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90_HB2363enr
35 ILCS 5/304 from Ch. 120, par. 3-304
Amends the Illinois Income Tax Act. Provides that for
taxable years ending on or after December 31, 1995, dividends
and certain other amounts included under the Internal Revenue
Code shall not be included in the numerator or denominator of
the sales factor (now for taxable years ending on or after
December 31, 1995 and excluding taxable years ending after
December 31, 1997). Effective immediately.
LRB9007368KDks
HB2363 Enrolled LRB9007368KDks
1 AN ACT concerning taxes.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Income Tax Act is amended by
5 changing Sections 204, 304, 502, 702, 703, 804, 901, and 1501
6 as follows:
7 (35 ILCS 5/204) (from Ch. 120, par. 2-204)
8 Sec. 204. Standard Exemption.
9 (a) Allowance of exemption. In computing net income
10 under this Act, there shall be allowed as an exemption the
11 sum of the amounts determined under subsections (b), (c) and
12 (d), multiplied by a fraction the numerator of which is the
13 amount of the taxpayer's base income allocable to this State
14 for the taxable year and the denominator of which is the
15 taxpayer's total base income for the taxable year.
16 (b) Basic amount. For the purpose of subsection (a) of
17 this Section, except as provided by subsection (a) of Section
18 205 and in this subsection, each taxpayer shall be allowed a
19 basic amount of $1000, except that for individuals the basic
20 amount shall be:
21 (1) for taxable years ending on or after December
22 31, 1998 and prior to December 31, 1999, $1,300;
23 (2) for taxable years ending on or after December
24 31, 1999 and prior to December 31, 2000, $1,650;
25 (3) for taxable years ending on or after December
26 31, 2000, $2,000.
27 For taxable years ending on or after December 31, 1992, a
28 taxpayer whose Illinois base income exceeds the basic amount
29 $1,000 and who is claimed as a dependent on another person's
30 tax return under the Internal Revenue Code of 1986 shall not
31 be allowed any basic amount under this subsection. The
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1 provisions of Section 250 shall not apply to the amendments
2 made by this amendatory Act of 1998.
3 (c) Additional amount for individuals. In the case of an
4 individual taxpayer, there shall be allowed for the purpose
5 of subsection (a), in addition to the basic amount provided
6 by subsection (b), an additional exemption equal to the basic
7 amount in the amount of $1000 for each exemption in excess of
8 one allowable to such individual taxpayer for the taxable
9 year under Section 151 of the Internal Revenue Code. The
10 provisions of Section 250 shall not apply to the amendments
11 made by this amendatory Act of 1998.
12 (d) Additional exemptions for an individual taxpayer and
13 his or her spouse. In the case of an individual taxpayer and
14 his or her spouse, he or she shall each be allowed additional
15 exemptions as follows:
16 (1) Additional exemption for taxpayer or spouse 65
17 years of age or older.
18 (A) For taxpayer. An additional exemption of
19 $1,000 for the taxpayer if he or she has attained
20 the age of 65 before the end of the taxable year.
21 (B) For spouse when a joint return is not
22 filed. An additional exemption of $1,000 for the
23 spouse of the taxpayer if a joint return is not made
24 by the taxpayer and his spouse, and if the spouse
25 has attained the age of 65 before the end of such
26 taxable year, and, for the calendar year in which
27 the taxable year of the taxpayer begins, has no
28 gross income and is not the dependent of another
29 taxpayer.
30 (2) Additional exemption for blindness of taxpayer
31 or spouse.
32 (A) For taxpayer. An additional exemption of
33 $1,000 for the taxpayer if he or she is blind at the
34 end of the taxable year.
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1 (B) For spouse when a joint return is not
2 filed. An additional exemption of $1,000 for the
3 spouse of the taxpayer if a separate return is made
4 by the taxpayer, and if the spouse is blind and, for
5 the calendar year in which the taxable year of the
6 taxpayer begins, has no gross income and is not the
7 dependent of another taxpayer. For purposes of this
8 paragraph, the determination of whether the spouse
9 is blind shall be made as of the end of the taxable
10 year of the taxpayer; except that if the spouse dies
11 during such taxable year such determination shall be
12 made as of the time of such death.
13 (C) Blindness defined. For purposes of this
14 subsection, an individual is blind only if his or
15 her central visual acuity does not exceed 20/200 in
16 the better eye with correcting lenses, or if his or
17 her visual acuity is greater than 20/200 but is
18 accompanied by a limitation in the fields of vision
19 such that the widest diameter of the visual fields
20 subtends an angle no greater than 20 degrees.
21 (e) Cross reference. See Article 3 for the manner of
22 determining base income allocable to this State.
23 (Source: P.A. 86-146; 87-880; 87-1246.)
24 (35 ILCS 5/304) (from Ch. 120, par. 3-304)
25 Sec. 304. Business income of persons other than
26 residents.
27 (a) In general. The business income of a person other
28 than a resident shall be allocated to this State if such
29 person's business income is derived solely from this State.
30 If a person other than a resident derives business income
31 from this State and one or more other states, then, for tax
32 years ending on or before December 30, 1998, and except as
33 otherwise provided by this Section, such person's business
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1 income shall be apportioned to this State by multiplying the
2 income by a fraction, the numerator of which is the sum of
3 the property factor (if any), the payroll factor (if any) and
4 200% of the sales factor (if any), and the denominator of
5 which is 4 reduced by the number of factors other than the
6 sales factor which have a denominator of zero and by an
7 additional 2 if the sales factor has a denominator of zero.
8 For tax years ending on or after December 31, 1998, and
9 except as otherwise provided by this Section, persons other
10 than residents who derive business income from this State and
11 one or more other states shall compute their apportionment
12 factor by weighting their property, payroll, and sales
13 factors as provided in subsection (h) of this Section.
14 (1) Property factor.
15 (A) The property factor is a fraction, the
16 numerator of which is the average value of the person's
17 real and tangible personal property owned or rented and
18 used in the trade or business in this State during the
19 taxable year and the denominator of which is the average
20 value of all the person's real and tangible personal
21 property owned or rented and used in the trade or
22 business during the taxable year.
23 (B) Property owned by the person is valued at its
24 original cost. Property rented by the person is valued at
25 8 times the net annual rental rate. Net annual rental
26 rate is the annual rental rate paid by the person less
27 any annual rental rate received by the person from
28 sub-rentals.
29 (C) The average value of property shall be
30 determined by averaging the values at the beginning and
31 ending of the taxable year but the Director may require
32 the averaging of monthly values during the taxable year
33 if reasonably required to reflect properly the average
34 value of the person's property.
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1 (2) Payroll factor.
2 (A) The payroll factor is a fraction, the numerator
3 of which is the total amount paid in this State during
4 the taxable year by the person for compensation, and the
5 denominator of which is the total compensation paid
6 everywhere during the taxable year.
7 (B) Compensation is paid in this State if:
8 (i) The individual's service is performed
9 entirely within this State;
10 (ii) The individual's service is performed
11 both within and without this State, but the service
12 performed without this State is incidental to the
13 individual's service performed within this State; or
14 (iii) Some of the service is performed within
15 this State and either the base of operations, or if
16 there is no base of operations, the place from which
17 the service is directed or controlled is within this
18 State, or the base of operations or the place from
19 which the service is directed or controlled is not
20 in any state in which some part of the service is
21 performed, but the individual's residence is in this
22 State.
23 Beginning with taxable years ending on or after
24 December 31, 1992, for residents of states that impose a
25 comparable tax liability on residents of this State, for
26 purposes of item (i) of this paragraph (B), in the case
27 of persons who perform personal services under personal
28 service contracts for sports performances, services by
29 that person at a sporting event taking place in Illinois
30 shall be deemed to be a performance entirely within this
31 State.
32 (3) Sales factor.
33 (A) The sales factor is a fraction, the numerator
34 of which is the total sales of the person in this State
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1 during the taxable year, and the denominator of which is
2 the total sales of the person everywhere during the
3 taxable year.
4 (B) Sales of tangible personal property are in this
5 State if:
6 (i) The property is delivered or shipped to a
7 purchaser, other than the United States government,
8 within this State regardless of the f. o. b. point
9 or other conditions of the sale; or
10 (ii) The property is shipped from an office,
11 store, warehouse, factory or other place of storage
12 in this State and either the purchaser is the United
13 States government or the person is not taxable in
14 the state of the purchaser; provided, however, that
15 premises owned or leased by a person who has
16 independently contracted with the seller for the
17 printing of newspapers, periodicals or books shall
18 not be deemed to be an office, store, warehouse,
19 factory or other place of storage for purposes of
20 this Section. Sales of tangible personal property
21 are not in this State if the seller and purchaser
22 would be members of the same unitary business group
23 but for the fact that either the seller or purchaser
24 is a person with 80% or more of total business
25 activity outside of the United States and the
26 property is purchased for resale.
27 (C) Sales, other than sales of tangible personal
28 property, are in this State if:
29 (i) The income-producing activity is performed
30 in this State; or
31 (ii) The income-producing activity is
32 performed both within and without this State and a
33 greater proportion of the income-producing activity
34 is performed within this State than without this
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1 State, based on performance costs.
2 (D) For taxable years ending on or after December
3 31, 1995, the following items of income shall not be
4 included in the numerator or denominator of the sales
5 factor: dividends; amounts included under Section 78 of
6 the Internal Revenue Code; and Subpart F income as
7 defined in Section 952 of the Internal Revenue Code. No
8 inference shall be drawn from the enactment of this
9 paragraph (D) in construing this Section for taxable
10 years ending before December 31, 1995.
11 (b) Insurance companies.
12 (1) In general. Except as otherwise provided by
13 paragraph (2), business income of an insurance company for a
14 taxable year shall be apportioned to this State by
15 multiplying such income by a fraction, the numerator of which
16 is the direct premiums written for insurance upon property or
17 risk in this State, and the denominator of which is the
18 direct premiums written for insurance upon property or risk
19 everywhere. For purposes of this subsection, the term "direct
20 premiums written" means the total amount of direct premiums
21 written, assessments and annuity considerations as reported
22 for the taxable year on the annual statement filed by the
23 company with the Illinois Director of Insurance in the form
24 approved by the National Convention of Insurance
25 Commissioners or such other form as may be prescribed in lieu
26 thereof.
27 (2) Reinsurance. If the principal source of premiums
28 written by an insurance company consists of premiums for
29 reinsurance accepted by it, the business income of such
30 company shall be apportioned to this State by multiplying
31 such income by a fraction, the numerator of which is the sum
32 of (i) direct premiums written for insurance upon property or
33 risk in this State, plus (ii) premiums written for
34 reinsurance accepted in respect of property or risk in this
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1 State, and the denominator of which is the sum of (iii)
2 direct premiums written for insurance upon property or risk
3 everywhere, plus (iv) premiums written for reinsurance
4 accepted in respect of property or risk everywhere. For
5 purposes of this paragraph, premiums written for reinsurance
6 accepted in respect of property or risk in this State,
7 whether or not otherwise determinable, may, at the election
8 of the company, be determined on the basis of the proportion
9 which premiums written for reinsurance accepted from
10 companies commercially domiciled in Illinois bears to
11 premiums written for reinsurance accepted from all sources,
12 or, alternatively, in the proportion which the sum of the
13 direct premiums written for insurance upon property or risk
14 in this State by each ceding company from which reinsurance
15 is accepted bears to the sum of the total direct premiums
16 written by each such ceding company for the taxable year.
17 (c) Financial organizations.
18 (1) In general. Business income of a financial
19 organization shall be apportioned to this State by
20 multiplying such income by a fraction, the numerator of which
21 is its business income from sources within this State, and
22 the denominator of which is its business income from all
23 sources. For the purposes of this subsection, the business
24 income of a financial organization from sources within this
25 State is the sum of the amounts referred to in subparagraphs
26 (A) through (E) following, but excluding the adjusted income
27 of an international banking facility as determined in
28 paragraph (2):
29 (A) Fees, commissions or other compensation for
30 financial services rendered within this State;
31 (B) Gross profits from trading in stocks, bonds or
32 other securities managed within this State;
33 (C) Dividends, and interest from Illinois
34 customers, which are received within this State;
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1 (D) Interest charged to customers at places of
2 business maintained within this State for carrying debit
3 balances of margin accounts, without deduction of any
4 costs incurred in carrying such accounts; and
5 (E) Any other gross income resulting from the
6 operation as a financial organization within this State.
7 In computing the amounts referred to in paragraphs (A)
8 through (E) of this subsection, any amount received by a
9 member of an affiliated group (determined under Section
10 1504(a) of the Internal Revenue Code but without
11 reference to whether any such corporation is an
12 "includible corporation" under Section 1504(b) of the
13 Internal Revenue Code) from another member of such group
14 shall be included only to the extent such amount exceeds
15 expenses of the recipient directly related thereto.
16 (2) International Banking Facility.
17 (A) Adjusted Income. The adjusted income of an
18 international banking facility is its income reduced by
19 the amount of the floor amount.
20 (B) Floor Amount. The floor amount shall be the
21 amount, if any, determined by multiplying the income of
22 the international banking facility by a fraction, not
23 greater than one, which is determined as follows:
24 (i) The numerator shall be:
25 The average aggregate, determined on a
26 quarterly basis, of the financial organization's
27 loans to banks in foreign countries, to foreign
28 domiciled borrowers (except where secured primarily
29 by real estate) and to foreign governments and other
30 foreign official institutions, as reported for its
31 branches, agencies and offices within the state on
32 its "Consolidated Report of Condition", Schedule A,
33 Lines 2.c., 5.b., and 7.a., which was filed with the
34 Federal Deposit Insurance Corporation and other
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1 regulatory authorities, for the year 1980, minus
2 The average aggregate, determined on a
3 quarterly basis, of such loans (other than loans of
4 an international banking facility), as reported by
5 the financial institution for its branches, agencies
6 and offices within the state, on the corresponding
7 Schedule and lines of the Consolidated Report of
8 Condition for the current taxable year, provided,
9 however, that in no case shall the amount determined
10 in this clause (the subtrahend) exceed the amount
11 determined in the preceding clause (the minuend);
12 and
13 (ii) the denominator shall be the average
14 aggregate, determined on a quarterly basis, of the
15 international banking facility's loans to banks in
16 foreign countries, to foreign domiciled borrowers
17 (except where secured primarily by real estate) and
18 to foreign governments and other foreign official
19 institutions, which were recorded in its financial
20 accounts for the current taxable year.
21 (C) Change to Consolidated Report of Condition and
22 in Qualification. In the event the Consolidated Report
23 of Condition which is filed with the Federal Deposit
24 Insurance Corporation and other regulatory authorities is
25 altered so that the information required for determining
26 the floor amount is not found on Schedule A, lines 2.c.,
27 5.b. and 7.a., the financial institution shall notify the
28 Department and the Department may, by regulations or
29 otherwise, prescribe or authorize the use of an
30 alternative source for such information. The financial
31 institution shall also notify the Department should its
32 international banking facility fail to qualify as such,
33 in whole or in part, or should there be any amendment or
34 change to the Consolidated Report of Condition, as
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1 originally filed, to the extent such amendment or change
2 alters the information used in determining the floor
3 amount.
4 (d) Transportation services. Business income derived
5 from furnishing transportation services shall be apportioned
6 to this State in accordance with paragraphs (1) and (2):
7 (1) Such business income (other than that derived
8 from transportation by pipeline) shall be apportioned to
9 this State by multiplying such income by a fraction, the
10 numerator of which is the revenue miles of the person in
11 this State, and the denominator of which is the revenue
12 miles of the person everywhere. For purposes of this
13 paragraph, a revenue mile is the transportation of 1
14 passenger or 1 net ton of freight the distance of 1 mile
15 for a consideration. Where a person is engaged in the
16 transportation of both passengers and freight, the
17 fraction above referred to shall be determined by means
18 of an average of the passenger revenue mile fraction and
19 the freight revenue mile fraction, weighted to reflect
20 the person's
21 (A) relative railway operating income from
22 total passenger and total freight service, as
23 reported to the Interstate Commerce Commission, in
24 the case of transportation by railroad, and
25 (B) relative gross receipts from passenger and
26 freight transportation, in case of transportation
27 other than by railroad.
28 (2) Such business income derived from
29 transportation by pipeline shall be apportioned to this
30 State by multiplying such income by a fraction, the
31 numerator of which is the revenue miles of the person in
32 this State, and the denominator of which is the revenue
33 miles of the person everywhere. For the purposes of this
34 paragraph, a revenue mile is the transportation by
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1 pipeline of 1 barrel of oil, 1,000 cubic feet of gas, or
2 of any specified quantity of any other substance, the
3 distance of 1 mile for a consideration.
4 (e) Combined apportionment. Where 2 or more persons are
5 engaged in a unitary business as described in subsection
6 (a)(27) of Section 1501, a part of which is conducted in this
7 State by one or more members of the group, the business
8 income attributable to this State by any such member or
9 members shall be apportioned by means of the combined
10 apportionment method.
11 (f) Alternative allocation. If the allocation and
12 apportionment provisions of subsections (a) through (e) and
13 of subsection (h) do not fairly represent the extent of a
14 person's business activity in this State, the person may
15 petition for, or the Director may require, in respect of all
16 or any part of the person's business activity, if reasonable:
17 (1) Separate accounting;
18 (2) The exclusion of any one or more factors;
19 (3) The inclusion of one or more additional factors
20 which will fairly represent the person's business
21 activities in this State; or
22 (4) The employment of any other method to
23 effectuate an equitable allocation and apportionment of
24 the person's business income.
25 (g) Cross reference. For allocation of business income
26 by residents, see Section 301(a).
27 (h) For tax years ending on or after December 31, 1998,
28 the apportionment factor of persons who apportion their
29 business income to this State under subsection (a) shall be
30 equal to:
31 (1) for tax years ending on or after December 31,
32 1998 and before December 31, 1999, 16 2/3% of the
33 property factor plus 16 2/3% of the payroll factor plus
34 66 2/3% of the sales factor;
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1 (2) for tax years ending on or after December 31,
2 1999 and before December 31, 2000, 8 1/3% of the property
3 factor plus 8 1/3% of the payroll factor plus 83 1/3% of
4 the sales factor;
5 (3) for tax years ending on or after December 31,
6 2000, the sales factor.
7 If, in any tax year ending on or after December 31, 1998 and
8 before December 31, 2000, the denominator of the payroll,
9 property, or sales factor is zero, the apportionment factor
10 computed in paragraph (1) or (2) of this subsection for that
11 year shall be divided by an amount equal to 100% minus the
12 percentage weight given to each factor whose denominator is
13 equal to zero.
14 (Source: P.A. 89-379, eff. 1-1-96; 89-399, eff. 8-20-95;
15 89-626, eff. 8-9-96; 90-562, eff. 12-16-97.)
16 (35 ILCS 5/502) (from Ch. 120, par. 5-502)
17 Sec. 502. Returns and notices.
18 (a) In general. A return with respect to the taxes
19 imposed by this Act shall be made by every person for any
20 taxable year:
21 (1) For which such person is liable for a tax
22 imposed by this Act, or
23 (2) In the case of a resident or in the case of a
24 corporation which is qualified to do business in this
25 State, for which such person is required to make a
26 federal income tax return, regardless of whether such
27 person is liable for a tax imposed by this Act. However,
28 this paragraph shall not require a resident to make a
29 return if, unless such person has an Illinois base income
30 of the basic amount in Section 204(b) $1,000 or less and
31 is either claimed as a dependent on another person's tax
32 return under the Internal Revenue Code of 1986, or is
33 claimed as a dependent on another person's tax return
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1 under this Act.
2 (b) Fiduciaries and receivers.
3 (1) Decedents. If an individual is deceased, any
4 return or notice required of such individual under this
5 Act shall be made by his executor, administrator, or
6 other person charged with the property of such decedent.
7 (2) Individuals under a disability. If an
8 individual is unable to make a return or notice required
9 under this Act, the return or notice required of such
10 individual shall be made by his duly authorized agent,
11 guardian, fiduciary or other person charged with the care
12 of the person or property of such individual.
13 (3) Estates and trusts. Returns or notices required
14 of an estate or a trust shall be made by the fiduciary
15 thereof.
16 (4) Receivers, trustees and assignees for
17 corporations. In a case where a receiver, trustee in
18 bankruptcy, or assignee, by order of a court of competent
19 jurisdiction, by operation of law, or otherwise, has
20 possession of or holds title to all or substantially all
21 the property or business of a corporation, whether or not
22 such property or business is being operated, such
23 receiver, trustee, or assignee shall make the returns and
24 notices required of such corporation in the same manner
25 and form as corporations are required to make such
26 returns and notices.
27 (c) Joint returns by husband and wife.
28 (1) Except as provided in paragraph (3), if a
29 husband and wife file a joint federal income tax return
30 for a taxable year they shall file a joint return under
31 this Act for such taxable year and their liabilities
32 shall be joint and several, but if the federal income tax
33 liability of either spouse is determined on a separate
34 federal income tax return, they shall file separate
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1 returns under this Act.
2 (2) If neither spouse is required to file a federal
3 income tax return and either or both are required to file
4 a return under this Act, they may elect to file separate
5 or joint returns and pursuant to such election their
6 liabilities shall be separate or joint and several.
7 (3) If either husband or wife is a resident and the
8 other is a nonresident, they shall file separate returns
9 in this State on such forms as may be required by the
10 Department in which event their tax liabilities shall be
11 separate; but they may elect to determine their joint net
12 income and file a joint return as if both were residents
13 and in such case, their liabilities shall be joint and
14 several.
15 (4) However, an innocent spouse shall be relieved
16 of liability for tax (including interest and penalties)
17 for any taxable year for which a joint return has been
18 made, upon submission of proof that the Internal Revenue
19 Service has made a determination under Section 6013(e) of
20 the Internal Revenue Code, for the same taxable year,
21 which determination relieved the spouse from liability
22 for federal income taxes. If there is no federal income
23 tax liability at issue for the same taxable year, the
24 Department shall rely on the provisions of Section
25 6013(e) to determine whether the person requesting
26 innocent spouse abatement of tax, penalty, and interest
27 is entitled to that relief.
28 (d) Partnerships. Every partnership having any base
29 income allocable to this State in accordance with section
30 305(c) shall retain information concerning all items of
31 income, gain, loss and deduction; the names and addresses of
32 all of the partners, or names and addresses of members of a
33 limited liability company, or other persons who would be
34 entitled to share in the base income of the partnership if
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1 distributed; the amount of the distributive share of each;
2 and such other pertinent information as the Department may by
3 forms or regulations prescribe. The partnership shall make
4 that information available to the Department when requested
5 by the Department.
6 (e) For taxable years ending on or after December 31,
7 1985, and before December 31, 1993, taxpayers that are
8 corporations (other than Subchapter S corporations) having
9 the same taxable year and that are members of the same
10 unitary business group may elect to be treated as one
11 taxpayer for purposes of any original return, amended return
12 which includes the same taxpayers of the unitary group which
13 joined in the election to file the original return,
14 extension, claim for refund, assessment, collection and
15 payment and determination of the group's tax liability under
16 this Act. This subsection (e) does not permit the election to
17 be made for some, but not all, of the purposes enumerated
18 above. For taxable years ending on or after December 31,
19 1987, corporate members (other than Subchapter S
20 corporations) of the same unitary business group making this
21 subsection (e) election are not required to have the same
22 taxable year.
23 For taxable years ending on or after December 31, 1993,
24 taxpayers that are corporations (other than Subchapter S
25 corporations) and that are members of the same unitary
26 business group shall be treated as one taxpayer for purposes
27 of any original return, amended return which includes the
28 same taxpayers of the unitary group which joined in filing
29 the original return, extension, claim for refund, assessment,
30 collection and payment and determination of the group's tax
31 liability under this Act.
32 (f) The Department may promulgate regulations to permit
33 nonresident individual partners of the same partnership,
34 nonresident Subchapter S corporation shareholders of the same
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1 Subchapter S corporation, and nonresident individuals
2 transacting an insurance business in Illinois under a Lloyds
3 plan of operation, and nonresident individual members of the
4 same limited liability company that is treated as a
5 partnership under Section 1501 (a)(16) of this Act, to file
6 composite individual income tax returns reflecting the
7 composite income of such individuals allocable to Illinois
8 and to make composite individual income tax payments. The
9 Department may by regulation also permit such composite
10 returns to include the income tax owed by Illinois residents
11 attributable to their income from partnerships, Subchapter S
12 corporations, insurance businesses organized under a Lloyds
13 plan of operation, or limited liability companies that are
14 treated as partnership under Section 1501 (a)(16) of this
15 Act, in which case such Illinois residents will be permitted
16 to claim credits on their individual returns for their shares
17 of the composite tax payments. This subsection (f) applies
18 to taxable years ending on or after December 31, 1987.
19 (g) The Department may adopt rules to authorize the
20 electronic filing of any return required to be filed under
21 this Section.
22 (Source: P.A. 87-879; 87-1246; 88-195; 88-480; 88-669, eff.
23 11-29-94; 88-670, eff. 12-2-94.)
24 (35 ILCS 5/702) (from Ch. 120, par. 7-702)
25 Sec. 702. Amount Exempt from Withholding. For purposes of
26 this Section an employee shall be entitled to a withholding
27 exemption in an amount equal to the basic amount in Section
28 204(b) $1,000 for each personal or dependent exemption which
29 he is entitled to claim on his federal return pursuant to
30 Section 151 of the Internal Revenue Code of 1986; plus an
31 allowance equal to $1,000 for each $1,000 he is entitled to
32 deduct from gross income in arriving at adjusted gross income
33 pursuant to Section 62 of the Internal Revenue Code of 1986;
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1 plus an additional allowance equal to $1,000 for each $1,000
2 eligible for subtraction on his Illinois income tax return as
3 Illinois real estate taxes paid during the taxable year; or
4 in any lesser amount claimed by him. Every employee shall
5 furnish to his employer such information as is required for
6 the employer to make an accurate withholding under this Act.
7 The employer may rely on this information for withholding
8 purposes. If any employee fails or refuses to furnish such
9 information, the employer shall withhold the full rate of tax
10 from the employee's total compensation.
11 (Source: P.A. 85-731.)
12 (35 ILCS 5/703) (from Ch. 120, par. 7-703)
13 Sec. 703. Information Statement. Every employer required
14 to deduct and withhold tax under this Act from compensation
15 of an employee, or who would have been required so to deduct
16 and withhold tax if the employee's withholding exemption were
17 not in excess of the basic amount in Section 204(b) $1,000,
18 shall furnish in duplicate to each such employee in respect
19 of the compensation paid by such employer to such employee
20 during the calendar year on or before January 31 of the
21 succeeding year, or, if his employment is terminated before
22 the close of such calendar year, on the date on which the
23 last payment of compensation is made, a written statement in
24 such form as the Department may by regulation prescribe
25 showing the amount of compensation paid by the employer to
26 the employee, the amount deducted and withheld as tax, and
27 such other information as the Department shall prescribe. A
28 copy of such statement shall be filed by the employee with
29 his return for his taxable year to which it relates (as
30 determined under section 601(b) (1).
31 (Source: P.A. 76-261.)
32 (35 ILCS 5/804) (from Ch. 120, par. 8-804)
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1 Sec. 804. Failure to Pay Estimated Tax.
2 (a) In general. In case of any underpayment of estimated
3 tax by a taxpayer, except as provided in subsection (d) or
4 (e), the taxpayer shall be liable to a penalty in an amount
5 determined at the rate prescribed by Section 3-3 of the
6 Uniform Penalty and Interest Act upon the amount of the
7 underpayment (determined under subsection (b)) for each
8 required installment.
9 (b) Amount of underpayment. For purposes of subsection
10 (a), the amount of the underpayment shall be the excess of:
11 (1) the amount of the installment which would be
12 required to be paid under subsection (c), over
13 (2) the amount, if any, of the installment paid on
14 or before the last date prescribed for payment.
15 (c) Amount of Required Installments.
16 (1) Amount.
17 (A) In General. Except as provided in
18 paragraph (2), the amount of any required
19 installment shall be 25% of the required annual
20 payment.
21 (B) Required Annual Payment. For purposes of
22 subparagraph (A), the term "required annual payment"
23 means the lesser of
24 (i) 90% of the tax shown on the return
25 for the taxable year, or if no return is filed,
26 90% of the tax for such year, or
27 (ii) 100% of the tax shown on the return
28 of the taxpayer for the preceding taxable year
29 if a return showing a liability for tax was
30 filed by the taxpayer for the preceding taxable
31 year and such preceding year was a taxable year
32 of 12 months.
33 (2) Lower Required Installment where Annualized
34 Income Installment is Less Than Amount Determined Under
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1 Paragraph (1).
2 (A) In General. In the case of any required
3 installment if a taxpayer establishes that the
4 annualized income installment is less than the
5 amount determined under paragraph (1),
6 (i) the amount of such required
7 installment shall be the annualized income
8 installment, and
9 (ii) any reduction in a required
10 installment resulting from the application of
11 this subparagraph shall be recaptured by
12 increasing the amount of the next required
13 installment determined under paragraph (1) by
14 the amount of such reduction, and by increasing
15 subsequent required installments to the extent
16 that the reduction has not previously been
17 recaptured under this clause.
18 (B) Determination of Annualized Income
19 Installment. In the case of any required
20 installment, the annualized income installment is
21 the excess, if any, of
22 (i) an amount equal to the applicable
23 percentage of the tax for the taxable year
24 computed by placing on an annualized basis the
25 net income for months in the taxable year
26 ending before the due date for the installment,
27 over
28 (ii) the aggregate amount of any prior
29 required installments for the taxable year.
30 (C) Applicable Percentage.
31 In the case of the following The applicable
32 required installments: percentage is:
33 1st ............................... 22.5%
34 2nd ............................... 45%
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1 3rd ............................... 67.5%
2 4th ............................... 90%
3 (D) Annualized Net Income; Individuals. For
4 individuals, net income shall be placed on an
5 annualized basis by:
6 (i) multiplying by 12, or in the case of
7 a taxable year of less than 12 months, by the
8 number of months in the taxable year, the net
9 income computed without regard to the standard
10 exemption for the months in the taxable year
11 ending before the month in which the
12 installment is required to be paid;
13 (ii) dividing the resulting amount by the
14 number of months in the taxable year ending
15 before the month in which such installment date
16 falls; and
17 (iii) deducting from such amount the
18 standard exemption allowable for the taxable
19 year, such standard exemption being determined
20 as of the last date prescribed for payment of
21 the installment.
22 (E) Annualized Net Income; Corporations. For
23 corporations, net income shall be placed on an
24 annualized basis by multiplying by 12 the taxable
25 income
26 (i) for the first 3 months of the taxable
27 year, in the case of the installment required
28 to be paid in the 4th month,
29 (ii) for the first 3 months or for the
30 first 5 months of the taxable year, in the case
31 of the installment required to be paid in the
32 6th month,
33 (iii) for the first 6 months or for the
34 first 8 months of the taxable year, in the case
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1 of the installment required to be paid in the
2 9th month, and
3 (iv) for the first 9 months or for the
4 first 11 months of the taxable year, in the
5 case of the installment required to be paid in
6 the 12th month of the taxable year,
7 then dividing the resulting amount by the number of
8 months in the taxable year (3, 5, 6, 8, 9, or 11 as
9 the case may be).
10 (d) Exceptions. Notwithstanding the provisions of the
11 preceding subsections, the penalty imposed by subsection (a)
12 shall not be imposed if the taxpayer was not required to file
13 an Illinois income tax return for the preceding taxable year,
14 or if the taxpayer has underpaid taxes solely because of the
15 increased rate in effect during the period from July 1, 1989
16 through December 1989, or, for individuals, if the taxpayer
17 had no tax liability for the preceding taxable year and such
18 year was a taxable year of 12 months. The penalty imposed by
19 subsection (a) shall also not be imposed on any underpayments
20 of estimated tax due before the effective date of this
21 amendatory Act of 1998 which underpayments are solely
22 attributable to the change in apportionment from subsection
23 (a) to subsection (h) of Section 304. The provisions of this
24 amendatory Act of 1998 apply to tax years ending on or after
25 December 31, 1998.
26 (e) The penalty imposed for underpayment of estimated
27 tax by subsection (a) of this Section shall not be imposed to
28 the extent that the Department or his designate determines,
29 pursuant to Section 3-8 of the Uniform Penalty and Interest
30 Act that the penalty should not be imposed.
31 (f) Definition of tax. For purposes of subsections (b)
32 and (c), the term "tax" means the excess of the tax imposed
33 under Article 2 of this Act, over the amounts credited
34 against such tax under Sections 601(b) (3) and (4).
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1 (g) Application of Section in case of tax withheld on
2 compensation. For purposes of applying this Section in the
3 case of an individual, tax withheld under Article 7 for the
4 taxable year shall be deemed a payment of estimated tax, and
5 an equal part of such amount shall be deemed paid on each
6 installment date for such taxable year, unless the taxpayer
7 establishes the dates on which all amounts were actually
8 withheld, in which case the amounts so withheld shall be
9 deemed payments of estimated tax on the dates on which such
10 amounts were actually withheld.
11 (g-5) Amounts withheld under the State Salary and
12 Annuity Withholding Act. An individual who has amounts
13 withheld under paragraph (10) of Section 4 of the State
14 Salary and Annuity Withholding Act may elect to have those
15 amounts treated as payments of estimated tax made on the
16 dates on which those amounts are actually withheld.
17 (i) Short taxable year. The application of this Section
18 to taxable years of less than 12 months shall be in
19 accordance with regulations prescribed by the Department.
20 The changes in this Section made by Public Act 84-127
21 shall apply to taxable years ending on or after January 1,
22 1986.
23 (Source: P.A. 90-448, eff. 8-16-97.)
24 (35 ILCS 5/901) (from Ch. 120, par. 9-901)
25 Sec. 901. Collection Authority.
26 (a) In general.
27 The Department shall collect the taxes imposed by this
28 Act. The Department shall collect certified past due child
29 support amounts under Section 39b52 of the Civil
30 Administrative Code of Illinois. Except as provided in
31 subsections (c) and (e) of this Section, money collected
32 pursuant to subsections (a) and (b) of Section 201 of this
33 Act shall be paid into the General Revenue Fund in the State
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1 treasury; money collected pursuant to subsections (c) and (d)
2 of Section 201 of this Act shall be paid into the Personal
3 Property Tax Replacement Fund, a special fund in the State
4 Treasury; and money collected under Section 39b52 of the
5 Civil Administrative Code of Illinois shall be paid into the
6 Child Support Enforcement Trust Fund, a special fund outside
7 the State Treasury.
8 (b) Local Governmental Distributive Fund.
9 Beginning August 1, 1969, and continuing through June 30,
10 1994, the Treasurer shall transfer each month from the
11 General Revenue Fund to a special fund in the State treasury,
12 to be known as the "Local Government Distributive Fund", an
13 amount equal to 1/12 of the net revenue realized from the tax
14 imposed by subsections (a) and (b) of Section 201 of this Act
15 during the preceding month. Beginning July 1, 1994, and
16 continuing through June 30, 1995, the Treasurer shall
17 transfer each month from the General Revenue Fund to the
18 Local Government Distributive Fund an amount equal to 1/11 of
19 the net revenue realized from the tax imposed by subsections
20 (a) and (b) of Section 201 of this Act during the preceding
21 month. Beginning July 1, 1995, the Treasurer shall transfer
22 each month from the General Revenue Fund to the Local
23 Government Distributive Fund an amount equal to 1/10 of the
24 net revenue realized from the tax imposed by subsections (a)
25 and (b) of Section 201 of the Illinois Income Tax Act during
26 the preceding month. Net revenue realized for a month shall
27 be defined as the revenue from the tax imposed by subsections
28 (a) and (b) of Section 201 of this Act which is deposited in
29 the General Revenue Fund, the Educational Assistance Fund and
30 the Income Tax Surcharge Local Government Distributive Fund
31 during the month minus the amount paid out of the General
32 Revenue Fund in State warrants during that same month as
33 refunds to taxpayers for overpayment of liability under the
34 tax imposed by subsections (a) and (b) of Section 201 of this
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1 Act.
2 (c) Deposits Into Income Tax Refund Fund.
3 (1) Beginning on January 1, 1989 and thereafter,
4 the Department shall deposit a percentage of the amounts
5 collected pursuant to subsections (a) and (b)(1), (2),
6 and (3), of Section 201 of this Act into a fund in the
7 State treasury known as the Income Tax Refund Fund. The
8 Department shall deposit 6% of such amounts during the
9 period beginning January 1, 1989 and ending on June 30,
10 1989. Beginning with State fiscal year 1990 and for each
11 fiscal year thereafter, the percentage deposited into the
12 Income Tax Refund Fund during a fiscal year shall be the
13 Annual Percentage. For fiscal years 1999 through 2001,
14 the Annual Percentage shall be 7.1%. For all other
15 fiscal years, the Annual Percentage shall be calculated
16 as a fraction, the numerator of which shall be the amount
17 of refunds approved for payment by the Department during
18 the preceding fiscal year as a result of overpayment of
19 tax liability under subsections (a) and (b)(1), (2), and
20 (3) of Section 201 of this Act plus the amount of such
21 refunds remaining approved but unpaid at the end of the
22 preceding fiscal year minus any surplus which remains on
23 deposit in the Income Tax Refund Fund at the end of the
24 preceding year, the denominator of which shall be the
25 amounts which will be collected pursuant to subsections
26 (a) and (b)(1), (2), and (3) of Section 201 of this Act
27 during the preceding fiscal year. The Director of
28 Revenue shall certify the Annual Percentage to the
29 Comptroller on the last business day of the fiscal year
30 immediately preceding the fiscal year for which it is it
31 to be effective.
32 (2) Beginning on January 1, 1989 and thereafter,
33 the Department shall deposit a percentage of the amounts
34 collected pursuant to subsections (a) and (b)(6), (7),
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1 and (8), (c) and (d) of Section 201 of this Act into a
2 fund in the State treasury known as the Income Tax Refund
3 Fund. The Department shall deposit 18% of such amounts
4 during the period beginning January 1, 1989 and ending on
5 June 30, 1989. Beginning with State fiscal year 1990 and
6 for each fiscal year thereafter, the percentage deposited
7 into the Income Tax Refund Fund during a fiscal year
8 shall be the Annual Percentage. For fiscal years 1999,
9 2000, and 2001, the Annual Percentage shall be 19%. For
10 all other fiscal years, the Annual Percentage shall be
11 calculated as a fraction, the numerator of which shall be
12 the amount of refunds approved for payment by the
13 Department during the preceding fiscal year as a result
14 of overpayment of tax liability under subsections (a) and
15 (b)(6), (7), and (8), (c) and (d) of Section 201 of this
16 Act plus the amount of such refunds remaining approved
17 but unpaid at the end of the preceding fiscal year, the
18 denominator of which shall be the amounts which will be
19 collected pursuant to subsections (a) and (b)(6), (7),
20 and (8), (c) and (d) of Section 201 of this Act during
21 the preceding fiscal year. The Director of Revenue shall
22 certify the Annual Percentage to the Comptroller on the
23 last business day of the fiscal year immediately
24 preceding the fiscal year for which it is to be
25 effective.
26 (d) Expenditures from Income Tax Refund Fund.
27 (1) Beginning January 1, 1989, money in the Income
28 Tax Refund Fund shall be expended exclusively for the
29 purpose of paying refunds resulting from overpayment of
30 tax liability under Section 201 of this Act and for
31 making transfers pursuant to this subsection (d).
32 (2) The Director shall order payment of refunds
33 resulting from overpayment of tax liability under Section
34 201 of this Act from the Income Tax Refund Fund only to
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1 the extent that amounts collected pursuant to Section 201
2 of this Act and transfers pursuant to this subsection (d)
3 have been deposited and retained in the Fund.
4 (3) As soon as possible after the end of On the
5 last business day of each fiscal year, the Director shall
6 order transferred and the State Treasurer and State
7 Comptroller shall transfer from the Income Tax Refund
8 Fund to the Personal Property Tax Replacement Fund an
9 amount, certified by the Director to the Comptroller,
10 equal to the excess of the amount collected pursuant to
11 subsections (c) and (d) of Section 201 of this Act
12 deposited into the Income Tax Refund Fund during the
13 fiscal year over the amount of refunds resulting from
14 overpayment of tax liability under subsections (c) and
15 (d) of Section 201 of this Act paid from the Income Tax
16 Refund Fund during the fiscal year.
17 (4) As soon as possible after the end of On the
18 last business day of each fiscal year, the Director shall
19 order transferred and the State Treasurer and State
20 Comptroller shall transfer from the Personal Property Tax
21 Replacement Fund to the Income Tax Refund Fund an amount,
22 certified by the Director to the Comptroller, equal to
23 the excess of the amount of refunds resulting from
24 overpayment of tax liability under subsections (c) and
25 (d) of Section 201 of this Act paid from the Income Tax
26 Refund Fund during the fiscal year over the amount
27 collected pursuant to subsections (c) and (d) of Section
28 201 of this Act deposited into the Income Tax Refund Fund
29 during the fiscal year.
30 (4.5) As soon as possible after the end of fiscal
31 year 1999 and of each fiscal year thereafter, the
32 Director shall order transferred and the State Treasurer
33 and State Comptroller shall transfer from the Income Tax
34 Refund Fund to the General Revenue Fund any surplus
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1 remaining in the Income Tax Refund Fund as of the end of
2 such fiscal year.
3 (5) This Act shall constitute an irrevocable and
4 continuing appropriation from the Income Tax Refund Fund
5 for the purpose of paying refunds upon the order of the
6 Director in accordance with the provisions of this
7 Section.
8 (e) Deposits into the Education Assistance Fund and the
9 Income Tax Surcharge Local Government Distributive Fund.
10 On July 1, 1991, and thereafter, of the amounts collected
11 pursuant to subsections (a) and (b) of Section 201 of this
12 Act, minus deposits into the Income Tax Refund Fund, the
13 Department shall deposit 7.3% into the Education Assistance
14 Fund in the State Treasury. Beginning July 1, 1991, and
15 continuing through January 31, 1993, of the amounts collected
16 pursuant to subsections (a) and (b) of Section 201 of the
17 Illinois Income Tax Act, minus deposits into the Income Tax
18 Refund Fund, the Department shall deposit 3.0% into the
19 Income Tax Surcharge Local Government Distributive Fund in
20 the State Treasury. Beginning February 1, 1993 and
21 continuing through June 30, 1993, of the amounts collected
22 pursuant to subsections (a) and (b) of Section 201 of the
23 Illinois Income Tax Act, minus deposits into the Income Tax
24 Refund Fund, the Department shall deposit 4.4% into the
25 Income Tax Surcharge Local Government Distributive Fund in
26 the State Treasury. Beginning July 1, 1993, and continuing
27 through June 30, 1994, of the amounts collected under
28 subsections (a) and (b) of Section 201 of this Act, minus
29 deposits into the Income Tax Refund Fund, the Department
30 shall deposit 1.475% into the Income Tax Surcharge Local
31 Government Distributive Fund in the State Treasury.
32 (Source: P.A. 88-89; 89-6, eff. 12-31-95; revised 12-18-97.)
33 (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
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1 Sec. 1501. Definitions.
2 (a) In general. When used in this Act, where not
3 otherwise distinctly expressed or manifestly incompatible
4 with the intent thereof:
5 (1) Business income. The term "business income"
6 means income arising from transactions and activity in
7 the regular course of the taxpayer's trade or business,
8 net of the deductions allocable thereto, and includes
9 income from tangible and intangible property if the
10 acquisition, management, and disposition of the property
11 constitute integral parts of the taxpayer's regular trade
12 or business operations. Such term does not include
13 compensation or the deductions allocable thereto.
14 (2) Commercial domicile. The term "commercial
15 domicile" means the principal place from which the trade
16 or business of the taxpayer is directed or managed.
17 (3) Compensation. The term "compensation" means
18 wages, salaries, commissions and any other form of
19 remuneration paid to employees for personal services.
20 (4) Corporation. The term "corporation" includes
21 associations, joint-stock companies, insurance companies
22 and cooperatives. Any entity, including a limited
23 liability company formed under the Illinois Limited
24 Liability Company Act, shall be treated as a corporation
25 if it is so classified for federal income tax purposes.
26 (5) Department. The term "Department" means the
27 Department of Revenue of this State.
28 (6) Director. The term "Director" means the
29 Director of Revenue of this State.
30 (7) Fiduciary. The term "fiduciary" means a
31 guardian, trustee, executor, administrator, receiver, or
32 any person acting in any fiduciary capacity for any
33 person.
34 (8) Financial organization.
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1 (A) The term "financial organization" means
2 any bank, bank holding company, trust company,
3 savings bank, industrial bank, land bank, safe
4 deposit company, private banker, savings and loan
5 association, building and loan association, credit
6 union, currency exchange, cooperative bank, small
7 loan company, sales finance company, investment
8 company, or any person which is owned by a bank or
9 bank holding company. For the purpose of this
10 Section a "person" will include only those persons
11 which a bank holding company may acquire and hold an
12 interest in, directly or indirectly, under the
13 provisions of the Bank Holding Company Act of 1956
14 (12 U.S.C. 1841, et seq.), except where interests in
15 any person must be disposed of within certain
16 required time limits under the Bank Holding Company
17 Act of 1956.
18 (B) For purposes of subparagraph (A) of this
19 paragraph, the term "bank" includes (i) any entity
20 that is regulated by the Comptroller of the Currency
21 under the National Bank Act, or by the Federal
22 Reserve Board, or by the Federal Deposit Insurance
23 Corporation and (ii) any federally or State
24 chartered bank operating as a credit card bank.
25 (C) For purposes of subparagraph (A) of this
26 paragraph, the term "sales finance company" means a
27 person primarily engaged in the business of
28 purchasing or making loans upon the security of
29 retail installment contracts or retail charge
30 agreements or the outstanding balances under such
31 contracts or agreements. The term includes but is
32 not limited to persons: (i) to whom the Sales
33 Finance Agency Act is rendered inapplicable by
34 subsection (b) of Section 17 thereof; (ii) engaged
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1 in consumer sales finance activities governed by the
2 Sales Finance Agency Act or that would be governed
3 by that Act if conducted in this State; (iii)
4 engaged in activities governed by the Retail
5 Installment Sales Act, including the making or
6 purchasing of retail installment contracts or retail
7 charge agreements for "goods" or "services" as
8 defined in that Act, or activities that would be
9 governed by that Act if conducted in this State;
10 (iv) engaged in activities governed by the Motor
11 Vehicle Retail Installment Sales Act or that would
12 be governed by that Act if conducted in this State;
13 (v) engaged in commercial finance activities
14 governed by the Illinois Uniform Commercial Code or
15 that would be governed by that Code if conducted in
16 this State; or (vi) engaged in the finance leasing
17 of tangible personal property where "finance
18 leasing" is activity that is the economic equivalent
19 of an extension of credit and for which a deduction
20 for depreciation under Section 167 of the Internal
21 Revenue Code of 1986 is not available to a lessor.
22 (D) Subparagraphs (B) and (C) of this
23 paragraph are declaratory of existing law and apply
24 retroactively, for all tax years beginning on or
25 before December 31, 1996, to all original returns,
26 to all amended returns filed no later than 30 days
27 after the effective date of this amendatory Act of
28 1996, and to all notices issued on or before the
29 effective date of this amendatory Act of 1996 under
30 subsection (a) of Section 903, subsection (a) of
31 Section 904, subsection (e) of Section 909, or
32 Section 912. A taxpayer that is a "financial
33 organization" that engages in any transaction with
34 an affiliate shall be a "financial organization" for
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1 all purposes of this Act.
2 (E) For all tax years beginning on or before
3 December 31, 1996, a taxpayer that falls within the
4 definition of a "financial organization" under
5 subparagraphs (B) or (C) of this paragraph, but who
6 does not fall within the definition of a "financial
7 organization" under the Proposed Regulations issued
8 by the Department of Revenue on July 19, 1996, may
9 irrevocably elect to apply the Proposed Regulations
10 for all of those years as though the Proposed
11 Regulations had been lawfully promulgated, adopted,
12 and in effect for all of those years. For purposes
13 of applying subparagraphs (B) or (C) of this
14 paragraph to all of those years, the election
15 allowed by this subparagraph applies only to the
16 taxpayer making the election and to those members of
17 the taxpayer's unitary business group who are
18 ordinarily required to apportion business income
19 under the same subsection of Section 304 of this Act
20 as the taxpayer making the election. No election
21 allowed by this subparagraph shall be made under a
22 claim filed under subsection (d) of Section 909 more
23 than 30 days after the effective date of this
24 amendatory Act of 1996.
25 (9) Fiscal year. The term "fiscal year" means an
26 accounting period of 12 months ending on the last day of
27 any month other than December.
28 (10) Includes and including. The terms "includes"
29 and "including" when used in a definition contained in
30 this Act shall not be deemed to exclude other things
31 otherwise within the meaning of the term defined.
32 (11) Internal Revenue Code. The term "Internal
33 Revenue Code" means the United States Internal Revenue
34 Code of 1954 or any successor law or laws relating to
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1 federal income taxes in effect for the taxable year.
2 (12) Mathematical error. The term "mathematical
3 error" includes the following types of errors, omissions,
4 or defects in a return filed by a taxpayer which prevents
5 acceptance of the return as filed for processing:
6 (A) arithmetic errors or incorrect
7 computations on the return or supporting schedules;
8 (B) entries on the wrong lines;
9 (C) omission of required supporting forms or
10 schedules or the omission of the information in
11 whole or in part called for thereon; and
12 (D) an attempt to claim, exclude, deduct, or
13 improperly report, in a manner directly contrary to
14 the provisions of the Act and regulations thereunder
15 any item of income, exemption, deduction, or credit.
16 (13) Nonbusiness income. The term "nonbusiness
17 income" means all income other than business income or
18 compensation.
19 (14) Nonresident. The term "nonresident" means a
20 person who is not a resident.
21 (15) Paid, incurred and accrued. The terms "paid",
22 "incurred" and "accrued" shall be construed according to
23 the method of accounting upon the basis of which the
24 person's base income is computed under this Act.
25 (16) Partnership and partner. The term
26 "partnership" includes a syndicate, group, pool, joint
27 venture or other unincorporated organization, through or
28 by means of which any business, financial operation, or
29 venture is carried on, and which is not, within the
30 meaning of this Act, a trust or estate or a corporation;
31 and the term "partner" includes a member in such
32 syndicate, group, pool, joint venture or organization.
33 Any entity, including a limited liability company
34 formed under the Illinois Limited Liability Company Act,
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1 shall be treated as a partnership if it is so classified
2 for federal income tax purposes.
3 For purposes of the tax imposed at subsection (c) of
4 Section 201 of this Act, the term "partnership" does not
5 include a syndicate, group, pool, joint venture or other
6 unincorporated organization established for the sole
7 purpose of playing the Illinois State Lottery.
8 (17) Part-year resident. The term "part-year
9 resident" means an individual who became a resident
10 during the taxable year or ceased to be a resident during
11 the taxable year. Under Section 1501 (a) (20) (A) (i)
12 residence commences with presence in this State for other
13 than a temporary or transitory purpose and ceases with
14 absence from this State for other than a temporary or
15 transitory purpose. Under Section 1501 (a) (20) (A) (ii)
16 residence commences with the establishment of domicile in
17 this State and ceases with the establishment of domicile
18 in another State.
19 (18) Person. The term "person" shall be construed
20 to mean and include an individual, a trust, estate,
21 partnership, association, firm, company, corporation,
22 limited liability company, or fiduciary. For purposes of
23 Section 1301 and 1302 of this Act, a "person" means (i)
24 an individual, (ii) a corporation, (iii) an officer,
25 agent, or employee of a corporation, (iv) a member, agent
26 or employee of a partnership, or (v) a member, manager,
27 employee, officer, director, or agent of a limited
28 liability company who in such capacity commits an offense
29 specified in Section 1301 and 1302.
30 (18A) Records. The term "records" includes all
31 data maintained by the taxpayer, whether on paper,
32 microfilm, microfiche, or any type of machine-sensible
33 data compilation.
34 (19) Regulations. The term "regulations" includes
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1 rules promulgated and forms prescribed by the Department.
2 (20) Resident. The term "resident" means:
3 (A) an individual (i) who is in this State for
4 other than a temporary or transitory purpose during
5 the taxable year; or (ii) who is domiciled in this
6 State but is absent from the State for a temporary
7 or transitory purpose during the taxable year;
8 (B) The estate of a decedent who at his or her
9 death was domiciled in this State;
10 (C) A trust created by a will of a decedent
11 who at his death was domiciled in this State; and
12 (D) An irrevocable trust, the grantor of which
13 was domiciled in this State at the time such trust
14 became irrevocable. For purpose of this
15 subparagraph, a trust shall be considered
16 irrevocable to the extent that the grantor is not
17 treated as the owner thereof under Sections 671
18 through 678 of the Internal Revenue Code.
19 (21) Sales. The term "sales" means all gross
20 receipts of the taxpayer not allocated under Sections
21 301, 302 and 303.
22 (22) State. The term "state" when applied to a
23 jurisdiction other than this State means any state of the
24 United States, the District of Columbia, the Commonwealth
25 of Puerto Rico, any Territory or Possession of the United
26 States, and any foreign country, or any political
27 subdivision of any of the foregoing. For purposes of the
28 foreign tax credit under Section 601, the term "state"
29 means any state of the United States, the District of
30 Columbia, the Commonwealth of Puerto Rico, and any
31 territory or possession of the United States, or any
32 political subdivision of any of the foregoing, effective
33 for tax years ending on or after December 31, 1989.
34 (23) Taxable year. The term "taxable year" means
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1 the calendar year, or the fiscal year ending during such
2 calendar year, upon the basis of which the base income is
3 computed under this Act. "Taxable year" means, in the
4 case of a return made for a fractional part of a year
5 under the provisions of this Act, the period for which
6 such return is made.
7 (24) Taxpayer. The term "taxpayer" means any person
8 subject to the tax imposed by this Act.
9 (25) International banking facility. The term
10 international banking facility shall have the same
11 meaning as is set forth in the Illinois Banking Act or as
12 is set forth in the laws of the United States or
13 regulations of the Board of Governors of the Federal
14 Reserve System.
15 (26) Income Tax Return Preparer.
16 (A) The term "income tax return preparer"
17 means any person who prepares for compensation, or
18 who employs one or more persons to prepare for
19 compensation, any return of tax imposed by this Act
20 or any claim for refund of tax imposed by this Act.
21 The preparation of a substantial portion of a return
22 or claim for refund shall be treated as the
23 preparation of that return or claim for refund.
24 (B) A person is not an income tax return
25 preparer if all he or she does is
26 (i) furnish typing, reproducing, or other
27 mechanical assistance;
28 (ii) prepare returns or claims for
29 refunds for the employer by whom he or she is
30 regularly and continuously employed;
31 (iii) prepare as a fiduciary returns or
32 claims for refunds for any person; or
33 (iv) prepare claims for refunds for a
34 taxpayer in response to any notice of
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1 deficiency issued to that taxpayer or in
2 response to any waiver of restriction after the
3 commencement of an audit of that taxpayer or of
4 another taxpayer if a determination in the
5 audit of the other taxpayer directly or
6 indirectly affects the tax liability of the
7 taxpayer whose claims he or she is preparing.
8 (27) Unitary business group. The term "unitary
9 business group" means a group of persons related through
10 common ownership whose business activities are integrated
11 with, dependent upon and contribute to each other. The
12 group will not include those members whose business
13 activity outside the United States is 80% or more of any
14 such member's total business activity; for purposes of
15 this paragraph and clause (a) (3) (B) (ii) of Section
16 304, business activity within the United States shall be
17 measured by means of the factors ordinarily applicable
18 under subsections (a), (b), (c), and (d), or (h) of
19 Section 304 except that, in the case of members
20 ordinarily required to apportion business income by means
21 of the 3 factor formula of property, payroll and sales
22 specified in subsection (a) of Section 304, including the
23 formula as weighted in subsection (h) of Section 304,
24 such members shall not use the sales factor in the
25 computation and the results of the property and payroll
26 factor computations of subsection (a) of Section 304
27 shall be divided by 2 (by one if either the property or
28 payroll factor has a denominator of zero). The
29 computation required by the preceding sentence shall, in
30 each case, involve the division of the member's property,
31 payroll, or revenue miles in the United States, insurance
32 premiums on property or risk in the United States, or
33 financial organization business income from sources
34 within the United States, as the case may be, by the
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1 respective worldwide figures for such items. Common
2 ownership in the case of corporations is the direct or
3 indirect control or ownership of more than 50% of the
4 outstanding voting stock of the persons carrying on
5 unitary business activity. Unitary business activity can
6 ordinarily be illustrated where the activities of the
7 members are: (1) in the same general line (such as
8 manufacturing, wholesaling, retailing of tangible
9 personal property, insurance, transportation or finance);
10 or (2) are steps in a vertically structured enterprise or
11 process (such as the steps involved in the production of
12 natural resources, which might include exploration,
13 mining, refining, and marketing); and, in either
14 instance, the members are functionally integrated through
15 the exercise of strong centralized management (where, for
16 example, authority over such matters as purchasing,
17 financing, tax compliance, product line, personnel,
18 marketing and capital investment is not left to each
19 member). In no event, however, will any unitary business
20 group include members which are ordinarily required to
21 apportion business income under different subsections of
22 Section 304 except that for tax years ending on or after
23 December 31, 1987 this prohibition shall not apply to a
24 unitary business group composed of one or more taxpayers
25 all of which apportion business income pursuant to
26 subsection (b) of Section 304, or all of which apportion
27 business income pursuant to subsection (d) of Section
28 304, and a holding company of such single-factor
29 taxpayers (see definition of "financial organization" for
30 rule regarding holding companies of financial
31 organizations). If a unitary business group would, but
32 for the preceding sentence, include members that are
33 ordinarily required to apportion business income under
34 different subsections of Section 304, then for each
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1 subsection of Section 304 for which there are two or more
2 members, there shall be a separate unitary business group
3 composed of such members. For purposes of the preceding
4 two sentences, a member is "ordinarily required to
5 apportion business income" under a particular subsection
6 of Section 304 if it would be required to use the
7 apportionment method prescribed by such subsection except
8 for the fact that it derives business income solely from
9 Illinois. If the unitary business group members'
10 accounting periods differ, the common parent's accounting
11 period or, if there is no common parent, the accounting
12 period of the member that is expected to have, on a
13 recurring basis, the greatest Illinois income tax
14 liability must be used to determine whether to use the
15 apportionment method provided in subsection (a) or
16 subsection (h) of Section 304. The prohibition against
17 membership in a unitary business group for taxpayers
18 ordinarily required to apportion income under different
19 subsections of Section 304 does not apply to taxpayers
20 required to apportion income under subsection (a) and
21 subsection (h) of Section 304. The provisions of this
22 amendatory Act of 1998 apply to tax years ending on or
23 after December 31, 1998.
24 (28) Subchapter S corporation. The term
25 "Subchapter S corporation" means a corporation for which
26 there is in effect an election under Section 1362 of the
27 Internal Revenue Code, or for which there is a federal
28 election to opt out of the provisions of the Subchapter S
29 Revision Act of 1982 and have applied instead the prior
30 federal Subchapter S rules as in effect on July 1, 1982.
31 (b) Other definitions.
32 (1) Words denoting number, gender, and so forth,
33 when used in this Act, where not otherwise distinctly
34 expressed or manifestly incompatible with the intent
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1 thereof:
2 (A) Words importing the singular include and
3 apply to several persons, parties or things;
4 (B) Words importing the plural include the
5 singular; and
6 (C) Words importing the masculine gender
7 include the feminine as well.
8 (2) "Company" or "association" as including
9 successors and assigns. The word "company" or
10 "association", when used in reference to a corporation,
11 shall be deemed to embrace the words "successors and
12 assigns of such company or association", and in like
13 manner as if these last-named words, or words of similar
14 import, were expressed.
15 (3) Other terms. Any term used in any Section of
16 this Act with respect to the application of, or in
17 connection with, the provisions of any other Section of
18 this Act shall have the same meaning as in such other
19 Section.
20 (Source: P.A. 88-480; 89-399, eff. 8-20-95; 89-711, eff.
21 2-14-97.)
22 Section 99. Effective date. This Act takes effect upon
23 becoming law.