | | services delivered by commercial mobile radio | 4 | | service providers, as defined in 47 CFR 20.3; | 5 | | (h) "Ancillary services"; or | 6 | | (i) Digital products "delivered | 7 | | electronically", including but not limited to | 8 | | software, music, video, reading materials or ring | 9 | | tones. | 10 | | "Vertical service" means an "ancillary service" | 11 | | that is offered in connection with one or more | 12 | | "telecommunications services", which offers advanced | 13 | | calling features that allow customers to identify | 14 | | callers and to manage multiple calls and call | 15 | | connections, including "conference bridging services". | 16 | | "Voice mail service" means an "ancillary service" | 17 | | that enables the customer to store, send or receive | 18 | | recorded messages. "Voice mail service" does not | 19 | | include any "vertical services" that the customer may | 20 | | be required to have in order to utilize the "voice mail | 21 | | service". | 22 | | (ii) Receipts from the sale of telecommunications | 23 | | service sold on an individual call-by-call basis are in | 24 | | this State if either of the following applies: | 25 | | (a) The call both originates and terminates in | 26 | | this State. |
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| 1 | | (b) The call either originates or terminates | 2 | | in this State and the service address is located in | 3 | | this State. | 4 | | (iii) Receipts from the sale of postpaid | 5 | | telecommunications service at retail are in this State | 6 | | if the origination point of the telecommunication | 7 | | signal, as first identified by the service provider's | 8 | | telecommunication system or as identified by | 9 | | information received by the seller from its service | 10 | | provider if the system used to transport | 11 | | telecommunication signals is not the seller's, is | 12 | | located in this State. | 13 | | (iv) Receipts from the sale of prepaid | 14 | | telecommunications service or prepaid mobile | 15 | | telecommunications service at retail are in this State | 16 | | if the purchaser obtains the prepaid card or similar | 17 | | means of conveyance at a location in this State. | 18 | | Receipts from recharging a prepaid telecommunications | 19 | | service or mobile telecommunications service is in | 20 | | this State if the purchaser's billing information | 21 | | indicates a location in this State. | 22 | | (v) Receipts from the sale of private | 23 | | communication services are in this State as follows: | 24 | | (a) 100% of receipts from charges imposed at | 25 | | each channel termination point in this State. | 26 | | (b) 100% of receipts from charges for the total |
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| 1 | | channel mileage between each channel termination | 2 | | point in this State. | 3 | | (c) 50% of the total receipts from charges for | 4 | | service segments when those segments are between 2 | 5 | | customer channel termination points, 1 of which is | 6 | | located in this State and the other is located | 7 | | outside of this State, which segments are | 8 | | separately charged. | 9 | | (d) The receipts from charges for service | 10 | | segments with a channel termination point located | 11 | | in this State and in two or more other states, and | 12 | | which segments are not separately billed, are in | 13 | | this State based on a percentage determined by | 14 | | dividing the number of customer channel | 15 | | termination points in this State by the total | 16 | | number of customer channel termination points. | 17 | | (vi) Receipts from charges for ancillary services | 18 | | for telecommunications service sold to customers at | 19 | | retail are in this State if the customer's primary | 20 | | place of use of telecommunications services associated | 21 | | with those ancillary services is in this State. If the | 22 | | seller of those ancillary services cannot determine | 23 | | where the associated telecommunications are located, | 24 | | then the ancillary services shall be based on the | 25 | | location of the purchaser. | 26 | | (vii) Receipts to access a carrier's network or |
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| 1 | | from the sale of telecommunication services or | 2 | | ancillary services for resale are in this State as | 3 | | follows: | 4 | | (a) 100% of the receipts from access fees | 5 | | attributable to intrastate telecommunications | 6 | | service that both originates and terminates in | 7 | | this State. | 8 | | (b) 50% of the receipts from access fees | 9 | | attributable to interstate telecommunications | 10 | | service if the interstate call either originates | 11 | | or terminates in this State. | 12 | | (c) 100% of the receipts from interstate end | 13 | | user access line charges, if the customer's | 14 | | service address is in this State. As used in this | 15 | | subdivision, "interstate end user access line | 16 | | charges" includes, but is not limited to, the | 17 | | surcharge approved by the federal communications | 18 | | commission and levied pursuant to 47 CFR 69. | 19 | | (d) Gross receipts from sales of | 20 | | telecommunication services or from ancillary | 21 | | services for telecommunications services sold to | 22 | | other telecommunication service providers for | 23 | | resale shall be sourced to this State using the | 24 | | apportionment concepts used for non-resale | 25 | | receipts of telecommunications services if the | 26 | | information is readily available to make that |
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| 1 | | determination. If the information is not readily | 2 | | available, then the taxpayer may use any other | 3 | | reasonable and consistent method. | 4 | | (B-7) For taxable years ending on or after December 31, | 5 | | 2008, receipts from the sale of broadcasting services are | 6 | | in this State if the broadcasting services are received in | 7 | | this State. For purposes of this paragraph (B-7), the | 8 | | following terms have the following meanings: | 9 | | "Advertising revenue" means consideration received | 10 | | by the taxpayer in exchange for broadcasting services | 11 | | or allowing the broadcasting of commercials or | 12 | | announcements in connection with the broadcasting of | 13 | | film or radio programming, from sponsorships of the | 14 | | programming, or from product placements in the | 15 | | programming. | 16 | | "Audience factor" means the ratio that the | 17 | | audience or subscribers located in this State of a | 18 | | station, a network, or a cable system bears to the | 19 | | total audience or total subscribers for that station, | 20 | | network, or cable system. The audience factor for film | 21 | | or radio programming shall be determined by reference | 22 | | to the books and records of the taxpayer or by | 23 | | reference to published rating statistics provided the | 24 | | method used by the taxpayer is consistently used from | 25 | | year to year for this purpose and fairly represents the | 26 | | taxpayer's activity in this State. |
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| 1 | | "Broadcast" or "broadcasting" or "broadcasting | 2 | | services" means the transmission or provision of film | 3 | | or radio programming, whether through the public | 4 | | airwaves, by cable, by direct or indirect satellite | 5 | | transmission, or by any other means of communication, | 6 | | either through a station, a network, or a cable system. | 7 | | "Film" or "film programming" means the broadcast | 8 | | on television of any and all performances, events, or | 9 | | productions, including but not limited to news, | 10 | | sporting events, plays, stories, or other literary, | 11 | | commercial, educational, or artistic works, either | 12 | | live or through the use of video tape, disc, or any | 13 | | other type of format or medium. Each episode of a | 14 | | series of films produced for television shall | 15 | | constitute separate "film" notwithstanding that the | 16 | | series relates to the same principal subject and is | 17 | | produced during one or more tax periods. | 18 | | "Radio" or "radio programming" means the broadcast | 19 | | on radio of any and all performances, events, or | 20 | | productions, including but not limited to news, | 21 | | sporting events, plays, stories, or other literary, | 22 | | commercial, educational, or artistic works, either | 23 | | live or through the use of an audio tape, disc, or any | 24 | | other format or medium. Each episode in a series of | 25 | | radio programming produced for radio broadcast shall | 26 | | constitute a separate "radio programming" |
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| 1 | | notwithstanding that the series relates to the same | 2 | | principal subject and is produced during one or more | 3 | | tax periods. | 4 | | (i) In the case of advertising revenue from | 5 | | broadcasting, the customer is the advertiser and | 6 | | the service is received in this State if the | 7 | | commercial domicile of the advertiser is in this | 8 | | State. | 9 | | (ii) In the case where film or radio | 10 | | programming is broadcast by a station, a network, | 11 | | or a cable system for a fee or other remuneration | 12 | | received from the recipient of the broadcast, the | 13 | | portion of the service that is received in this | 14 | | State is measured by the portion of the recipients | 15 | | of the broadcast located in this State. | 16 | | Accordingly, the fee or other remuneration for | 17 | | such service that is included in the Illinois | 18 | | numerator of the sales factor is the total of those | 19 | | fees or other remuneration received from | 20 | | recipients in Illinois. For purposes of this | 21 | | paragraph, a taxpayer may determine the location | 22 | | of the recipients of its broadcast using the | 23 | | address of the recipient shown in its contracts | 24 | | with the recipient or using the billing address of | 25 | | the recipient in the taxpayer's records. | 26 | | (iii) In the case where film or radio |
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| 1 | | programming is broadcast by a station, a network, | 2 | | or a cable system for a fee or other remuneration | 3 | | from the person providing the programming, the | 4 | | portion of the broadcast service that is received | 5 | | by such station, network, or cable system in this | 6 | | State is measured by the portion of recipients of | 7 | | the broadcast located in this State. Accordingly, | 8 | | the amount of revenue related to such an | 9 | | arrangement that is included in the Illinois | 10 | | numerator of the sales factor is the total fee or | 11 | | other total remuneration from the person providing | 12 | | the programming related to that broadcast | 13 | | multiplied by the Illinois audience factor for | 14 | | that broadcast. | 15 | | (iv) In the case where film or radio | 16 | | programming is provided by a taxpayer that is a | 17 | | network or station to a customer for broadcast in | 18 | | exchange for a fee or other remuneration from that | 19 | | customer the broadcasting service is received at | 20 | | the location of the office of the customer from | 21 | | which the services were ordered in the regular | 22 | | course of the customer's trade or business. | 23 | | Accordingly, in such a case the revenue derived by | 24 | | the taxpayer that is included in the taxpayer's | 25 | | Illinois numerator of the sales factor is the | 26 | | revenue from such customers who receive the |
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| 1 | | broadcasting service in Illinois. | 2 | | (v) In the case where film or radio programming | 3 | | is provided by a taxpayer that is not a network or | 4 | | station to another person for broadcasting in | 5 | | exchange for a fee or other remuneration from that | 6 | | person, the broadcasting service is received at | 7 | | the location of the office of the customer from | 8 | | which the services were ordered in the regular | 9 | | course of the customer's trade or business. | 10 | | Accordingly, in such a case the revenue derived by | 11 | | the taxpayer that is included in the taxpayer's | 12 | | Illinois numerator of the sales factor is the | 13 | | revenue from such customers who receive the | 14 | | broadcasting service in Illinois. | 15 | | (B-8) Gross receipts from winnings under the Illinois | 16 | | Lottery Law from the assignment of a prize under Section | 17 | | 13.1 of the Illinois Lottery Law are received in this | 18 | | State. This paragraph (B-8) applies only to taxable years | 19 | | ending on or after December 31, 2013. | 20 | | (B-9) Gross receipts from winnings from pari-mutuel | 21 | | wagering conducted at a wagering facility licensed under | 22 | | the Illinois Horse Racing Act of 1975 or from winnings from | 23 | | gambling games conducted on a riverboat licensed under the | 24 | | Riverboat Gambling Act are in this State. This paragraph | 25 | | (B-9) applies only to taxable years ending on or after | 26 | | December 31, 2019. |
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| 1 | | (C) For taxable years ending before December 31, 2008, | 2 | | sales, other than sales governed by paragraphs (B), (B-1), | 3 | | and (B-2), and (B-8) are in
this State if:
| 4 | | (i) The income-producing activity is performed in | 5 | | this State; or
| 6 | | (ii) The income-producing activity is performed | 7 | | both within and
without this State and a greater | 8 | | proportion of the income-producing
activity is | 9 | | performed within this State than without this State, | 10 | | based
on performance costs.
| 11 | | (C-5) For taxable years ending on or after December 31, | 12 | | 2008, sales, other than sales governed by paragraphs (B), | 13 | | (B-1), (B-2), (B-5), and (B-7), (B-8), and (B-9), are in | 14 | | this State if any of the following criteria are met: | 15 | | (i) Sales from the sale or lease of real property | 16 | | are in this State if the property is located in this | 17 | | State. | 18 | | (ii) Sales from the lease or rental of tangible | 19 | | personal property are in this State if the property is | 20 | | located in this State during the rental period. Sales | 21 | | from the lease or rental of tangible personal property | 22 | | that is characteristically moving property, including, | 23 | | but not limited to, motor vehicles, rolling stock, | 24 | | aircraft, vessels, or mobile equipment are in this | 25 | | State to the extent that the property is used in this | 26 | | State. |
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| 1 | | (iii) In the case of interest, net gains (but not | 2 | | less than zero) and other items of income from | 3 | | intangible personal property, the sale is in this State | 4 | | if: | 5 | | (a) in the case of a taxpayer who is a dealer | 6 | | in the item of intangible personal property within | 7 | | the meaning of Section 475 of the Internal Revenue | 8 | | Code, the income or gain is received from a | 9 | | customer in this State. For purposes of this | 10 | | subparagraph, a customer is in this State if the | 11 | | customer is an individual, trust or estate who is a | 12 | | resident of this State and, for all other | 13 | | customers, if the customer's commercial domicile | 14 | | is in this State. Unless the dealer has actual | 15 | | knowledge of the residence or commercial domicile | 16 | | of a customer during a taxable year, the customer | 17 | | shall be deemed to be a customer in this State if | 18 | | the billing address of the customer, as shown in | 19 | | the records of the dealer, is in this State; or | 20 | | (b) in all other cases, if the | 21 | | income-producing activity of the taxpayer is | 22 | | performed in this State or, if the | 23 | | income-producing activity of the taxpayer is | 24 | | performed both within and without this State, if a | 25 | | greater proportion of the income-producing | 26 | | activity of the taxpayer is performed within this |
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| 1 | | State than in any other state, based on performance | 2 | | costs. | 3 | | (iv) Sales of services are in this State if the | 4 | | services are received in this State. For the purposes | 5 | | of this section, gross receipts from the performance of | 6 | | services provided to a corporation, partnership, or | 7 | | trust may only be attributed to a state where that | 8 | | corporation, partnership, or trust has a fixed place of | 9 | | business. If the state where the services are received | 10 | | is not readily determinable or is a state where the | 11 | | corporation, partnership, or trust receiving the | 12 | | service does not have a fixed place of business, the | 13 | | services shall be deemed to be received at the location | 14 | | of the office of the customer from which the services | 15 | | were ordered in the regular course of the customer's | 16 | | trade or business. If the ordering office cannot be | 17 | | determined, the services shall be deemed to be received | 18 | | at the office of the customer to which the services are | 19 | | billed. If the taxpayer is not taxable in the state in | 20 | | which the services are received, the sale must be | 21 | | excluded from both the numerator and the denominator of | 22 | | the sales factor. The Department shall adopt rules | 23 | | prescribing where specific types of service are | 24 | | received, including, but not limited to, publishing, | 25 | | and utility service.
| 26 | | (D) For taxable years ending on or after December 31, |
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| 1 | | 1995, the following
items of income shall not be included | 2 | | in the numerator or denominator of the
sales factor: | 3 | | dividends; amounts included under Section 78 of the | 4 | | Internal
Revenue Code; and Subpart F income as defined in | 5 | | Section 952 of the Internal
Revenue Code.
No inference | 6 | | shall be drawn from the enactment of this paragraph (D) in
| 7 | | construing this Section for taxable years ending before | 8 | | December 31, 1995.
| 9 | | (E) Paragraphs (B-1) and (B-2) shall apply to tax years | 10 | | ending on or
after December 31, 1999, provided that a | 11 | | taxpayer may elect to apply the
provisions of these | 12 | | paragraphs to prior tax years. Such election shall be made
| 13 | | in the form and manner prescribed by the Department, shall | 14 | | be irrevocable, and
shall apply to all tax years; provided | 15 | | that, if a taxpayer's Illinois income
tax liability for any | 16 | | tax year, as assessed under Section 903 prior to January
1, | 17 | | 1999, was computed in a manner contrary to the provisions | 18 | | of paragraphs
(B-1) or (B-2), no refund shall be payable to | 19 | | the taxpayer for that tax year to
the extent such refund is | 20 | | the result of applying the provisions of paragraph
(B-1) or | 21 | | (B-2) retroactively. In the case of a unitary business | 22 | | group, such
election shall apply to all members of such | 23 | | group for every tax year such group
is in existence, but | 24 | | shall not apply to any taxpayer for any period during
which | 25 | | that taxpayer is not a member of such group.
| 26 | | (b) Insurance companies.
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| 1 | | (1) In general. Except as otherwise
provided by | 2 | | paragraph (2), business income of an insurance company for | 3 | | a
taxable year shall be apportioned to this State by | 4 | | multiplying such
income by a fraction, the numerator of | 5 | | which is the direct premiums
written for insurance upon | 6 | | property or risk in this State, and the
denominator of | 7 | | which is the direct premiums written for insurance upon
| 8 | | property or risk everywhere. For purposes of this | 9 | | subsection, the term
"direct premiums written" means the | 10 | | total amount of direct premiums
written, assessments and | 11 | | annuity considerations as reported for the
taxable year on | 12 | | the annual statement filed by the company with the
Illinois | 13 | | Director of Insurance in the form approved by the National
| 14 | | Convention of Insurance Commissioners
or such other form as | 15 | | may be
prescribed in lieu thereof.
| 16 | | (2) Reinsurance. If the principal source of premiums | 17 | | written by an
insurance company consists of premiums for | 18 | | reinsurance accepted by it,
the business income of such | 19 | | company shall be apportioned to this State
by multiplying | 20 | | such income by a fraction, the numerator of which is the
| 21 | | sum of (i) direct premiums written for insurance upon | 22 | | property or risk
in this State, plus (ii) premiums written | 23 | | for reinsurance accepted in
respect of property or risk in | 24 | | this State, and the denominator of which
is the sum of | 25 | | (iii) direct premiums written for insurance upon property
| 26 | | or risk everywhere, plus (iv) premiums written for |
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| 1 | | reinsurance accepted
in respect of property or risk | 2 | | everywhere. For purposes of this
paragraph, premiums | 3 | | written for reinsurance accepted in respect of
property or | 4 | | risk in this State, whether or not otherwise determinable,
| 5 | | may, at the election of the company, be determined on the | 6 | | basis of the
proportion which premiums written for | 7 | | reinsurance accepted from
companies commercially domiciled | 8 | | in Illinois bears to premiums written
for reinsurance | 9 | | accepted from all sources, or, alternatively, in the
| 10 | | proportion which the sum of the direct premiums written for | 11 | | insurance
upon property or risk in this State by each | 12 | | ceding company from which
reinsurance is accepted bears to | 13 | | the sum of the total direct premiums
written by each such | 14 | | ceding company for the taxable year. The election made by a | 15 | | company under this paragraph for its first taxable year | 16 | | ending on or after December 31, 2011, shall be binding for | 17 | | that company for that taxable year and for all subsequent | 18 | | taxable years, and may be altered only with the written | 19 | | permission of the Department, which shall not be | 20 | | unreasonably withheld.
| 21 | | (c) Financial organizations.
| 22 | | (1) In general. For taxable years ending before | 23 | | December 31, 2008, business income of a financial
| 24 | | organization shall be apportioned to this State by | 25 | | multiplying such
income by a fraction, the numerator of | 26 | | which is its business income from
sources within this |
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| 1 | | State, and the denominator of which is its business
income | 2 | | from all sources. For the purposes of this subsection, the
| 3 | | business income of a financial organization from sources | 4 | | within this
State is the sum of the amounts referred to in | 5 | | subparagraphs (A) through
(E) following, but excluding the | 6 | | adjusted income of an international banking
facility as | 7 | | determined in paragraph (2):
| 8 | | (A) Fees, commissions or other compensation for | 9 | | financial services
rendered within this State;
| 10 | | (B) Gross profits from trading in stocks, bonds or | 11 | | other securities
managed within this State;
| 12 | | (C) Dividends, and interest from Illinois | 13 | | customers, which are received
within this State;
| 14 | | (D) Interest charged to customers at places of | 15 | | business maintained
within this State for carrying | 16 | | debit balances of margin accounts,
without deduction | 17 | | of any costs incurred in carrying such accounts; and
| 18 | | (E) Any other gross income resulting from the | 19 | | operation as a
financial organization within this | 20 | | State. In computing the amounts
referred to in | 21 | | paragraphs (A) through (E) of this subsection, any | 22 | | amount
received by a member of an affiliated group | 23 | | (determined under Section
1504(a) of the Internal | 24 | | Revenue Code but without reference to whether
any such | 25 | | corporation is an "includible corporation" under | 26 | | Section
1504(b) of the Internal Revenue Code) from |
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| 1 | | another member of such group
shall be included only to | 2 | | the extent such amount exceeds expenses of the
| 3 | | recipient directly related thereto.
| 4 | | (2) International Banking Facility. For taxable years | 5 | | ending before December 31, 2008:
| 6 | | (A) Adjusted Income. The adjusted income of an | 7 | | international banking
facility is its income reduced | 8 | | by the amount of the floor amount.
| 9 | | (B) Floor Amount. The floor amount shall be the | 10 | | amount, if any,
determined
by multiplying the income of | 11 | | the international banking facility by a fraction,
not | 12 | | greater than one, which is determined as follows:
| 13 | | (i) The numerator shall be:
| 14 | | The average aggregate, determined on a | 15 | | quarterly basis, of the
financial
organization's | 16 | | loans to banks in foreign countries, to foreign | 17 | | domiciled
borrowers (except where secured | 18 | | primarily by real estate) and to foreign
| 19 | | governments and other foreign official | 20 | | institutions, as reported for its
branches, | 21 | | agencies and offices within the state on its | 22 | | "Consolidated Report
of Condition", Schedule A, | 23 | | Lines 2.c., 5.b., and 7.a., which was filed with
| 24 | | the Federal Deposit Insurance Corporation and | 25 | | other regulatory authorities,
for the year 1980, | 26 | | minus
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| 1 | | The average aggregate, determined on a | 2 | | quarterly basis, of such loans
(other
than loans of | 3 | | an international banking facility), as reported by | 4 | | the financial
institution for its branches, | 5 | | agencies and offices within the state, on
the | 6 | | corresponding Schedule and lines of the | 7 | | Consolidated Report of Condition
for the current | 8 | | taxable year, provided, however, that in no case | 9 | | shall the
amount determined in this clause (the | 10 | | subtrahend) exceed the amount determined
in the | 11 | | preceding clause (the minuend); and
| 12 | | (ii) the denominator shall be the average | 13 | | aggregate, determined on a
quarterly basis, of the | 14 | | international banking facility's loans to banks in
| 15 | | foreign countries, to foreign domiciled borrowers | 16 | | (except where secured
primarily by real estate) | 17 | | and to foreign governments and other foreign
| 18 | | official institutions, which were recorded in its | 19 | | financial accounts for
the current taxable year.
| 20 | | (C) Change to Consolidated Report of Condition and | 21 | | in Qualification.
In the event the Consolidated Report | 22 | | of Condition which is filed with the
Federal Deposit | 23 | | Insurance Corporation and other regulatory authorities | 24 | | is
altered so that the information required for | 25 | | determining the floor amount
is not found on Schedule | 26 | | A, lines 2.c., 5.b. and 7.a., the financial
institution |
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| 1 | | shall notify the Department and the Department may, by
| 2 | | regulations or otherwise, prescribe or authorize the | 3 | | use of an alternative
source for such information. The | 4 | | financial institution shall also notify
the Department | 5 | | should its international banking facility fail to | 6 | | qualify as
such, in whole or in part, or should there | 7 | | be any amendment or change to
the Consolidated Report | 8 | | of Condition, as originally filed, to the extent
such | 9 | | amendment or change alters the information used in | 10 | | determining the floor
amount.
| 11 | | (3) For taxable years ending on or after December 31, | 12 | | 2008, the business income of a financial organization shall | 13 | | be apportioned to this State by multiplying such income by | 14 | | a fraction, the numerator of which is its gross receipts | 15 | | from sources in this State or otherwise attributable to | 16 | | this State's marketplace and the denominator of which is | 17 | | its gross receipts everywhere during the taxable year. | 18 | | "Gross receipts" for purposes of this subparagraph (3) | 19 | | means gross income, including net taxable gain on | 20 | | disposition of assets, including securities and money | 21 | | market instruments, when derived from transactions and | 22 | | activities in the regular course of the financial | 23 | | organization's trade or business. The following examples | 24 | | are illustrative:
| 25 | | (i) Receipts from the lease or rental of real or | 26 | | tangible personal property are in this State if the |
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| 1 | | property is located in this State during the rental | 2 | | period. Receipts from the lease or rental of tangible | 3 | | personal property that is characteristically moving | 4 | | property, including, but not limited to, motor | 5 | | vehicles, rolling stock, aircraft, vessels, or mobile | 6 | | equipment are from sources in this State to the extent | 7 | | that the property is used in this State. | 8 | | (ii) Interest income, commissions, fees, gains on | 9 | | disposition, and other receipts from assets in the | 10 | | nature of loans that are secured primarily by real | 11 | | estate or tangible personal property are from sources | 12 | | in this State if the security is located in this State. | 13 | | (iii) Interest income, commissions, fees, gains on | 14 | | disposition, and other receipts from consumer loans | 15 | | that are not secured by real or tangible personal | 16 | | property are from sources in this State if the debtor | 17 | | is a resident of this State. | 18 | | (iv) Interest income, commissions, fees, gains on | 19 | | disposition, and other receipts from commercial loans | 20 | | and installment obligations that are not secured by | 21 | | real or tangible personal property are from sources in | 22 | | this State if the proceeds of the loan are to be | 23 | | applied in this State. If it cannot be determined where | 24 | | the funds are to be applied, the income and receipts | 25 | | are from sources in this State if the office of the | 26 | | borrower from which the loan was negotiated in the |
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| 1 | | regular course of business is located in this State. If | 2 | | the location of this office cannot be determined, the | 3 | | income and receipts shall be excluded from the | 4 | | numerator and denominator of the sales factor.
| 5 | | (v) Interest income, fees, gains on disposition, | 6 | | service charges, merchant discount income, and other | 7 | | receipts from credit card receivables are from sources | 8 | | in this State if the card charges are regularly billed | 9 | | to a customer in this State. | 10 | | (vi) Receipts from the performance of services, | 11 | | including, but not limited to, fiduciary, advisory, | 12 | | and brokerage services, are in this State if the | 13 | | services are received in this State within the meaning | 14 | | of subparagraph (a)(3)(C-5)(iv) of this Section. | 15 | | (vii) Receipts from the issuance of travelers | 16 | | checks and money orders are from sources in this State | 17 | | if the checks and money orders are issued from a | 18 | | location within this State. | 19 | | (viii) Receipts from investment assets and | 20 | | activities and trading assets and activities are | 21 | | included in the receipts factor as follows: | 22 | | (1) Interest, dividends, net gains (but not | 23 | | less than zero) and other income from investment | 24 | | assets and activities from trading assets and | 25 | | activities shall be included in the receipts | 26 | | factor. Investment assets and activities and |
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| 1 | | trading assets and activities include but are not | 2 | | limited to: investment securities; trading account | 3 | | assets; federal funds; securities purchased and | 4 | | sold under agreements to resell or repurchase; | 5 | | options; futures contracts; forward contracts; | 6 | | notional principal contracts such as swaps; | 7 | | equities; and foreign currency transactions. With | 8 | | respect to the investment and trading assets and | 9 | | activities described in subparagraphs (A) and (B) | 10 | | of this paragraph, the receipts factor shall | 11 | | include the amounts described in such | 12 | | subparagraphs. | 13 | | (A) The receipts factor shall include the | 14 | | amount by which interest from federal funds | 15 | | sold and securities purchased under resale | 16 | | agreements exceeds interest expense on federal | 17 | | funds purchased and securities sold under | 18 | | repurchase agreements. | 19 | | (B) The receipts factor shall include the | 20 | | amount by which interest, dividends, gains and | 21 | | other income from trading assets and | 22 | | activities, including but not limited to | 23 | | assets and activities in the matched book, in | 24 | | the arbitrage book, and foreign currency | 25 | | transactions, exceed amounts paid in lieu of | 26 | | interest, amounts paid in lieu of dividends, |
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| 1 | | and losses from such assets and activities. | 2 | | (2) The numerator of the receipts factor | 3 | | includes interest, dividends, net gains (but not | 4 | | less than zero), and other income from investment | 5 | | assets and activities and from trading assets and | 6 | | activities described in paragraph (1) of this | 7 | | subsection that are attributable to this State. | 8 | | (A) The amount of interest, dividends, net | 9 | | gains (but not less than zero), and other | 10 | | income from investment assets and activities | 11 | | in the investment account to be attributed to | 12 | | this State and included in the numerator is | 13 | | determined by multiplying all such income from | 14 | | such assets and activities by a fraction, the | 15 | | numerator of which is the gross income from | 16 | | such assets and activities which are properly | 17 | | assigned to a fixed place of business of the | 18 | | taxpayer within this State and the denominator | 19 | | of which is the gross income from all such | 20 | | assets and activities. | 21 | | (B) The amount of interest from federal | 22 | | funds sold and purchased and from securities | 23 | | purchased under resale agreements and | 24 | | securities sold under repurchase agreements | 25 | | attributable to this State and included in the | 26 | | numerator is determined by multiplying the |
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| 1 | | amount described in subparagraph (A) of | 2 | | paragraph (1) of this subsection from such | 3 | | funds and such securities by a fraction, the | 4 | | numerator of which is the gross income from | 5 | | such funds and such securities which are | 6 | | properly assigned to a fixed place of business | 7 | | of the taxpayer within this State and the | 8 | | denominator of which is the gross income from | 9 | | all such funds and such securities. | 10 | | (C) The amount of interest, dividends, | 11 | | gains, and other income from trading assets and | 12 | | activities, including but not limited to | 13 | | assets and activities in the matched book, in | 14 | | the arbitrage book and foreign currency | 15 | | transactions (but excluding amounts described | 16 | | in subparagraphs (A) or (B) of this paragraph), | 17 | | attributable to this State and included in the | 18 | | numerator is determined by multiplying the | 19 | | amount described in subparagraph (B) of | 20 | | paragraph (1) of this subsection by a fraction, | 21 | | the numerator of which is the gross income from | 22 | | such trading assets and activities which are | 23 | | properly assigned to a fixed place of business | 24 | | of the taxpayer within this State and the | 25 | | denominator of which is the gross income from | 26 | | all such assets and activities. |
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| 1 | | (D) Properly assigned, for purposes of | 2 | | this paragraph (2) of this subsection, means | 3 | | the investment or trading asset or activity is | 4 | | assigned to the fixed place of business with | 5 | | which it has a preponderance of substantive | 6 | | contacts. An investment or trading asset or | 7 | | activity assigned by the taxpayer to a fixed | 8 | | place of business without the State shall be | 9 | | presumed to have been properly assigned if: | 10 | | (i) the taxpayer has assigned, in the | 11 | | regular course of its business, such asset | 12 | | or activity on its records to a fixed place | 13 | | of business consistent with federal or | 14 | | state regulatory requirements; | 15 | | (ii) such assignment on its records is | 16 | | based upon substantive contacts of the | 17 | | asset or activity to such fixed place of | 18 | | business; and | 19 | | (iii) the taxpayer uses such records | 20 | | reflecting assignment of such assets or | 21 | | activities for the filing of all state and | 22 | | local tax returns for which an assignment | 23 | | of such assets or activities to a fixed | 24 | | place of business is required. | 25 | | (E) The presumption of proper assignment | 26 | | of an investment or trading asset or activity |
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| 1 | | provided in subparagraph (D) of paragraph (2) | 2 | | of this subsection may be rebutted upon a | 3 | | showing by the Department, supported by a | 4 | | preponderance of the evidence, that the | 5 | | preponderance of substantive contacts | 6 | | regarding such asset or activity did not occur | 7 | | at the fixed place of business to which it was | 8 | | assigned on the taxpayer's records. If the | 9 | | fixed place of business that has a | 10 | | preponderance of substantive contacts cannot | 11 | | be determined for an investment or trading | 12 | | asset or activity to which the presumption in | 13 | | subparagraph (D) of paragraph (2) of this | 14 | | subsection does not apply or with respect to | 15 | | which that presumption has been rebutted, that | 16 | | asset or activity is properly assigned to the | 17 | | state in which the taxpayer's commercial | 18 | | domicile is located. For purposes of this | 19 | | subparagraph (E), it shall be presumed, | 20 | | subject to rebuttal, that taxpayer's | 21 | | commercial domicile is in the state of the | 22 | | United States or the District of Columbia to | 23 | | which the greatest number of employees are | 24 | | regularly connected with the management of the | 25 | | investment or trading income or out of which | 26 | | they are working, irrespective of where the |
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| 1 | | services of such employees are performed, as of | 2 | | the last day of the taxable year.
| 3 | | (4) (Blank). | 4 | | (5) (Blank). | 5 | | (c-1) Federally regulated exchanges. For taxable years | 6 | | ending on or after December 31, 2012, business income of a | 7 | | federally regulated exchange shall, at the option of the | 8 | | federally regulated exchange, be apportioned to this State by | 9 | | multiplying such income by a fraction, the numerator of which | 10 | | is its business income from sources within this State, and the | 11 | | denominator of which is its business income from all sources. | 12 | | For purposes of this subsection, the business income within | 13 | | this State of a federally regulated exchange is the sum of the | 14 | | following: | 15 | | (1) Receipts attributable to transactions executed on | 16 | | a physical trading floor if that physical trading floor is | 17 | | located in this State. | 18 | | (2) Receipts attributable to all other matching, | 19 | | execution, or clearing transactions, including without | 20 | | limitation receipts from the provision of matching, | 21 | | execution, or clearing services to another entity, | 22 | | multiplied by (i) for taxable years ending on or after | 23 | | December 31, 2012 but before December 31, 2013, 63.77%; and | 24 | | (ii) for taxable years ending on or after December 31, | 25 | | 2013, 27.54%. | 26 | | (3) All other receipts not governed by subparagraphs |
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| 1 | | (1) or (2) of this subsection (c-1), to the extent the | 2 | | receipts would be characterized as "sales in this State" | 3 | | under item (3) of subsection (a) of this Section. | 4 | | "Federally regulated exchange" means (i) a "registered | 5 | | entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B), | 6 | | or (C), (ii) an "exchange" or "clearing agency" within the | 7 | | meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such | 8 | | entities regulated under any successor regulatory structure to | 9 | | the foregoing, and (iv) all taxpayers who are members of the | 10 | | same unitary business group as a federally regulated exchange, | 11 | | determined without regard to the prohibition in Section | 12 | | 1501(a)(27) of this Act against including in a unitary business | 13 | | group taxpayers who are ordinarily required to apportion | 14 | | business income under different subsections of this Section; | 15 | | provided that this subparagraph (iv) shall apply only if 50% or | 16 | | more of the business receipts of the unitary business group | 17 | | determined by application of this subparagraph (iv) for the | 18 | | taxable year are attributable to the matching, execution, or | 19 | | clearing of transactions conducted by an entity described in | 20 | | subparagraph (i), (ii), or (iii) of this paragraph. | 21 | | In no event shall the Illinois apportionment percentage | 22 | | computed in accordance with this subsection (c-1) for any | 23 | | taxpayer for any tax year be less than the Illinois | 24 | | apportionment percentage computed under this subsection (c-1) | 25 | | for that taxpayer for the first full tax year ending on or | 26 | | after December 31, 2013 for which this subsection (c-1) applied |
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| 1 | | to the taxpayer. | 2 | | (d) Transportation services. For taxable years ending | 3 | | before December 31, 2008, business income derived from | 4 | | furnishing
transportation services shall be apportioned to | 5 | | this State in accordance
with paragraphs (1) and (2):
| 6 | | (1) Such business income (other than that derived from
| 7 | | transportation by pipeline) shall be apportioned to this | 8 | | State by
multiplying such income by a fraction, the | 9 | | numerator of which is the
revenue miles of the person in | 10 | | this State, and the denominator of which
is the revenue | 11 | | miles of the person everywhere. For purposes of this
| 12 | | paragraph, a revenue mile is the transportation of 1 | 13 | | passenger or 1 net
ton of freight the distance of 1 mile | 14 | | for a consideration. Where a
person is engaged in the | 15 | | transportation of both passengers and freight,
the | 16 | | fraction above referred to shall be determined by means of | 17 | | an
average of the passenger revenue mile fraction and the | 18 | | freight revenue
mile fraction, weighted to reflect the | 19 | | person's
| 20 | | (A) relative railway operating income from total | 21 | | passenger and total
freight service, as reported to the | 22 | | Interstate Commerce Commission, in
the case of | 23 | | transportation by railroad, and
| 24 | | (B) relative gross receipts from passenger and | 25 | | freight
transportation, in case of transportation | 26 | | other than by railroad.
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| 1 | | (2) Such business income derived from transportation | 2 | | by pipeline
shall be apportioned to this State by | 3 | | multiplying such income by a
fraction, the numerator of | 4 | | which is the revenue miles of the person in
this State, and | 5 | | the denominator of which is the revenue miles of the
person | 6 | | everywhere. For the purposes of this paragraph, a revenue | 7 | | mile is
the transportation by pipeline of 1 barrel of oil, | 8 | | 1,000 cubic feet of
gas, or of any specified quantity of | 9 | | any other substance, the distance
of 1 mile for a | 10 | | consideration.
| 11 | | (3) For taxable years ending on or after December 31, | 12 | | 2008, business income derived from providing | 13 | | transportation services other than airline services shall | 14 | | be apportioned to this State by using a fraction, (a) the | 15 | | numerator of which shall be (i) all receipts from any | 16 | | movement or shipment of people, goods, mail, oil, gas, or | 17 | | any other substance (other than by airline) that both | 18 | | originates and terminates in this State, plus (ii) that | 19 | | portion of the person's gross receipts from movements or | 20 | | shipments of people, goods, mail, oil, gas, or any other | 21 | | substance (other than by airline) that originates in one | 22 | | state or jurisdiction and terminates in another state or | 23 | | jurisdiction, that is determined by the ratio that the | 24 | | miles traveled in this State bears to total miles | 25 | | everywhere and (b) the denominator of which shall be all | 26 | | revenue derived from the movement or shipment of people, |
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| 1 | | goods, mail, oil, gas, or any other substance (other than | 2 | | by airline). Where a taxpayer is engaged in the | 3 | | transportation of both passengers and freight, the | 4 | | fraction above referred to shall first be determined | 5 | | separately for passenger miles and freight miles. Then an | 6 | | average of the passenger miles fraction and the freight | 7 | | miles fraction shall be weighted to reflect the taxpayer's: | 8 | | (A) relative railway operating income from total | 9 | | passenger and total freight service, as reported to the | 10 | | Surface Transportation Board, in the case of | 11 | | transportation by railroad; and | 12 | | (B) relative gross receipts from passenger and | 13 | | freight transportation, in case of transportation | 14 | | other than by railroad.
| 15 | | (4) For taxable years ending on or after December 31, | 16 | | 2008, business income derived from furnishing airline
| 17 | | transportation services shall be apportioned to this State | 18 | | by
multiplying such income by a fraction, the numerator of | 19 | | which is the
revenue miles of the person in this State, and | 20 | | the denominator of which
is the revenue miles of the person | 21 | | everywhere. For purposes of this
paragraph, a revenue mile | 22 | | is the transportation of one passenger or one net
ton of | 23 | | freight the distance of one mile for a consideration. If a
| 24 | | person is engaged in the transportation of both passengers | 25 | | and freight,
the fraction above referred to shall be | 26 | | determined by means of an
average of the passenger revenue |
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| 1 | | mile fraction and the freight revenue
mile fraction, | 2 | | weighted to reflect the person's relative gross receipts | 3 | | from passenger and freight
airline transportation.
| 4 | | (e) Combined apportionment. Where 2 or more persons are | 5 | | engaged in
a unitary business as described in subsection | 6 | | (a)(27) of
Section 1501,
a part of which is conducted in this | 7 | | State by one or more members of the
group, the business income | 8 | | attributable to this State by any such member
or members shall | 9 | | be apportioned by means of the combined apportionment method.
| 10 | | (f) Alternative allocation. If the allocation and | 11 | | apportionment
provisions of subsections (a) through (e) and of | 12 | | subsection (h) do not, for taxable years ending before December | 13 | | 31, 2008, fairly represent the
extent of a person's business | 14 | | activity in this State, or, for taxable years ending on or | 15 | | after December 31, 2008, fairly represent the market for the | 16 | | person's goods, services, or other sources of business income, | 17 | | the person may
petition for, or the Director may, without a | 18 | | petition, permit or require, in respect of all or any part
of | 19 | | the person's business activity, if reasonable:
| 20 | | (1) Separate accounting;
| 21 | | (2) The exclusion of any one or more factors;
| 22 | | (3) The inclusion of one or more additional factors | 23 | | which will
fairly represent the person's business | 24 | | activities or market in this State; or
| 25 | | (4) The employment of any other method to effectuate an | 26 | | equitable
allocation and apportionment of the person's |
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| 1 | | business income.
| 2 | | (g) Cross reference. For allocation of business income by | 3 | | residents,
see Section 301(a).
| 4 | | (h) For tax years ending on or after December 31, 1998, the | 5 | | apportionment
factor of persons who apportion their business | 6 | | income to this State under
subsection (a) shall be equal to:
| 7 | | (1) for tax years ending on or after December 31, 1998 | 8 | | and before December
31, 1999, 16 2/3% of the property | 9 | | factor plus 16 2/3% of the payroll factor
plus
66 2/3% of | 10 | | the sales factor;
| 11 | | (2) for tax years ending on or after December 31, 1999 | 12 | | and before December
31,
2000, 8 1/3% of the property factor | 13 | | plus 8 1/3% of the payroll factor plus 83
1/3%
of the sales | 14 | | factor;
| 15 | | (3) for tax years ending on or after December 31, 2000, | 16 | | the sales factor.
| 17 | | If, in any tax year ending on or after December 31, 1998 and | 18 | | before December
31, 2000, the denominator of the payroll, | 19 | | property, or sales factor is zero,
the apportionment
factor | 20 | | computed in paragraph (1) or (2) of this subsection for that | 21 | | year shall
be divided by an amount equal to 100% minus the | 22 | | percentage weight given to each
factor whose denominator is | 23 | | equal to zero.
| 24 | | (Source: P.A. 99-642, eff. 7-28-16; 100-201, eff. 8-18-17.)
| 25 | | (35 ILCS 5/710) (from Ch. 120, par. 7-710)
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| 1 | | Sec. 710. Withholding from lottery , wagering and gambling | 2 | | winnings. | 3 | | (a) In general. | 4 | | (1) Any person
making a payment to a resident or | 5 | | nonresident of winnings under the Illinois
Lottery Law and | 6 | | not required to withhold Illinois income tax from such | 7 | | payment
under Subsection (b) of Section 701 of this Act | 8 | | because those winnings are
not subject to Federal income | 9 | | tax withholding, must withhold Illinois income
tax from | 10 | | such payment at a rate equal to the percentage tax rate for | 11 | | individuals
provided in subsection (b) of Section 201, | 12 | | provided that withholding is
not required if such payment | 13 | | of winnings is less than $1,000.
| 14 | | (2) In the case of an assignment of a lottery prize | 15 | | under Section 13.1 of the Illinois Lottery Law, any person | 16 | | making a payment of the purchase price after December 31, | 17 | | 2013, shall withhold from the amount of each payment at a | 18 | | rate equal to the percentage tax rate for individuals | 19 | | provided in subsection (b) of Section 201. | 20 | | (3) Any person making a payment after December 31, | 21 | | 2019, to a resident or nonresident of winnings from | 22 | | pari-mutuel wagering conducted at a wagering facility | 23 | | licensed under the Illinois Horse Racing Act of 1975 or | 24 | | from gambling games conducted on a riverboat licensed under | 25 | | the Riverboat Gambling Act must withhold Illinois income | 26 | | tax from such payment at a rate equal to the percentage tax |
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| 1 | | rate for individuals provided in subsection (b) of Section | 2 | | 201, provided that withholding on a payment is required | 3 | | under this paragraph (3) only if withholding of tax on that | 4 | | payment is required under the provisions of the Internal | 5 | | Revenue Code. | 6 | | (b) Credit for taxes withheld. Any amount withheld under | 7 | | Subsection (a)
shall be a credit against the Illinois income | 8 | | tax liability of the person
to whom the payment of winnings was | 9 | | made for the taxable year in which that
person incurred an | 10 | | Illinois income tax liability with respect to those winnings.
| 11 | | (Source: P.A. 98-496, eff. 1-1-14.)
| 12 | | Section 99. Effective date. This Act takes effect upon | 13 | | becoming law.
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