Full Text of HB3157 98th General Assembly
HB3157enr 98TH 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 304, 502, and 709.5 as follows:
| 6 | | (35 ILCS 5/304) (from Ch. 120, par. 3-304)
| 7 | | Sec. 304. Business income of persons other than residents.
| 8 | | (a) In general. The business income of a person other than | 9 | | a
resident shall be allocated to this State if such person's | 10 | | business
income is derived solely from this State. If a person | 11 | | other than a
resident derives business income from this State | 12 | | and one or more other
states, then, for tax years ending on or | 13 | | before December 30, 1998, and
except as otherwise provided by | 14 | | this Section, such
person's business income shall be | 15 | | apportioned to this State by
multiplying the income by a | 16 | | fraction, the numerator of which is the sum
of the property | 17 | | factor (if any), the payroll factor (if any) and 200% of the
| 18 | | sales factor (if any), and the denominator of which is 4 | 19 | | reduced by the
number of factors other than the sales factor | 20 | | which have a denominator
of zero and by an additional 2 if the | 21 | | sales factor has a denominator of zero.
For tax years ending on | 22 | | or after December 31, 1998, and except as otherwise
provided by | 23 | | this Section, persons other than
residents who derive business |
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| 1 | | income from this State and one or more other
states shall | 2 | | compute their apportionment factor by weighting their | 3 | | property,
payroll, and sales factors as provided in
subsection | 4 | | (h) of this Section.
| 5 | | (1) Property factor.
| 6 | | (A) The property factor is a fraction, the numerator of | 7 | | which is the
average value of the person's real and | 8 | | tangible personal property owned
or rented and used in the | 9 | | trade or business in this State during the
taxable year and | 10 | | the denominator of which is the average value of all
the | 11 | | person's real and tangible personal property owned or | 12 | | rented and
used in the trade or business during the taxable | 13 | | year.
| 14 | | (B) Property owned by the person is valued at its | 15 | | original cost.
Property rented by the person is valued at 8 | 16 | | times the net annual rental
rate. Net annual rental rate is | 17 | | the annual rental rate paid by the
person less any annual | 18 | | rental rate received by the person from
sub-rentals.
| 19 | | (C) The average value of property shall be determined | 20 | | by averaging
the values at the beginning and ending of the | 21 | | taxable year but the
Director may require the averaging of | 22 | | monthly values during the taxable
year if reasonably | 23 | | required to reflect properly the average value of the
| 24 | | person's property.
| 25 | | (2) Payroll factor.
| 26 | | (A) The payroll factor is a fraction, the numerator of |
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| 1 | | which is the
total amount paid in this State during the | 2 | | taxable year by the person
for compensation, and the | 3 | | denominator of which is the total compensation
paid | 4 | | everywhere during the taxable year.
| 5 | | (B) Compensation is paid in this State if:
| 6 | | (i) The individual's service is performed entirely | 7 | | within this
State;
| 8 | | (ii) The individual's service is performed both | 9 | | within and without
this State, but the service | 10 | | performed without this State is incidental
to the | 11 | | individual's service performed within this State; or
| 12 | | (iii) Some of the service is performed within this | 13 | | State and either
the base of operations, or if there is | 14 | | no base of operations, the place
from which the service | 15 | | is directed or controlled is within this State,
or the | 16 | | base of operations or the place from which the service | 17 | | is
directed or controlled is not in any state in which | 18 | | some part of the
service is performed, but the | 19 | | individual's residence is in this State.
| 20 | | (iv) Compensation paid to nonresident professional | 21 | | athletes. | 22 | | (a) General. The Illinois source income of a | 23 | | nonresident individual who is a member of a | 24 | | professional athletic team includes the portion of the | 25 | | individual's total compensation for services performed | 26 | | as a member of a professional athletic team during the |
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| 1 | | taxable year which the number of duty days spent within | 2 | | this State performing services for the team in any | 3 | | manner during the taxable year bears to the total | 4 | | number of duty days spent both within and without this | 5 | | State during the taxable year. | 6 | | (b) Travel days. Travel days that do not involve | 7 | | either a game, practice, team meeting, or other similar | 8 | | team event are not considered duty days spent in this | 9 | | State. However, such travel days are considered in the | 10 | | total duty days spent both within and without this | 11 | | State. | 12 | | (c) Definitions. For purposes of this subpart | 13 | | (iv): | 14 | | (1) The term "professional athletic team" | 15 | | includes, but is not limited to, any professional | 16 | | baseball, basketball, football, soccer, or hockey | 17 | | team. | 18 | | (2) The term "member of a professional | 19 | | athletic team" includes those employees who are | 20 | | active players, players on the disabled list, and | 21 | | any other persons required to travel and who travel | 22 | | with and perform services on behalf of a | 23 | | professional athletic team on a regular basis. | 24 | | This includes, but is not limited to, coaches, | 25 | | managers, and trainers. | 26 | | (3) Except as provided in items (C) and (D) of |
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| 1 | | this subpart (3), the term "duty days" means all | 2 | | days during the taxable year from the beginning of | 3 | | the professional athletic team's official | 4 | | pre-season training period through the last game | 5 | | in which the team competes or is scheduled to | 6 | | compete. Duty days shall be counted for the year in | 7 | | which they occur, including where a team's | 8 | | official pre-season training period through the | 9 | | last game in which the team competes or is | 10 | | scheduled to compete, occurs during more than one | 11 | | tax year. | 12 | | (A) Duty days shall also include days on | 13 | | which a member of a professional athletic team | 14 | | performs service for a team on a date that does | 15 | | not fall within the foregoing period (e.g., | 16 | | participation in instructional leagues, the | 17 | | "All Star Game", or promotional "caravans"). | 18 | | Performing a service for a professional | 19 | | athletic team includes conducting training and | 20 | | rehabilitation activities, when such | 21 | | activities are conducted at team facilities. | 22 | | (B) Also included in duty days are game | 23 | | days, practice days, days spent at team | 24 | | meetings, promotional caravans, preseason | 25 | | training camps, and days served with the team | 26 | | through all post-season games in which the team |
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| 1 | | competes or is scheduled to compete. | 2 | | (C) Duty days for any person who joins a | 3 | | team during the period from the beginning of | 4 | | the professional athletic team's official | 5 | | pre-season training period through the last | 6 | | game in which the team competes, or is | 7 | | scheduled to compete, shall begin on the day | 8 | | that person joins the team. Conversely, duty | 9 | | days for any person who leaves a team during | 10 | | this period shall end on the day that person | 11 | | leaves the team. Where a person switches teams | 12 | | during a taxable year, a separate duty-day | 13 | | calculation shall be made for the period the | 14 | | person was with each team. | 15 | | (D) Days for which a member of a | 16 | | professional athletic team is not compensated | 17 | | and is not performing services for the team in | 18 | | any manner, including days when such member of | 19 | | a professional athletic team has been | 20 | | suspended without pay and prohibited from | 21 | | performing any services for the team, shall not | 22 | | be treated as duty days. | 23 | | (E) Days for which a member of a | 24 | | professional athletic team is on the disabled | 25 | | list and does not conduct rehabilitation | 26 | | activities at facilities of the team, and is |
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| 1 | | not otherwise performing services for the team | 2 | | in Illinois, shall not be considered duty days | 3 | | spent in this State. All days on the disabled | 4 | | list, however, are considered to be included in | 5 | | total duty days spent both within and without | 6 | | this State. | 7 | | (4) The term "total compensation for services | 8 | | performed as a member of a professional athletic | 9 | | team" means the total compensation received during | 10 | | the taxable year for services performed: | 11 | | (A) from the beginning of the official | 12 | | pre-season training period through the last | 13 | | game in which the team competes or is scheduled | 14 | | to compete during that taxable year; and | 15 | | (B) during the taxable year on a date which | 16 | | does not fall within the foregoing period | 17 | | (e.g., participation in instructional leagues, | 18 | | the "All Star Game", or promotional caravans). | 19 | | This compensation shall include, but is not | 20 | | limited to, salaries, wages, bonuses as described | 21 | | in this subpart, and any other type of compensation | 22 | | paid during the taxable year to a member of a | 23 | | professional athletic team for services performed | 24 | | in that year. This compensation does not include | 25 | | strike benefits, severance pay, termination pay, | 26 | | contract or option year buy-out payments, |
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| 1 | | expansion or relocation payments, or any other | 2 | | payments not related to services performed for the | 3 | | team. | 4 | | For purposes of this subparagraph, "bonuses" | 5 | | included in "total compensation for services | 6 | | performed as a member of a professional athletic | 7 | | team" subject to the allocation described in | 8 | | Section 302(c)(1) are: bonuses earned as a result | 9 | | of play (i.e., performance bonuses) during the | 10 | | season, including bonuses paid for championship, | 11 | | playoff or "bowl" games played by a team, or for | 12 | | selection to all-star league or other honorary | 13 | | positions; and bonuses paid for signing a | 14 | | contract, unless the payment of the signing bonus | 15 | | is not conditional upon the signee playing any | 16 | | games for the team or performing any subsequent | 17 | | services for the team or even making the team, the | 18 | | signing bonus is payable separately from the | 19 | | salary and any other compensation, and the signing | 20 | | bonus is nonrefundable.
| 21 | | (3) Sales factor.
| 22 | | (A) The sales factor is a fraction, the numerator of | 23 | | which is the
total sales of the person in this State during | 24 | | the taxable year, and the
denominator of which is the total | 25 | | sales of the person everywhere during
the taxable year.
| 26 | | (B) Sales of tangible personal property are in this |
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| 1 | | State if:
| 2 | | (i) The property is delivered or shipped to a | 3 | | purchaser, other than
the United States government, | 4 | | within this State regardless of the f. o.
b. point or | 5 | | other conditions of the sale; or
| 6 | | (ii) The property is shipped from an office, store, | 7 | | warehouse,
factory or other place of storage in this | 8 | | State and either the purchaser
is the United States | 9 | | government or the person is not taxable in the
state of | 10 | | the purchaser; provided, however, that premises owned | 11 | | or leased
by a person who has independently contracted | 12 | | with the seller for the printing
of newspapers, | 13 | | periodicals or books shall not be deemed to be an | 14 | | office,
store, warehouse, factory or other place of | 15 | | storage for purposes of this
Section.
Sales of tangible | 16 | | personal property are not in this State if the
seller | 17 | | and purchaser would be members of the same unitary | 18 | | business group
but for the fact that either the seller | 19 | | or purchaser is a person with 80%
or more of total | 20 | | business activity outside of the United States and the
| 21 | | property is purchased for resale.
| 22 | | (B-1) Patents, copyrights, trademarks, and similar | 23 | | items of intangible
personal property.
| 24 | | (i) Gross receipts from the licensing, sale, or | 25 | | other disposition of a
patent, copyright, trademark, | 26 | | or similar item of intangible personal property, other |
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| 1 | | than gross receipts governed by paragraph (B-7) of this | 2 | | item (3),
are in this State to the extent the item is | 3 | | utilized in this State during the
year the gross | 4 | | receipts are included in gross income.
| 5 | | (ii) Place of utilization.
| 6 | | (I) A patent is utilized in a state to the | 7 | | extent that it is employed
in production, | 8 | | fabrication, manufacturing, or other processing in | 9 | | the state or
to the extent that a patented product | 10 | | is produced in the state. If a patent is
utilized | 11 | | in
more than one state, the extent to which it is | 12 | | utilized in any one state shall
be a fraction equal | 13 | | to the gross receipts of the licensee or purchaser | 14 | | from
sales or leases of items produced, | 15 | | fabricated, manufactured, or processed
within that | 16 | | state using the patent and of patented items | 17 | | produced within that
state, divided by the total of | 18 | | such gross receipts for all states in which the
| 19 | | patent is utilized.
| 20 | | (II) A copyright is utilized in a state to the | 21 | | extent that printing or
other publication | 22 | | originates in the state. If a copyright is utilized | 23 | | in more
than one state, the extent to which it is | 24 | | utilized in any one state shall be a
fraction equal | 25 | | to the gross receipts from sales or licenses of | 26 | | materials
printed or published in that state |
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| 1 | | divided by the total of such gross receipts
for all | 2 | | states in which the copyright is utilized.
| 3 | | (III) Trademarks and other items of intangible | 4 | | personal property
governed by this paragraph (B-1) | 5 | | are utilized in the state in which the
commercial | 6 | | domicile of the licensee or purchaser is located.
| 7 | | (iii) If the state of utilization of an item of | 8 | | property governed by
this paragraph (B-1) cannot be | 9 | | determined from the taxpayer's books and
records or | 10 | | from the books and records of any person related to the | 11 | | taxpayer
within the meaning of Section 267(b) of the | 12 | | Internal Revenue Code, 26 U.S.C.
267, the gross
| 13 | | receipts attributable to that item shall be excluded | 14 | | from both the numerator
and the denominator of the | 15 | | sales factor.
| 16 | | (B-2) Gross receipts from the license, sale, or other | 17 | | disposition of
patents, copyrights, trademarks, and | 18 | | similar items of intangible personal
property, other than | 19 | | gross receipts governed by paragraph (B-7) of this item | 20 | | (3), may be included in the numerator or denominator of the | 21 | | sales factor
only if gross receipts from licenses, sales, | 22 | | or other disposition of such items
comprise more than 50% | 23 | | of the taxpayer's total gross receipts included in gross
| 24 | | income during the tax year and during each of the 2 | 25 | | immediately preceding tax
years; provided that, when a | 26 | | taxpayer is a member of a unitary business group,
such |
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| 1 | | determination shall be made on the basis of the gross | 2 | | receipts of the
entire unitary business group.
| 3 | | (B-5) For taxable years ending on or after December 31, | 4 | | 2008, except as provided in subsections (ii) through (vii), | 5 | | receipts from the sale of telecommunications service or | 6 | | mobile telecommunications service are in this State if the | 7 | | customer's service address is in this State. | 8 | | (i) For purposes of this subparagraph (B-5), the | 9 | | following terms have the following meanings: | 10 | | "Ancillary services" means services that are | 11 | | associated with or incidental to the provision of | 12 | | "telecommunications services", including but not | 13 | | limited to "detailed telecommunications billing", | 14 | | "directory assistance", "vertical service", and "voice | 15 | | mail services". | 16 | | "Air-to-Ground Radiotelephone service" means a | 17 | | radio service, as that term is defined in 47 CFR 22.99, | 18 | | in which common carriers are authorized to offer and | 19 | | provide radio telecommunications service for hire to | 20 | | subscribers in aircraft. | 21 | | "Call-by-call Basis" means any method of charging | 22 | | for telecommunications services where the price is | 23 | | measured by individual calls. | 24 | | "Communications Channel" means a physical or | 25 | | virtual path of communications over which signals are | 26 | | transmitted between or among customer channel |
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| 1 | | termination points. | 2 | | "Conference bridging service" means an "ancillary | 3 | | service" that links two or more participants of an | 4 | | audio or video conference call and may include the | 5 | | provision of a telephone number. "Conference bridging | 6 | | service" does not include the "telecommunications | 7 | | services" used to reach the conference bridge. | 8 | | "Customer Channel Termination Point" means the | 9 | | location where the customer either inputs or receives | 10 | | the communications. | 11 | | "Detailed telecommunications billing service" | 12 | | means an "ancillary service" of separately stating | 13 | | information pertaining to individual calls on a | 14 | | customer's billing statement. | 15 | | "Directory assistance" means an "ancillary | 16 | | service" of providing telephone number information, | 17 | | and/or address information. | 18 | | "Home service provider" means the facilities based | 19 | | carrier or reseller with which the customer contracts | 20 | | for the provision of mobile telecommunications | 21 | | services. | 22 | | "Mobile telecommunications service" means | 23 | | commercial mobile radio service, as defined in Section | 24 | | 20.3 of Title 47 of the Code of Federal Regulations as | 25 | | in effect on June 1, 1999. | 26 | | "Place of primary use" means the street address |
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| 1 | | representative of where the customer's use of the | 2 | | telecommunications service primarily occurs, which | 3 | | must be the residential street address or the primary | 4 | | business street address of the customer. In the case of | 5 | | mobile telecommunications services, "place of primary | 6 | | use" must be within the licensed service area of the | 7 | | home service provider. | 8 | | "Post-paid telecommunication service" means the | 9 | | telecommunications service obtained by making a | 10 | | payment on a call-by-call basis either through the use | 11 | | of a credit card or payment mechanism such as a bank | 12 | | card, travel card, credit card, or debit card, or by | 13 | | charge made to a telephone number which is not | 14 | | associated with the origination or termination of the | 15 | | telecommunications service. A post-paid calling | 16 | | service includes telecommunications service, except a | 17 | | prepaid wireless calling service, that would be a | 18 | | prepaid calling service except it is not exclusively a | 19 | | telecommunication service. | 20 | | "Prepaid telecommunication service" means the | 21 | | right to access exclusively telecommunications | 22 | | services, which must be paid for in advance and which | 23 | | enables the origination of calls using an access number | 24 | | or authorization code, whether manually or | 25 | | electronically dialed, and that is sold in | 26 | | predetermined units or dollars of which the number |
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| 1 | | declines with use in a known amount. | 2 | | "Prepaid Mobile telecommunication service" means a | 3 | | telecommunications service that provides the right to | 4 | | utilize mobile wireless service as well as other | 5 | | non-telecommunication services, including but not | 6 | | limited to ancillary services, which must be paid for | 7 | | in advance that is sold in predetermined units or | 8 | | dollars of which the number declines with use in a | 9 | | known amount. | 10 | | "Private communication service" means a | 11 | | telecommunication service that entitles the customer | 12 | | to exclusive or priority use of a communications | 13 | | channel or group of channels between or among | 14 | | termination points, regardless of the manner in which | 15 | | such channel or channels are connected, and includes | 16 | | switching capacity, extension lines, stations, and any | 17 | | other associated services that are provided in | 18 | | connection with the use of such channel or channels. | 19 | | "Service address" means: | 20 | | (a) The location of the telecommunications | 21 | | equipment to which a customer's call is charged and | 22 | | from which the call originates or terminates, | 23 | | regardless of where the call is billed or paid; | 24 | | (b) If the location in line (a) is not known, | 25 | | service address means the origination point of the | 26 | | signal of the telecommunications services first |
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| 1 | | identified by either the seller's | 2 | | telecommunications system or in information | 3 | | received by the seller from its service provider | 4 | | where the system used to transport such signals is | 5 | | not that of the seller; and | 6 | | (c) If the locations in line (a) and line (b) | 7 | | are not known, the service address means the | 8 | | location of the customer's place of primary use. | 9 | | "Telecommunications service" means the electronic | 10 | | transmission, conveyance, or routing of voice, data, | 11 | | audio, video, or any other information or signals to a | 12 | | point, or between or among points. The term | 13 | | "telecommunications service" includes such | 14 | | transmission, conveyance, or routing in which computer | 15 | | processing applications are used to act on the form, | 16 | | code or protocol of the content for purposes of | 17 | | transmission, conveyance or routing without regard to | 18 | | whether such service is referred to as voice over | 19 | | Internet protocol services or is classified by the | 20 | | Federal Communications Commission as enhanced or value | 21 | | added. "Telecommunications service" does not include: | 22 | | (a) Data processing and information services | 23 | | that allow data to be generated, acquired, stored, | 24 | | processed, or retrieved and delivered by an | 25 | | electronic transmission to a purchaser when such | 26 | | purchaser's primary purpose for the underlying |
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| 1 | | transaction is the processed data or information; | 2 | | (b) Installation or maintenance of wiring or | 3 | | equipment on a customer's premises; | 4 | | (c) Tangible personal property; | 5 | | (d) Advertising, including but not limited to | 6 | | directory advertising. | 7 | | (e) Billing and collection services provided | 8 | | to third parties; | 9 | | (f) Internet access service; | 10 | | (g) Radio and television audio and video | 11 | | programming services, regardless of the medium, | 12 | | including the furnishing of transmission, | 13 | | conveyance and routing of such services by the | 14 | | programming service provider. Radio and television | 15 | | audio and video programming services shall include | 16 | | but not be limited to cable service as defined in | 17 | | 47 USC 522(6) and audio and video programming | 18 | | services delivered by commercial mobile radio | 19 | | service providers, as defined in 47 CFR 20.3; | 20 | | (h) "Ancillary services"; or | 21 | | (i) Digital products "delivered | 22 | | electronically", including but not limited to | 23 | | software, music, video, reading materials or ring | 24 | | tones. | 25 | | "Vertical service" means an "ancillary service" | 26 | | that is offered in connection with one or more |
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| 1 | | "telecommunications services", which offers advanced | 2 | | calling features that allow customers to identify | 3 | | callers and to manage multiple calls and call | 4 | | connections, including "conference bridging services". | 5 | | "Voice mail service" means an "ancillary service" | 6 | | that enables the customer to store, send or receive | 7 | | recorded messages. "Voice mail service" does not | 8 | | include any "vertical services" that the customer may | 9 | | be required to have in order to utilize the "voice mail | 10 | | service". | 11 | | (ii) Receipts from the sale of telecommunications | 12 | | service sold on an individual call-by-call basis are in | 13 | | this State if either of the following applies: | 14 | | (a) The call both originates and terminates in | 15 | | this State. | 16 | | (b) The call either originates or terminates | 17 | | in this State and the service address is located in | 18 | | this State. | 19 | | (iii) Receipts from the sale of postpaid | 20 | | telecommunications service at retail are in this State | 21 | | if the origination point of the telecommunication | 22 | | signal, as first identified by the service provider's | 23 | | telecommunication system or as identified by | 24 | | information received by the seller from its service | 25 | | provider if the system used to transport | 26 | | telecommunication signals is not the seller's, is |
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| 1 | | located in this State. | 2 | | (iv) Receipts from the sale of prepaid | 3 | | telecommunications service or prepaid mobile | 4 | | telecommunications service at retail are in this State | 5 | | if the purchaser obtains the prepaid card or similar | 6 | | means of conveyance at a location in this State. | 7 | | Receipts from recharging a prepaid telecommunications | 8 | | service or mobile telecommunications service is in | 9 | | this State if the purchaser's billing information | 10 | | indicates a location in this State. | 11 | | (v) Receipts from the sale of private | 12 | | communication services are in this State as follows: | 13 | | (a) 100% of receipts from charges imposed at | 14 | | each channel termination point in this State. | 15 | | (b) 100% of receipts from charges for the total | 16 | | channel mileage between each channel termination | 17 | | point in this State. | 18 | | (c) 50% of the total receipts from charges for | 19 | | service segments when those segments are between 2 | 20 | | customer channel termination points, 1 of which is | 21 | | located in this State and the other is located | 22 | | outside of this State, which segments are | 23 | | separately charged. | 24 | | (d) The receipts from charges for service | 25 | | segments with a channel termination point located | 26 | | in this State and in two or more other states, and |
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| 1 | | which segments are not separately billed, are in | 2 | | this State based on a percentage determined by | 3 | | dividing the number of customer channel | 4 | | termination points in this State by the total | 5 | | number of customer channel termination points. | 6 | | (vi) Receipts from charges for ancillary services | 7 | | for telecommunications service sold to customers at | 8 | | retail are in this State if the customer's primary | 9 | | place of use of telecommunications services associated | 10 | | with those ancillary services is in this State. If the | 11 | | seller of those ancillary services cannot determine | 12 | | where the associated telecommunications are located, | 13 | | then the ancillary services shall be based on the | 14 | | location of the purchaser. | 15 | | (vii) Receipts to access a carrier's network or | 16 | | from the sale of telecommunication services or | 17 | | ancillary services for resale are in this State as | 18 | | follows: | 19 | | (a) 100% of the receipts from access fees | 20 | | attributable to intrastate telecommunications | 21 | | service that both originates and terminates in | 22 | | this State. | 23 | | (b) 50% of the receipts from access fees | 24 | | attributable to interstate telecommunications | 25 | | service if the interstate call either originates | 26 | | or terminates in this State. |
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| 1 | | (c) 100% of the receipts from interstate end | 2 | | user access line charges, if the customer's | 3 | | service address is in this State. As used in this | 4 | | subdivision, "interstate end user access line | 5 | | charges" includes, but is not limited to, the | 6 | | surcharge approved by the federal communications | 7 | | commission and levied pursuant to 47 CFR 69. | 8 | | (d) Gross receipts from sales of | 9 | | telecommunication services or from ancillary | 10 | | services for telecommunications services sold to | 11 | | other telecommunication service providers for | 12 | | resale shall be sourced to this State using the | 13 | | apportionment concepts used for non-resale | 14 | | receipts of telecommunications services if the | 15 | | information is readily available to make that | 16 | | determination. If the information is not readily | 17 | | available, then the taxpayer may use any other | 18 | | reasonable and consistent method. | 19 | | (B-7) For taxable years ending on or after December 31, | 20 | | 2008, receipts from the sale of broadcasting services are | 21 | | in this State if the broadcasting services are received in | 22 | | this State. For purposes of this paragraph (B-7), the | 23 | | following terms have the following meanings: | 24 | | "Advertising revenue" means consideration received | 25 | | by the taxpayer in exchange for broadcasting services | 26 | | or allowing the broadcasting of commercials or |
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| 1 | | announcements in connection with the broadcasting of | 2 | | film or radio programming, from sponsorships of the | 3 | | programming, or from product placements in the | 4 | | programming. | 5 | | "Audience factor" means the ratio that the | 6 | | audience or subscribers located in this State of a | 7 | | station, a network, or a cable system bears to the | 8 | | total audience or total subscribers for that station, | 9 | | network, or cable system. The audience factor for film | 10 | | or radio programming shall be determined by reference | 11 | | to the books and records of the taxpayer or by | 12 | | reference to published rating statistics provided the | 13 | | method used by the taxpayer is consistently used from | 14 | | year to year for this purpose and fairly represents the | 15 | | taxpayer's activity in this State. | 16 | | "Broadcast" or "broadcasting" or "broadcasting | 17 | | services" means the transmission or provision of film | 18 | | or radio programming, whether through the public | 19 | | airwaves, by cable, by direct or indirect satellite | 20 | | transmission, or by any other means of communication, | 21 | | either through a station, a network, or a cable system. | 22 | | "Film" or "film programming" means the broadcast | 23 | | on television of any and all performances, events, or | 24 | | productions, including but not limited to news, | 25 | | sporting events, plays, stories, or other literary, | 26 | | commercial, educational, or artistic works, either |
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| 1 | | live or through the use of video tape, disc, or any | 2 | | other type of format or medium. Each episode of a | 3 | | series of films produced for television shall | 4 | | constitute separate "film" notwithstanding that the | 5 | | series relates to the same principal subject and is | 6 | | produced during one or more tax periods. | 7 | | "Radio" or "radio programming" means the broadcast | 8 | | on radio 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 an audio tape, disc, or any | 13 | | other format or medium. Each episode in a series of | 14 | | radio programming produced for radio broadcast shall | 15 | | constitute a separate "radio programming" | 16 | | notwithstanding that the series relates to the same | 17 | | principal subject and is produced during one or more | 18 | | tax periods. | 19 | | (i) In the case of advertising revenue from | 20 | | broadcasting, the customer is the advertiser and | 21 | | the service is received in this State if the | 22 | | commercial domicile of the advertiser is in this | 23 | | State. | 24 | | (ii) In the case where film or radio | 25 | | programming is broadcast by a station, a network, | 26 | | or a cable system for a fee or other remuneration |
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| 1 | | received from the recipient of the broadcast, the | 2 | | portion of the service that is received in this | 3 | | State is measured by the portion of the recipients | 4 | | of the broadcast located in this State. | 5 | | Accordingly, the fee or other remuneration for | 6 | | such service that is included in the Illinois | 7 | | numerator of the sales factor is the total of those | 8 | | fees or other remuneration received from | 9 | | recipients in Illinois. For purposes of this | 10 | | paragraph, a taxpayer may determine the location | 11 | | of the recipients of its broadcast using the | 12 | | address of the recipient shown in its contracts | 13 | | with the recipient or using the billing address of | 14 | | the recipient in the taxpayer's records. | 15 | | (iii) In the case where film or radio | 16 | | programming is broadcast by a station, a network, | 17 | | or a cable system for a fee or other remuneration | 18 | | from the person providing the programming, the | 19 | | portion of the broadcast service that is received | 20 | | by such station, network, or cable system in this | 21 | | State is measured by the portion of recipients of | 22 | | the broadcast located in this State. Accordingly, | 23 | | the amount of revenue related to such an | 24 | | arrangement that is included in the Illinois | 25 | | numerator of the sales factor is the total fee or | 26 | | other total remuneration from the person providing |
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| 1 | | the programming related to that broadcast | 2 | | multiplied by the Illinois audience factor for | 3 | | that broadcast. | 4 | | (iv) In the case where film or radio | 5 | | programming is provided by a taxpayer that is a | 6 | | network or station to a customer for broadcast in | 7 | | exchange for a fee or other remuneration from that | 8 | | customer the broadcasting service is received at | 9 | | the location of the office of the customer from | 10 | | which the services were ordered in the regular | 11 | | course of the customer's trade or business. | 12 | | Accordingly, in such a case the revenue derived by | 13 | | the taxpayer that is included in the taxpayer's | 14 | | Illinois numerator of the sales factor is the | 15 | | revenue from such customers who receive the | 16 | | broadcasting service in Illinois. | 17 | | (v) In the case where film or radio programming | 18 | | is provided by a taxpayer that is not a network or | 19 | | station to another person for broadcasting in | 20 | | exchange for a fee or other remuneration from that | 21 | | person, the broadcasting service is received at | 22 | | the location of the office of the customer from | 23 | | which the services were ordered in the regular | 24 | | course of the customer's trade or business. | 25 | | Accordingly, in such a case the revenue derived by | 26 | | the taxpayer that is included in the taxpayer's |
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| 1 | | Illinois numerator of the sales factor is the | 2 | | revenue from such customers who receive the | 3 | | broadcasting service in Illinois.
| 4 | | (C) For taxable years ending before December 31, 2008, | 5 | | sales, other than sales governed by paragraphs (B), (B-1), | 6 | | and (B-2), are in
this State if:
| 7 | | (i) The income-producing activity is performed in | 8 | | this State; or
| 9 | | (ii) The income-producing activity is performed | 10 | | both within and
without this State and a greater | 11 | | proportion of the income-producing
activity is | 12 | | performed within this State than without this State, | 13 | | based
on performance costs.
| 14 | | (C-5) For taxable years ending on or after December 31, | 15 | | 2008, sales, other than sales governed by paragraphs (B), | 16 | | (B-1), (B-2), (B-5), and (B-7), are in this State if any of | 17 | | the following criteria are met: | 18 | | (i) Sales from the sale or lease of real property | 19 | | are in this State if the property is located in this | 20 | | State. | 21 | | (ii) Sales from the lease or rental of tangible | 22 | | personal property are in this State if the property is | 23 | | located in this State during the rental period. Sales | 24 | | from the lease or rental of tangible personal property | 25 | | that is characteristically moving property, including, | 26 | | but not limited to, motor vehicles, rolling stock, |
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| 1 | | aircraft, vessels, or mobile equipment are in this | 2 | | State to the extent that the property is used in this | 3 | | State. | 4 | | (iii) In the case of interest, net gains (but not | 5 | | less than zero) and other items of income from | 6 | | intangible personal property, the sale is in this State | 7 | | if: | 8 | | (a) in the case of a taxpayer who is a dealer | 9 | | in the item of intangible personal property within | 10 | | the meaning of Section 475 of the Internal Revenue | 11 | | Code, the income or gain is received from a | 12 | | customer in this State. For purposes of this | 13 | | subparagraph, a customer is in this State if the | 14 | | customer is an individual, trust or estate who is a | 15 | | resident of this State and, for all other | 16 | | customers, if the customer's commercial domicile | 17 | | is in this State. Unless the dealer has actual | 18 | | knowledge of the residence or commercial domicile | 19 | | of a customer during a taxable year, the customer | 20 | | shall be deemed to be a customer in this State if | 21 | | the billing address of the customer, as shown in | 22 | | the records of the dealer, is in this State; or | 23 | | (b) in all other cases, if the | 24 | | income-producing activity of the taxpayer is | 25 | | performed in this State or, if the | 26 | | income-producing activity of the taxpayer is |
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| 1 | | performed both within and without this State, if a | 2 | | greater proportion of the income-producing | 3 | | activity of the taxpayer is performed within this | 4 | | State than in any other state, based on performance | 5 | | costs. | 6 | | (iv) Sales of services are in this State if the | 7 | | services are received in this State. For the purposes | 8 | | of this section, gross receipts from the performance of | 9 | | services provided to a corporation, partnership, or | 10 | | trust may only be attributed to a state where that | 11 | | corporation, partnership, or trust has a fixed place of | 12 | | business. If the state where the services are received | 13 | | is not readily determinable or is a state where the | 14 | | corporation, partnership, or trust receiving the | 15 | | service does not have a fixed place of business, the | 16 | | services shall be deemed to be received at the location | 17 | | of the office of the customer from which the services | 18 | | were ordered in the regular course of the customer's | 19 | | trade or business. If the ordering office cannot be | 20 | | determined, the services shall be deemed to be received | 21 | | at the office of the customer to which the services are | 22 | | billed. If the taxpayer is not taxable in the state in | 23 | | which the services are received, the sale must be | 24 | | excluded from both the numerator and the denominator of | 25 | | the sales factor. The Department shall adopt rules | 26 | | prescribing where specific types of service are |
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| 1 | | received, including, but not limited to, publishing, | 2 | | and utility service.
| 3 | | (D) For taxable years ending on or after December 31, | 4 | | 1995, the following
items of income shall not be included | 5 | | in the numerator or denominator of the
sales factor: | 6 | | dividends; amounts included under Section 78 of the | 7 | | Internal
Revenue Code; and Subpart F income as defined in | 8 | | Section 952 of the Internal
Revenue Code.
No inference | 9 | | shall be drawn from the enactment of this paragraph (D) in
| 10 | | construing this Section for taxable years ending before | 11 | | December 31, 1995.
| 12 | | (E) Paragraphs (B-1) and (B-2) shall apply to tax years | 13 | | ending on or
after December 31, 1999, provided that a | 14 | | taxpayer may elect to apply the
provisions of these | 15 | | paragraphs to prior tax years. Such election shall be made
| 16 | | in the form and manner prescribed by the Department, shall | 17 | | be irrevocable, and
shall apply to all tax years; provided | 18 | | that, if a taxpayer's Illinois income
tax liability for any | 19 | | tax year, as assessed under Section 903 prior to January
1, | 20 | | 1999, was computed in a manner contrary to the provisions | 21 | | of paragraphs
(B-1) or (B-2), no refund shall be payable to | 22 | | the taxpayer for that tax year to
the extent such refund is | 23 | | the result of applying the provisions of paragraph
(B-1) or | 24 | | (B-2) retroactively. In the case of a unitary business | 25 | | group, such
election shall apply to all members of such | 26 | | group for every tax year such group
is in existence, but |
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| 1 | | shall not apply to any taxpayer for any period during
which | 2 | | that taxpayer is not a member of such group.
| 3 | | (b) Insurance companies.
| 4 | | (1) In general. Except as otherwise
provided by | 5 | | paragraph (2), business income of an insurance company for | 6 | | a
taxable year shall be apportioned to this State by | 7 | | multiplying such
income by a fraction, the numerator of | 8 | | which is the direct premiums
written for insurance upon | 9 | | property or risk in this State, and the
denominator of | 10 | | which is the direct premiums written for insurance upon
| 11 | | property or risk everywhere. For purposes of this | 12 | | subsection, the term
"direct premiums written" means the | 13 | | total amount of direct premiums
written, assessments and | 14 | | annuity considerations as reported for the
taxable year on | 15 | | the annual statement filed by the company with the
Illinois | 16 | | Director of Insurance in the form approved by the National
| 17 | | Convention of Insurance Commissioners
or such other form as | 18 | | may be
prescribed in lieu thereof.
| 19 | | (2) Reinsurance. If the principal source of premiums | 20 | | written by an
insurance company consists of premiums for | 21 | | reinsurance accepted by it,
the business income of such | 22 | | company shall be apportioned to this State
by multiplying | 23 | | such income by a fraction, the numerator of which is the
| 24 | | sum of (i) direct premiums written for insurance upon | 25 | | property or risk
in this State, plus (ii) premiums written | 26 | | for reinsurance accepted in
respect of property or risk in |
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| 1 | | this State, and the denominator of which
is the sum of | 2 | | (iii) direct premiums written for insurance upon property
| 3 | | or risk everywhere, plus (iv) premiums written for | 4 | | reinsurance accepted
in respect of property or risk | 5 | | everywhere. For purposes of this
paragraph, premiums | 6 | | written for reinsurance accepted in respect of
property or | 7 | | risk in this State, whether or not otherwise determinable,
| 8 | | may, at the election of the company, be determined on the | 9 | | basis of the
proportion which premiums written for | 10 | | reinsurance accepted from
companies commercially domiciled | 11 | | in Illinois bears to premiums written
for reinsurance | 12 | | accepted from all sources, or, alternatively, in the
| 13 | | proportion which the sum of the direct premiums written for | 14 | | insurance
upon property or risk in this State by each | 15 | | ceding company from which
reinsurance is accepted bears to | 16 | | the sum of the total direct premiums
written by each such | 17 | | ceding company for the taxable year. The election made by a | 18 | | company under this paragraph for its first taxable year | 19 | | ending on or after December 31, 2011, shall be binding for | 20 | | that company for that taxable year and for all subsequent | 21 | | taxable years, and may be altered only with the written | 22 | | permission of the Department, which shall not be | 23 | | unreasonably withheld.
| 24 | | (c) Financial organizations.
| 25 | | (1) In general. For taxable years ending before | 26 | | December 31, 2008, business income of a financial
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| 1 | | organization shall be apportioned to this State by | 2 | | multiplying such
income by a fraction, the numerator of | 3 | | which is its business income from
sources within this | 4 | | State, and the denominator of which is its business
income | 5 | | from all sources. For the purposes of this subsection, the
| 6 | | business income of a financial organization from sources | 7 | | within this
State is the sum of the amounts referred to in | 8 | | subparagraphs (A) through
(E) following, but excluding the | 9 | | adjusted income of an international banking
facility as | 10 | | determined in paragraph (2):
| 11 | | (A) Fees, commissions or other compensation for | 12 | | financial services
rendered within this State;
| 13 | | (B) Gross profits from trading in stocks, bonds or | 14 | | other securities
managed within this State;
| 15 | | (C) Dividends, and interest from Illinois | 16 | | customers, which are received
within this State;
| 17 | | (D) Interest charged to customers at places of | 18 | | business maintained
within this State for carrying | 19 | | debit balances of margin accounts,
without deduction | 20 | | of any costs incurred in carrying such accounts; and
| 21 | | (E) Any other gross income resulting from the | 22 | | operation as a
financial organization within this | 23 | | State. In computing the amounts
referred to in | 24 | | paragraphs (A) through (E) of this subsection, any | 25 | | amount
received by a member of an affiliated group | 26 | | (determined under Section
1504(a) of the Internal |
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| 1 | | Revenue Code but without reference to whether
any such | 2 | | corporation is an "includible corporation" under | 3 | | Section
1504(b) of the Internal Revenue Code) from | 4 | | another member of such group
shall be included only to | 5 | | the extent such amount exceeds expenses of the
| 6 | | recipient directly related thereto.
| 7 | | (2) International Banking Facility. For taxable years | 8 | | ending before December 31, 2008:
| 9 | | (A) Adjusted Income. The adjusted income of an | 10 | | international banking
facility is its income reduced | 11 | | by the amount of the floor amount.
| 12 | | (B) Floor Amount. The floor amount shall be the | 13 | | amount, if any,
determined
by multiplying the income of | 14 | | the international banking facility by a fraction,
not | 15 | | greater than one, which is determined as follows:
| 16 | | (i) The numerator shall be:
| 17 | | The average aggregate, determined on a | 18 | | quarterly basis, of the
financial
organization's | 19 | | loans to banks in foreign countries, to foreign | 20 | | domiciled
borrowers (except where secured | 21 | | primarily by real estate) and to foreign
| 22 | | governments and other foreign official | 23 | | institutions, as reported for its
branches, | 24 | | agencies and offices within the state on its | 25 | | "Consolidated Report
of Condition", Schedule A, | 26 | | Lines 2.c., 5.b., and 7.a., which was filed with
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| 1 | | the Federal Deposit Insurance Corporation and | 2 | | other regulatory authorities,
for the year 1980, | 3 | | minus
| 4 | | The average aggregate, determined on a | 5 | | quarterly basis, of such loans
(other
than loans of | 6 | | an international banking facility), as reported by | 7 | | the financial
institution for its branches, | 8 | | agencies and offices within the state, on
the | 9 | | corresponding Schedule and lines of the | 10 | | Consolidated Report of Condition
for the current | 11 | | taxable year, provided, however, that in no case | 12 | | shall the
amount determined in this clause (the | 13 | | subtrahend) exceed the amount determined
in the | 14 | | preceding clause (the minuend); and
| 15 | | (ii) the denominator shall be the average | 16 | | aggregate, determined on a
quarterly basis, of the | 17 | | international banking facility's loans to banks in
| 18 | | foreign countries, to foreign domiciled borrowers | 19 | | (except where secured
primarily by real estate) | 20 | | and to foreign governments and other foreign
| 21 | | official institutions, which were recorded in its | 22 | | financial accounts for
the current taxable year.
| 23 | | (C) Change to Consolidated Report of Condition and | 24 | | in Qualification.
In the event the Consolidated Report | 25 | | of Condition which is filed with the
Federal Deposit | 26 | | Insurance Corporation and other regulatory authorities |
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| 1 | | is
altered so that the information required for | 2 | | determining the floor amount
is not found on Schedule | 3 | | A, lines 2.c., 5.b. and 7.a., the financial
institution | 4 | | shall notify the Department and the Department may, by
| 5 | | regulations or otherwise, prescribe or authorize the | 6 | | use of an alternative
source for such information. The | 7 | | financial institution shall also notify
the Department | 8 | | should its international banking facility fail to | 9 | | qualify as
such, in whole or in part, or should there | 10 | | be any amendment or change to
the Consolidated Report | 11 | | of Condition, as originally filed, to the extent
such | 12 | | amendment or change alters the information used in | 13 | | determining the floor
amount.
| 14 | | (3) For taxable years ending on or after December 31, | 15 | | 2008, the business income of a financial organization shall | 16 | | be apportioned to this State by multiplying such income by | 17 | | a fraction, the numerator of which is its gross receipts | 18 | | from sources in this State or otherwise attributable to | 19 | | this State's marketplace and the denominator of which is | 20 | | its gross receipts everywhere during the taxable year. | 21 | | "Gross receipts" for purposes of this subparagraph (3) | 22 | | means gross income, including net taxable gain on | 23 | | disposition of assets, including securities and money | 24 | | market instruments, when derived from transactions and | 25 | | activities in the regular course of the financial | 26 | | organization's trade or business. The following examples |
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| 1 | | are illustrative:
| 2 | | (i) Receipts from the lease or rental of real or | 3 | | tangible personal property are in this State if the | 4 | | property is located in this State during the rental | 5 | | period. Receipts from the lease or rental of tangible | 6 | | personal property that is characteristically moving | 7 | | property, including, but not limited to, motor | 8 | | vehicles, rolling stock, aircraft, vessels, or mobile | 9 | | equipment are from sources in this State to the extent | 10 | | that the property is used in this State. | 11 | | (ii) Interest income, commissions, fees, gains on | 12 | | disposition, and other receipts from assets in the | 13 | | nature of loans that are secured primarily by real | 14 | | estate or tangible personal property are from sources | 15 | | in this State if the security is located in this State. | 16 | | (iii) Interest income, commissions, fees, gains on | 17 | | disposition, and other receipts from consumer loans | 18 | | that are not secured by real or tangible personal | 19 | | property are from sources in this State if the debtor | 20 | | is a resident of this State. | 21 | | (iv) Interest income, commissions, fees, gains on | 22 | | disposition, and other receipts from commercial loans | 23 | | and installment obligations that are not secured by | 24 | | real or tangible personal property are from sources in | 25 | | this State if the proceeds of the loan are to be | 26 | | applied in this State. If it cannot be determined where |
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| 1 | | the funds are to be applied, the income and receipts | 2 | | are from sources in this State if the office of the | 3 | | borrower from which the loan was negotiated in the | 4 | | regular course of business is located in this State. If | 5 | | the location of this office cannot be determined, the | 6 | | income and receipts shall be excluded from the | 7 | | numerator and denominator of the sales factor.
| 8 | | (v) Interest income, fees, gains on disposition, | 9 | | service charges, merchant discount income, and other | 10 | | receipts from credit card receivables are from sources | 11 | | in this State if the card charges are regularly billed | 12 | | to a customer in this State. | 13 | | (vi) Receipts from the performance of services, | 14 | | including, but not limited to, fiduciary, advisory, | 15 | | and brokerage services, are in this State if the | 16 | | services are received in this State within the meaning | 17 | | of subparagraph (a)(3)(C-5)(iv) of this Section. | 18 | | (vii) Receipts from the issuance of travelers | 19 | | checks and money orders are from sources in this State | 20 | | if the checks and money orders are issued from a | 21 | | location within this State. | 22 | | (viii) Receipts from investment assets and | 23 | | activities and trading assets and activities are | 24 | | included in the receipts factor as follows: | 25 | | (1) Interest, dividends, net gains (but not | 26 | | less than zero) and other income from investment |
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| 1 | | assets and activities from trading assets and | 2 | | activities shall be included in the receipts | 3 | | factor. Investment assets and activities and | 4 | | trading assets and activities include but are not | 5 | | limited to: investment securities; trading account | 6 | | assets; federal funds; securities purchased and | 7 | | sold under agreements to resell or repurchase; | 8 | | options; futures contracts; forward contracts; | 9 | | notional principal contracts such as swaps; | 10 | | equities; and foreign currency transactions. With | 11 | | respect to the investment and trading assets and | 12 | | activities described in subparagraphs (A) and (B) | 13 | | of this paragraph, the receipts factor shall | 14 | | include the amounts described in such | 15 | | subparagraphs. | 16 | | (A) The receipts factor shall include the | 17 | | amount by which interest from federal funds | 18 | | sold and securities purchased under resale | 19 | | agreements exceeds interest expense on federal | 20 | | funds purchased and securities sold under | 21 | | repurchase agreements. | 22 | | (B) The receipts factor shall include the | 23 | | amount by which interest, dividends, gains and | 24 | | other income from trading assets and | 25 | | activities, including but not limited to | 26 | | assets and activities in the matched book, in |
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| 1 | | the arbitrage book, and foreign currency | 2 | | transactions, exceed amounts paid in lieu of | 3 | | interest, amounts paid in lieu of dividends, | 4 | | and losses from such assets and activities. | 5 | | (2) The numerator of the receipts factor | 6 | | includes interest, dividends, net gains (but not | 7 | | less than zero), and other income from investment | 8 | | assets and activities and from trading assets and | 9 | | activities described in paragraph (1) of this | 10 | | subsection that are attributable to this State. | 11 | | (A) The amount of interest, dividends, net | 12 | | gains (but not less than zero), and other | 13 | | income from investment assets and activities | 14 | | in the investment account to be attributed to | 15 | | this State and included in the numerator is | 16 | | determined by multiplying all such income from | 17 | | such assets and activities by a fraction, the | 18 | | numerator of which is the gross income from | 19 | | such assets and activities which are properly | 20 | | assigned to a fixed place of business of the | 21 | | taxpayer within this State and the denominator | 22 | | of which is the gross income from all such | 23 | | assets and activities. | 24 | | (B) The amount of interest from federal | 25 | | funds sold and purchased and from securities | 26 | | purchased under resale agreements and |
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| 1 | | securities sold under repurchase agreements | 2 | | attributable to this State and included in the | 3 | | numerator is determined by multiplying the | 4 | | amount described in subparagraph (A) of | 5 | | paragraph (1) of this subsection from such | 6 | | funds and such securities by a fraction, the | 7 | | numerator of which is the gross income from | 8 | | such funds and such securities which are | 9 | | properly assigned to a fixed place of business | 10 | | of the taxpayer within this State and the | 11 | | denominator of which is the gross income from | 12 | | all such funds and such securities. | 13 | | (C) The amount of interest, dividends, | 14 | | gains, and other income from trading assets and | 15 | | activities, including but not limited to | 16 | | assets and activities in the matched book, in | 17 | | the arbitrage book and foreign currency | 18 | | transactions (but excluding amounts described | 19 | | in subparagraphs (A) or (B) of this paragraph), | 20 | | attributable to this State and included in the | 21 | | numerator is determined by multiplying the | 22 | | amount described in subparagraph (B) of | 23 | | paragraph (1) of this subsection by a fraction, | 24 | | the numerator of which is the gross income from | 25 | | such trading assets and activities which are | 26 | | properly assigned to a fixed place of business |
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| 1 | | of the taxpayer within this State and the | 2 | | denominator of which is the gross income from | 3 | | all such assets and activities. | 4 | | (D) Properly assigned, for purposes of | 5 | | this paragraph (2) of this subsection, means | 6 | | the investment or trading asset or activity is | 7 | | assigned to the fixed place of business with | 8 | | which it has a preponderance of substantive | 9 | | contacts. An investment or trading asset or | 10 | | activity assigned by the taxpayer to a fixed | 11 | | place of business without the State shall be | 12 | | presumed to have been properly assigned if: | 13 | | (i) the taxpayer has assigned, in the | 14 | | regular course of its business, such asset | 15 | | or activity on its records to a fixed place | 16 | | of business consistent with federal or | 17 | | state regulatory requirements; | 18 | | (ii) such assignment on its records is | 19 | | based upon substantive contacts of the | 20 | | asset or activity to such fixed place of | 21 | | business; and | 22 | | (iii) the taxpayer uses such records | 23 | | reflecting assignment of such assets or | 24 | | activities for the filing of all state and | 25 | | local tax returns for which an assignment | 26 | | of such assets or activities to a fixed |
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| 1 | | place of business is required. | 2 | | (E) The presumption of proper assignment | 3 | | of an investment or trading asset or activity | 4 | | provided in subparagraph (D) of paragraph (2) | 5 | | of this subsection may be rebutted upon a | 6 | | showing by the Department, supported by a | 7 | | preponderance of the evidence, that the | 8 | | preponderance of substantive contacts | 9 | | regarding such asset or activity did not occur | 10 | | at the fixed place of business to which it was | 11 | | assigned on the taxpayer's records. If the | 12 | | fixed place of business that has a | 13 | | preponderance of substantive contacts cannot | 14 | | be determined for an investment or trading | 15 | | asset or activity to which the presumption in | 16 | | subparagraph (D) of paragraph (2) of this | 17 | | subsection does not apply or with respect to | 18 | | which that presumption has been rebutted, that | 19 | | asset or activity is properly assigned to the | 20 | | state in which the taxpayer's commercial | 21 | | domicile is located. For purposes of this | 22 | | subparagraph (E), it shall be presumed, | 23 | | subject to rebuttal, that taxpayer's | 24 | | commercial domicile is in the state of the | 25 | | United States or the District of Columbia to | 26 | | which the greatest number of employees are |
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| 1 | | regularly connected with the management of the | 2 | | investment or trading income or out of which | 3 | | they are working, irrespective of where the | 4 | | services of such employees are performed, as of | 5 | | the last day of the taxable year.
| 6 | | (4) (Blank). | 7 | | (5) (Blank). | 8 | | (c-1) Federally regulated exchanges. For taxable years | 9 | | ending on or after December 31, 2012, business income of a | 10 | | federally regulated exchange shall, at the option of the | 11 | | federally regulated exchange, be apportioned to this State by | 12 | | multiplying such income by a fraction, the numerator of which | 13 | | is its business income from sources within this State, and the | 14 | | denominator of which is its business income from all sources. | 15 | | For purposes of this subsection, the business income within | 16 | | this State of a federally regulated exchange is the sum of the | 17 | | following: | 18 | | (1) Receipts attributable to transactions executed on | 19 | | a physical trading floor if that physical trading floor is | 20 | | located in this State. | 21 | | (2) Receipts attributable to all other matching, | 22 | | execution, or clearing transactions, including without | 23 | | limitation receipts from the provision of matching, | 24 | | execution, or clearing services to another entity, | 25 | | multiplied by (i) for taxable years ending on or after | 26 | | December 31, 2012 but before December 31, 2013, 63.77%; and |
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| 1 | | (ii) for taxable years ending on or after December 31, | 2 | | 2013, 27.54%. | 3 | | (3) All other receipts not governed by subparagraphs | 4 | | (1) or (2) of this subsection (c-1), to the extent the | 5 | | receipts would be characterized as "sales in this State" | 6 | | under item (3) of subsection (a) of this Section. | 7 | | "Federally regulated exchange" means (i) a "registered | 8 | | entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B), | 9 | | or (C), (ii) an "exchange" or "clearing agency" within the | 10 | | meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such | 11 | | entities regulated under any successor regulatory structure to | 12 | | the foregoing, and (iv) all taxpayers who are members of the | 13 | | same unitary business group as a federally regulated exchange, | 14 | | determined without regard to the prohibition in Section | 15 | | 1501(a)(27) of this Act against including in a unitary business | 16 | | group taxpayers who are ordinarily required to apportion | 17 | | business income under different subsections of this Section; | 18 | | provided that this subparagraph (iv) shall apply only if 50% or | 19 | | more of the business receipts of the unitary business group | 20 | | determined by application of this subparagraph (iv) for the | 21 | | taxable year are attributable to the matching, execution, or | 22 | | clearing of transactions conducted by an entity described in | 23 | | subparagraph (i), (ii), or (iii) of this paragraph. | 24 | | In no event shall the Illinois apportionment percentage | 25 | | computed in accordance with this subsection (c-1) for any | 26 | | taxpayer for any tax year be less than the Illinois |
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| 1 | | apportionment percentage computed under this subsection (c-1) | 2 | | for that taxpayer for the first full tax year ending on or | 3 | | after December 31, 2013 for which this subsection (c-1) applied | 4 | | to the taxpayer. | 5 | | (d) Transportation services. For taxable years ending | 6 | | before December 31, 2008, business income derived from | 7 | | furnishing
transportation services shall be apportioned to | 8 | | this State in accordance
with paragraphs (1) and (2):
| 9 | | (1) Such business income (other than that derived from
| 10 | | transportation by pipeline) shall be apportioned to this | 11 | | State by
multiplying such income by a fraction, the | 12 | | numerator of which is the
revenue miles of the person in | 13 | | this State, and the denominator of which
is the revenue | 14 | | miles of the person everywhere. For purposes of this
| 15 | | paragraph, a revenue mile is the transportation of 1 | 16 | | passenger or 1 net
ton of freight the distance of 1 mile | 17 | | for a consideration. Where a
person is engaged in the | 18 | | transportation of both passengers and freight,
the | 19 | | fraction above referred to shall be determined by means of | 20 | | an
average of the passenger revenue mile fraction and the | 21 | | freight revenue
mile fraction, weighted to reflect the | 22 | | person's
| 23 | | (A) relative railway operating income from total | 24 | | passenger and total
freight service, as reported to the | 25 | | Interstate Commerce Commission, in
the case of | 26 | | transportation by railroad, and
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| 1 | | (B) relative gross receipts from passenger and | 2 | | freight
transportation, in case of transportation | 3 | | other than by railroad.
| 4 | | (2) Such business income derived from transportation | 5 | | by pipeline
shall be apportioned to this State by | 6 | | multiplying such income by a
fraction, the numerator of | 7 | | which is the revenue miles of the person in
this State, and | 8 | | the denominator of which is the revenue miles of the
person | 9 | | everywhere. For the purposes of this paragraph, a revenue | 10 | | mile is
the transportation by pipeline of 1 barrel of oil, | 11 | | 1,000 cubic feet of
gas, or of any specified quantity of | 12 | | any other substance, the distance
of 1 mile for a | 13 | | consideration.
| 14 | | (3) For taxable years ending on or after December 31, | 15 | | 2008, business income derived from providing | 16 | | transportation services other than airline services shall | 17 | | be apportioned to this State by using a fraction, (a) the | 18 | | numerator of which shall be (i) all receipts from any | 19 | | movement or shipment of people, goods, mail, oil, gas, or | 20 | | any other substance (other than by airline) that both | 21 | | originates and terminates in this State, plus (ii) that | 22 | | portion of the person's gross receipts from movements or | 23 | | shipments of people, goods, mail, oil, gas, or any other | 24 | | substance (other than by airline) that originates in one | 25 | | state or jurisdiction and terminates in another state or | 26 | | jurisdiction, that is determined by the ratio that the |
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| 1 | | miles traveled in this State bears to total miles | 2 | | everywhere and (b) the denominator of which shall be all | 3 | | revenue derived from the movement or shipment of people, | 4 | | goods, mail, oil, gas, or any other substance (other than | 5 | | by airline). Where a taxpayer is engaged in the | 6 | | transportation of both passengers and freight, the | 7 | | fraction above referred to shall first be determined | 8 | | separately for passenger miles and freight miles. Then an | 9 | | average of the passenger miles fraction and the freight | 10 | | miles fraction shall be weighted to reflect the taxpayer's: | 11 | | (A) relative railway operating income from total | 12 | | passenger and total freight service, as reported to the | 13 | | Surface Transportation Board, in the case of | 14 | | transportation by railroad; and
| 15 | | (B) relative gross receipts from passenger and | 16 | | freight transportation, in case of transportation | 17 | | other than by railroad.
| 18 | | (4) For taxable years ending on or after December 31, | 19 | | 2008, business income derived from furnishing airline
| 20 | | transportation services shall be apportioned to this State | 21 | | by
multiplying such income by a fraction, the numerator of | 22 | | which is the
revenue miles of the person in this State, and | 23 | | the denominator of which
is the revenue miles of the person | 24 | | everywhere. For purposes of this
paragraph, a revenue mile | 25 | | is the transportation of one passenger or one net
ton of | 26 | | freight the distance of one mile for a consideration. If a
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| 1 | | person is engaged in the transportation of both passengers | 2 | | and freight,
the fraction above referred to shall be | 3 | | determined by means of an
average of the passenger revenue | 4 | | mile fraction and the freight revenue
mile fraction, | 5 | | weighted to reflect the person's relative gross receipts | 6 | | from passenger and freight
airline transportation.
| 7 | | (e) Combined apportionment. Where 2 or more persons are | 8 | | engaged in
a unitary business as described in subsection | 9 | | (a)(27) of
Section 1501,
a part of which is conducted in this | 10 | | State by one or more members of the
group, the business income | 11 | | attributable to this State by any such member
or members shall | 12 | | be apportioned by means of the combined apportionment method.
| 13 | | (f) Alternative allocation. If the allocation and | 14 | | apportionment
provisions of subsections (a) through (e) and of | 15 | | subsection (h) do not , for taxable years ending before December | 16 | | 31, 2008, fairly represent the
extent of a person's business | 17 | | activity in this State, or, for taxable years ending on or | 18 | | after December 31, 2008, fairly represent the market for the | 19 | | person's goods, services, or other sources of business income, | 20 | | the person may
petition for, or the Director may, without a | 21 | | petition, permit or require, in respect of all or any part
of | 22 | | the person's business activity, if reasonable:
| 23 | | (1) Separate accounting;
| 24 | | (2) The exclusion of any one or more factors;
| 25 | | (3) The inclusion of one or more additional factors | 26 | | which will
fairly represent the person's business |
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| 1 | | activities or market in this State; or
| 2 | | (4) The employment of any other method to effectuate an | 3 | | equitable
allocation and apportionment of the person's | 4 | | business income.
| 5 | | (g) Cross reference. For allocation of business income by | 6 | | residents,
see Section 301(a).
| 7 | | (h) For tax years ending on or after December 31, 1998, the | 8 | | apportionment
factor of persons who apportion their business | 9 | | income to this State under
subsection (a) shall be equal to:
| 10 | | (1) for tax years ending on or after December 31, 1998 | 11 | | and before December
31, 1999, 16 2/3% of the property | 12 | | factor plus 16 2/3% of the payroll factor
plus
66 2/3% of | 13 | | the sales factor;
| 14 | | (2) for tax years ending on or after December 31, 1999 | 15 | | and before December
31,
2000, 8 1/3% of the property factor | 16 | | plus 8 1/3% of the payroll factor plus 83
1/3%
of the sales | 17 | | factor;
| 18 | | (3) for tax years ending on or after December 31, 2000, | 19 | | the sales factor.
| 20 | | If, in any tax year ending on or after December 31, 1998 and | 21 | | before December
31, 2000, the denominator of the payroll, | 22 | | property, or sales factor is zero,
the apportionment
factor | 23 | | computed in paragraph (1) or (2) of this subsection for that | 24 | | year shall
be divided by an amount equal to 100% minus the | 25 | | percentage weight given to each
factor whose denominator is | 26 | | equal to zero.
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| 1 | | (Source: P.A. 96-763, eff. 8-25-09; 97-507, eff. 8-23-11; | 2 | | 97-636, eff. 6-1-12 .)
| 3 | | (35 ILCS 5/502) (from Ch. 120, par. 5-502)
| 4 | | Sec. 502. Returns and notices.
| 5 | | (a) In general. A return with respect to the taxes imposed | 6 | | by this
Act shall be made by every person for any taxable year:
| 7 | | (1) for which such person is liable for a tax imposed | 8 | | by this Act,
or
| 9 | | (2) in the case of a resident or in the case of a | 10 | | corporation which
is qualified to do business in this | 11 | | State, for which such person is
required to make a federal | 12 | | income tax return, regardless of whether such
person is | 13 | | liable for a tax imposed by this Act. However, this | 14 | | paragraph
shall not require a resident to make a return if | 15 | | such person has
an
Illinois base income of the basic amount | 16 | | in Section 204(b) or
less and is either claimed as a | 17 | | dependent on
another person's tax return under the Internal | 18 | | Revenue Code, or is
claimed as a dependent on another | 19 | | person's tax return under this Act.
| 20 | | Notwithstanding the provisions of paragraph (1), a | 21 | | nonresident (other than, for taxable years ending on or after | 22 | | December 31, 2011, a nonresident required to withhold tax under | 23 | | Section 709.5) whose Illinois income tax liability under | 24 | | subsections (a), (b), (c), and (d) of Section 201 of this Act | 25 | | is paid in full after taking into account the credits allowed |
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| 1 | | under subsection (f) of this Section or allowed under Section | 2 | | 709.5 of this Act shall not be required to file a return under | 3 | | this subsection (a).
| 4 | | (b) Fiduciaries and receivers.
| 5 | | (1) Decedents. If an individual is deceased, any return | 6 | | or notice
required of such individual under this Act shall | 7 | | be made by his
executor, administrator, or other person | 8 | | charged with the property of
such decedent.
| 9 | | (2) Individuals under a disability. If an individual is | 10 | | unable
to make a return or notice required under this Act, | 11 | | the return or notice
required of such individual shall be | 12 | | made by his duly authorized agent,
guardian, fiduciary or | 13 | | other person charged with the care
of the person or | 14 | | property of such individual.
| 15 | | (3) Estates and trusts. Returns or notices required of | 16 | | an estate
or a trust shall be made by the fiduciary | 17 | | thereof.
| 18 | | (4) Receivers, trustees and assignees for | 19 | | corporations. In a
case where a receiver, trustee in | 20 | | bankruptcy, or assignee, by order of a
court of competent | 21 | | jurisdiction, by operation of law, or otherwise, has
| 22 | | possession of or holds title to all or substantially all | 23 | | the property or
business of a corporation, whether or not | 24 | | such property or business is
being operated, such receiver, | 25 | | trustee, or assignee shall make the
returns and notices | 26 | | required of such corporation in the same manner and
form as |
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| 1 | | corporations are required to make such returns and notices.
| 2 | | (c) Joint returns by husband and wife.
| 3 | | (1) Except as provided in paragraph (3): | 4 | | (A) if a husband and wife file a
joint federal | 5 | | income tax return for a taxable year ending before | 6 | | December 31, 2009, they shall file a joint
return under | 7 | | this Act for such taxable year and their liabilities | 8 | | shall be
joint and several; | 9 | | (B) if a husband and wife file a joint federal | 10 | | income tax return for a taxable year ending on or after | 11 | | December 31, 2009, they may elect to file separate | 12 | | returns under this Act for such taxable year. The | 13 | | election under this paragraph must be made on or before | 14 | | the due date (including extensions) of the return and, | 15 | | once made, shall be irrevocable. If no election is | 16 | | timely made under this paragraph for a taxable year: | 17 | | (i) the couple must file a joint return under | 18 | | this Act for such taxable year, | 19 | | (ii) their liabilities shall be joint and | 20 | | several, and | 21 | | (iii) any overpayment for that taxable year | 22 | | may be withheld under Section 909 of this Act or | 23 | | under Section 2505-275 of the Civil Administrative | 24 | | Code of Illinois and applied against a debt of | 25 | | either spouse without regard to the amount of the | 26 | | overpayment attributable to the other spouse; and |
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| 1 | | (C) if the federal income tax liability of either | 2 | | spouse is
determined on a separate federal income tax | 3 | | return, they shall file separate
returns under this | 4 | | Act.
| 5 | | (2) If neither spouse is required to file a federal | 6 | | income tax
return and either or both are required to file a | 7 | | return under this Act,
they may elect to file separate or | 8 | | joint returns and pursuant to such
election their | 9 | | liabilities shall be separate or joint and several.
| 10 | | (3) If either husband or wife is a resident and the | 11 | | other is a
nonresident, they shall file separate returns in | 12 | | this State on such
forms as may be required by the | 13 | | Department in which event their tax
liabilities shall be | 14 | | separate; but if they file a joint federal income tax | 15 | | return for a taxable year, they may elect to determine | 16 | | their
joint net income and file a joint return for that | 17 | | taxable year under the provisions of paragraph (1) of this | 18 | | subsection as if both were residents and
in such case, | 19 | | their liabilities shall be joint and several.
| 20 | | (4) Innocent spouses.
| 21 | | (A) However, for tax liabilities arising and paid | 22 | | prior to August 13,
1999, an innocent spouse shall be | 23 | | relieved of
liability for tax
(including interest and | 24 | | penalties) for any taxable year for which a joint
| 25 | | return has been made, upon submission of proof that the | 26 | | Internal Revenue
Service has made a determination |
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| 1 | | under Section 6013(e) of the Internal
Revenue Code, for | 2 | | the same taxable year, which determination relieved | 3 | | the
spouse from liability for federal income taxes.
If | 4 | | there is no federal income tax liability at issue for | 5 | | the
same taxable year, the Department shall rely on the | 6 | | provisions of Section
6013(e) to determine whether the | 7 | | person requesting innocent spouse abatement of
tax, | 8 | | penalty, and interest is entitled to that relief.
| 9 | | (B) For tax liabilities arising on and after August | 10 | | 13, 1999 or which arose prior to that date, but remain | 11 | | unpaid as of that date, if
an individual
who filed a | 12 | | joint return for any taxable year has made an election | 13 | | under this
paragraph, the individual's liability for | 14 | | any tax shown on the joint return
shall not exceed the | 15 | | individual's separate return amount and the | 16 | | individual's
liability for any deficiency assessed for | 17 | | that taxable year shall not exceed
the portion of the | 18 | | deficiency properly allocable to the individual. For
| 19 | | purposes of this paragraph:
| 20 | | (i) An election properly made pursuant to | 21 | | Section 6015 of the Internal
Revenue Code shall | 22 | | constitute an election under this paragraph, | 23 | | provided that
the election shall not be effective | 24 | | until the individual has notified the
Department | 25 | | of the election in the form and manner prescribed | 26 | | by the Department.
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| 1 | | (ii) If no election has been made under Section | 2 | | 6015, the individual
may make an election under | 3 | | this paragraph in the form and manner prescribed by
| 4 | | the Department, provided that no election may be | 5 | | made if the Department finds
that assets were | 6 | | transferred
between individuals filing a joint | 7 | | return as part of a scheme by such
individuals to | 8 | | avoid payment of Illinois income tax and the | 9 | | election shall not
eliminate the individual's | 10 | | liability for any portion of a deficiency
| 11 | | attributable to an error on the return of which the | 12 | | individual had actual
knowledge as of the date of | 13 | | filing.
| 14 | | (iii) In determining the separate return | 15 | | amount or portion of any
deficiency attributable | 16 | | to an individual, the Department shall follow the
| 17 | | provisions in subsections (c) and (d) of Section | 18 | | 6015 of the Internal Revenue Code.
| 19 | | (iv) In determining the validity of an | 20 | | individual's election under
subparagraph (ii) and | 21 | | in determining an electing individual's separate | 22 | | return
amount or portion of any deficiency under | 23 | | subparagraph (iii), any determination
made by the | 24 | | Secretary of the Treasury, by the United States Tax | 25 | | Court on
petition for review of a determination by | 26 | | the Secretary of the Treasury, or on
appeal from |
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| 1 | | the United States Tax Court under Section 6015 of
| 2 | | the Internal
Revenue Code regarding criteria for | 3 | | eligibility or under subsection (d) of
Section | 4 | | 6015
of the Internal Revenue Code regarding the | 5 | | allocation of any item of income,
deduction, | 6 | | payment, or credit between an individual making | 7 | | the federal election
and that individual's spouse | 8 | | shall be conclusively presumed to be correct.
With | 9 | | respect to any item that is not the subject of a | 10 | | determination by the
Secretary of the Treasury or | 11 | | the federal courts, in any proceeding
involving | 12 | | this subsection, the
individual making the | 13 | | election shall have the burden of proof with | 14 | | respect to
any item except that the Department | 15 | | shall have the burden of proof with respect
to | 16 | | items in subdivision (ii).
| 17 | | (v) Any election made by an individual under | 18 | | this subsection shall
apply to all years for which | 19 | | that individual and the spouse named in the
| 20 | | election have filed a joint return.
| 21 | | (vi) After receiving a notice that the federal | 22 | | election has been made
or after receiving an | 23 | | election under subdivision (ii), the Department | 24 | | shall
take no collection action against the | 25 | | electing individual for any liability
arising from | 26 | | a joint return covered by the election until the |
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| 1 | | Department has
notified the electing individual in | 2 | | writing that the election is invalid or of
the | 3 | | portion of the liability the Department has | 4 | | allocated to the electing
individual. Within 60 | 5 | | days (150 days if the individual is outside the | 6 | | United
States) after the issuance of such | 7 | | notification, the individual may file a
written | 8 | | protest of the denial of the election or of the | 9 | | Department's
determination of the liability | 10 | | allocated to him or her and shall be granted a
| 11 | | hearing within the Department under the provisions | 12 | | of Section 908. If a
protest is filed, the | 13 | | Department shall take no collection action against | 14 | | the
electing individual until the decision | 15 | | regarding the protest has become final
under | 16 | | subsection (d) of Section 908 or, if | 17 | | administrative review of the
Department's decision
| 18 | | is requested under Section 1201, until the | 19 | | decision of the court becomes
final.
| 20 | | (d) Partnerships. Every partnership having any base income
| 21 | | allocable to this State in accordance with section 305(c) shall | 22 | | retain
information concerning all items of income, gain, loss | 23 | | and
deduction; the names and addresses of all of the partners, | 24 | | or names and
addresses of members of a limited liability | 25 | | company, or other
persons who would be entitled to share in the | 26 | | base income of the
partnership if distributed; the amount of |
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| 1 | | the distributive share of
each; and such other pertinent | 2 | | information as the Department may by
forms or regulations | 3 | | prescribe. The partnership shall make that information
| 4 | | available to the Department when requested by the Department.
| 5 | | (e) For taxable years ending on or after December 31, 1985, | 6 | | and before
December 31, 1993, taxpayers
that are corporations | 7 | | (other than Subchapter S corporations) having the
same taxable | 8 | | year and that are members of the same unitary business group
| 9 | | may elect to be treated as one taxpayer for purposes of any | 10 | | original return,
amended return which includes the same | 11 | | taxpayers of the unitary group which
joined in the election to | 12 | | file the original return, extension, claim for
refund, | 13 | | assessment, collection and payment and determination of the
| 14 | | group's tax liability under this Act. This subsection (e) does | 15 | | not permit the
election to be made for some, but not all, of | 16 | | the purposes enumerated above.
For taxable years ending on or | 17 | | after December 31, 1987, corporate members
(other than | 18 | | Subchapter S corporations) of the same unitary business group
| 19 | | making this subsection (e) election are not required to have | 20 | | the same taxable
year.
| 21 | | For taxable years ending on or after December 31, 1993, | 22 | | taxpayers that are
corporations (other than Subchapter S | 23 | | corporations) and that are members of
the same unitary business | 24 | | group shall be treated as one taxpayer for purposes
of any | 25 | | original return, amended return which includes the same | 26 | | taxpayers of the
unitary group which joined in filing the |
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| 1 | | original return, extension, claim for
refund, assessment, | 2 | | collection and payment and determination of the group's tax
| 3 | | liability under this Act.
| 4 | | (f) For taxable years ending prior to December 31, 2014, | 5 | | the The Department may promulgate regulations to permit | 6 | | nonresident
individual partners of the same partnership, | 7 | | nonresident Subchapter S
corporation shareholders of the same | 8 | | Subchapter S corporation, and
nonresident individuals | 9 | | transacting an insurance business in Illinois under
a Lloyds | 10 | | plan of operation, and nonresident individual members of the | 11 | | same
limited liability company that is treated as a partnership | 12 | | under Section 1501
(a)(16) of this Act, to file composite | 13 | | individual income tax returns
reflecting the composite income | 14 | | of such individuals allocable to Illinois
and to make composite | 15 | | individual income tax payments. For taxable years ending prior | 16 | | to December 31, 2014, the The Department may
by regulation also | 17 | | permit such composite returns to include the income tax
owed by | 18 | | Illinois residents attributable to their income from | 19 | | partnerships,
Subchapter S corporations, insurance businesses | 20 | | organized under a Lloyds
plan of operation, or limited | 21 | | liability companies that are treated as
partnership under | 22 | | Section 1501(a)(16) of this Act, in which case such
Illinois | 23 | | residents will be permitted to claim credits on their | 24 | | individual
returns for their shares of the composite tax | 25 | | payments. This paragraph of
subsection (f) applies to taxable | 26 | | years ending on or after December 31, 1987 and ending prior to |
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| 1 | | December 31, 2014 .
| 2 | | For taxable years ending on or after December 31, 1999, the | 3 | | Department may,
by regulation, also permit any persons | 4 | | transacting an insurance business
organized under a Lloyds plan | 5 | | of operation to file composite returns reflecting
the income of | 6 | | such persons allocable to Illinois and the tax rates applicable
| 7 | | to such persons under Section 201 and to make composite tax | 8 | | payments and shall,
by regulation, also provide that the income | 9 | | and apportionment factors
attributable to the transaction of an | 10 | | insurance business organized under a
Lloyds plan of operation | 11 | | by any person joining in the filing of a composite
return | 12 | | shall, for purposes of allocating and apportioning income under | 13 | | Article
3 of this Act and computing net income under Section | 14 | | 202 of this Act, be
excluded from any other income and | 15 | | apportionment factors of that person or of
any unitary business | 16 | | group, as defined in subdivision (a)(27) of Section 1501,
to | 17 | | which that person may belong.
| 18 | | For taxable years ending on or after December 31, 2008, | 19 | | every nonresident shall be allowed a credit against his or her | 20 | | liability under subsections (a) and (b) of Section 201 for any | 21 | | amount of tax reported on a composite return and paid on his or | 22 | | her behalf under this subsection (f). Residents (other than | 23 | | persons transacting an insurance business organized under a | 24 | | Lloyds plan of operation) may claim a credit for taxes reported | 25 | | on a composite return and paid on their behalf under this | 26 | | subsection (f) only as permitted by the Department by rule.
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| 1 | | (f-5) For taxable years ending on or after December 31, | 2 | | 2008, the Department may adopt rules to provide that, when a | 3 | | partnership or Subchapter S corporation has made an error in | 4 | | determining the amount of any item of income, deduction, | 5 | | addition, subtraction, or credit required to be reported on its | 6 | | return that affects the liability imposed under this Act on a | 7 | | partner or shareholder, the partnership or Subchapter S | 8 | | corporation may report the changes in liabilities of its | 9 | | partners or shareholders and claim a refund of the resulting | 10 | | overpayments, or pay the resulting underpayments, on behalf of | 11 | | its partners and shareholders.
| 12 | | (g) The Department may adopt rules to authorize the | 13 | | electronic filing of
any return required to be filed under this | 14 | | Section.
| 15 | | (Source: P.A. 96-520, eff. 8-14-09; 97-507, eff. 8-23-11.)
| 16 | | (35 ILCS 5/709.5)
| 17 | | Sec. 709.5. Withholding by partnerships, Subchapter S | 18 | | corporations, and trusts. | 19 | | (a) In general. For each taxable year ending on or after | 20 | | December 31, 2008, every partnership (other than a publicly | 21 | | traded partnership under Section 7704 of the Internal Revenue | 22 | | Code or investment partnership), Subchapter S corporation, and | 23 | | trust must withhold from each nonresident partner, | 24 | | shareholder, or beneficiary (other than a partner, | 25 | | shareholder, or beneficiary who is exempt from tax under |
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| 1 | | Section 501(a) of the Internal Revenue Code or under Section | 2 | | 205 of this Act, who is included on a composite return filed by | 3 | | the partnership or Subchapter S corporation for the taxable | 4 | | year under subsection (f) of Section 502 of this Act), or who | 5 | | is a retired partner, to the extent that partner's | 6 | | distributions are exempt from tax under Section 203(a)(2)(F) of | 7 | | this Act) an amount equal to the sum distributable share of (i) | 8 | | the share of business income of the partnership, Subchapter S | 9 | | corporation, or trust apportionable to Illinois plus (ii) for | 10 | | taxable years ending on or after December 31, 2014, the share | 11 | | of nonbusiness income of the partnership, Subchapter S | 12 | | corporation, or trust allocated to Illinois under Section 303 | 13 | | of this Act (other than an amount allocated to the commercial | 14 | | domicile of the taxpayer under Section 303 of this Act) that is | 15 | | distributable to of that partner, shareholder, or beneficiary | 16 | | under Sections 702 and 704 and Subchapter S of the Internal | 17 | | Revenue Code, whether or not distributed, (iii) multiplied by | 18 | | the applicable rates of tax for that partner , or shareholder , | 19 | | or beneficiary under subsections (a) through (d) of Section 201 | 20 | | of this Act , and (iv) net of the share of any credit under | 21 | | Article 2 of this Act that is distributable by the partnership, | 22 | | Subchapter S corporation, or trust and allowable against the | 23 | | tax liability of that partner, shareholder, or beneficiary for | 24 | | a taxable year ending on or after December 31, 2014 . | 25 | | (b) Credit for taxes withheld. Any amount withheld under | 26 | | subsection (a) of this Section and paid to the Department shall |
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| 1 | | be treated as a payment of the estimated tax liability or of | 2 | | the liability for withholding under this Section of the | 3 | | partner, shareholder, or beneficiary to whom the income is | 4 | | distributable for the taxable year in which that person | 5 | | incurred a liability under this Act with respect to that | 6 | | income.
The Department shall adopt rules pursuant to which a | 7 | | partner, shareholder, or beneficiary may claim a credit against | 8 | | its obligation for withholding under this Section for amounts | 9 | | withheld under this Section with respect to income | 10 | | distributable to it by a partnership, Subchapter S corporation, | 11 | | or trust and allowing its partners, shareholders, or | 12 | | beneficiaries to claim a credit under this subsection (b) for | 13 | | those withheld amounts.
| 14 | | (c) Exemption from withholding. | 15 | | (1) A partnership, Subchapter S corporation, or trust | 16 | | shall not be required to withhold tax under subsection (a) | 17 | | of this Section with respect to any nonresident partner, | 18 | | shareholder, or beneficiary (other than an individual) | 19 | | from whom the partnership, S corporation, or trust has | 20 | | received a certificate, completed in the form and manner | 21 | | prescribed by the Department, stating that such | 22 | | nonresident partner, shareholder, or beneficiary shall: | 23 | | (A) file all returns that the partner, | 24 | | shareholder, or beneficiary is required to file under | 25 | | Section 502 of this Act and make timely payment of all | 26 | | taxes imposed under Section 201 of this Act or under |
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| 1 | | this Section on the partner, shareholder, or | 2 | | beneficiary with respect to income of the partnership, | 3 | | S corporation, or trust; and | 4 | | (B) be subject to personal jurisdiction in this | 5 | | State for purposes of the collection of income taxes, | 6 | | together with related interest and penalties, imposed | 7 | | on the partner, shareholder, or beneficiary with | 8 | | respect to the income of the partnership, S | 9 | | corporation, or trust. | 10 | | (2) The Department may revoke the exemption provided by | 11 | | this subsection (c) at any time that it determines that the | 12 | | nonresident partner, shareholder, or beneficiary is not | 13 | | abiding by the terms of the certificate. The Department | 14 | | shall notify the partnership, S corporation, or trust that | 15 | | it has revoked a certificate by notice left at the usual | 16 | | place of business of the partnership, S corporation, or | 17 | | trust or by mail to the last known address of the | 18 | | partnership, S corporation, or trust. | 19 | | (3) A partnership, S corporation, or trust that | 20 | | receives a certificate under this subsection (c) properly | 21 | | completed by a nonresident partner, shareholder, or | 22 | | beneficiary shall not be required to withhold any amount | 23 | | from that partner, shareholder, or beneficiary, the | 24 | | payment of which would be due under Section 711(a-5) of | 25 | | this Act after the receipt of the certificate and no | 26 | | earlier than 60 days after the Department has notified the |
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| 1 | | partnership, S corporation, or trust that the certificate | 2 | | has been revoked. | 3 | | (4) Certificates received by a the partnership, S | 4 | | corporation, or trust under this subsection (c) must be | 5 | | retained by the partnership, S corporation, or trust and a | 6 | | record of such certificates must be provided to the | 7 | | Department, in a format in which the record is available | 8 | | for review by the Department, upon request by the | 9 | | Department. The Department may, by rule, require the record | 10 | | of certificates to be maintained and provided to the | 11 | | Department electronically.
| 12 | | (Source: P.A. 97-507, eff. 8-23-11.)
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