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90_SB1705sam001
LRB9008944LDdvam01
1 AMENDMENT TO SENATE BILL 1705
2 AMENDMENT NO. . Amend Senate Bill 1705 by replacing
3 the title with the following:
4 "AN ACT concerning environmental remediation tax credits,
5 amending named Acts."; and
6 by replacing everything after the enacting clause with the
7 following:
8 "Section 5. The Illinois Income Tax Act is amended by
9 changing Section 201 as follows:
10 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
11 Sec. 201. Tax Imposed.
12 (a) In general. A tax measured by net income is hereby
13 imposed on every individual, corporation, trust and estate
14 for each taxable year ending after July 31, 1969 on the
15 privilege of earning or receiving income in or as a resident
16 of this State. Such tax shall be in addition to all other
17 occupation or privilege taxes imposed by this State or by any
18 municipal corporation or political subdivision thereof.
19 (b) Rates. The tax imposed by subsection (a) of this
20 Section shall be determined as follows:
21 (1) In the case of an individual, trust or estate,
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1 for taxable years ending prior to July 1, 1989, an amount
2 equal to 2 1/2% of the taxpayer's net income for the
3 taxable year.
4 (2) In the case of an individual, trust or estate,
5 for taxable years beginning prior to July 1, 1989 and
6 ending after June 30, 1989, an amount equal to the sum of
7 (i) 2 1/2% of the taxpayer's net income for the period
8 prior to July 1, 1989, as calculated under Section 202.3,
9 and (ii) 3% of the taxpayer's net income for the period
10 after June 30, 1989, as calculated under Section 202.3.
11 (3) In the case of an individual, trust or estate,
12 for taxable years beginning after June 30, 1989, an
13 amount equal to 3% of the taxpayer's net income for the
14 taxable year.
15 (4) (Blank).
16 (5) (Blank).
17 (6) In the case of a corporation, for taxable years
18 ending prior to July 1, 1989, an amount equal to 4% of
19 the taxpayer's net income for the taxable year.
20 (7) In the case of a corporation, for taxable years
21 beginning prior to July 1, 1989 and ending after June 30,
22 1989, an amount equal to the sum of (i) 4% of the
23 taxpayer's net income for the period prior to July 1,
24 1989, as calculated under Section 202.3, and (ii) 4.8% of
25 the taxpayer's net income for the period after June 30,
26 1989, as calculated under Section 202.3.
27 (8) In the case of a corporation, for taxable years
28 beginning after June 30, 1989, an amount equal to 4.8% of
29 the taxpayer's net income for the taxable year.
30 (c) Beginning on July 1, 1979 and thereafter, in
31 addition to such income tax, there is also hereby imposed the
32 Personal Property Tax Replacement Income Tax measured by net
33 income on every corporation (including Subchapter S
34 corporations), partnership and trust, for each taxable year
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1 ending after June 30, 1979. Such taxes are imposed on the
2 privilege of earning or receiving income in or as a resident
3 of this State. The Personal Property Tax Replacement Income
4 Tax shall be in addition to the income tax imposed by
5 subsections (a) and (b) of this Section and in addition to
6 all other occupation or privilege taxes imposed by this State
7 or by any municipal corporation or political subdivision
8 thereof.
9 (d) Additional Personal Property Tax Replacement Income
10 Tax Rates. The personal property tax replacement income tax
11 imposed by this subsection and subsection (c) of this Section
12 in the case of a corporation, other than a Subchapter S
13 corporation, shall be an additional amount equal to 2.85% of
14 such taxpayer's net income for the taxable year, except that
15 beginning on January 1, 1981, and thereafter, the rate of
16 2.85% specified in this subsection shall be reduced to 2.5%,
17 and in the case of a partnership, trust or a Subchapter S
18 corporation shall be an additional amount equal to 1.5% of
19 such taxpayer's net income for the taxable year.
20 (e) Investment credit. A taxpayer shall be allowed a
21 credit against the Personal Property Tax Replacement Income
22 Tax for investment in qualified property.
23 (1) A taxpayer shall be allowed a credit equal to
24 .5% of the basis of qualified property placed in service
25 during the taxable year, provided such property is placed
26 in service on or after July 1, 1984. There shall be
27 allowed an additional credit equal to .5% of the basis of
28 qualified property placed in service during the taxable
29 year, provided such property is placed in service on or
30 after July 1, 1986, and the taxpayer's base employment
31 within Illinois has increased by 1% or more over the
32 preceding year as determined by the taxpayer's employment
33 records filed with the Illinois Department of Employment
34 Security. Taxpayers who are new to Illinois shall be
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1 deemed to have met the 1% growth in base employment for
2 the first year in which they file employment records with
3 the Illinois Department of Employment Security. The
4 provisions added to this Section by Public Act 85-1200
5 (and restored by Public Act 87-895) shall be construed as
6 declaratory of existing law and not as a new enactment.
7 If, in any year, the increase in base employment within
8 Illinois over the preceding year is less than 1%, the
9 additional credit shall be limited to that percentage
10 times a fraction, the numerator of which is .5% and the
11 denominator of which is 1%, but shall not exceed .5%.
12 The investment credit shall not be allowed to the extent
13 that it would reduce a taxpayer's liability in any tax
14 year below zero, nor may any credit for qualified
15 property be allowed for any year other than the year in
16 which the property was placed in service in Illinois. For
17 tax years ending on or after December 31, 1987, and on or
18 before December 31, 1988, the credit shall be allowed for
19 the tax year in which the property is placed in service,
20 or, if the amount of the credit exceeds the tax liability
21 for that year, whether it exceeds the original liability
22 or the liability as later amended, such excess may be
23 carried forward and applied to the tax liability of the 5
24 taxable years following the excess credit years if the
25 taxpayer (i) makes investments which cause the creation
26 of a minimum of 2,000 full-time equivalent jobs in
27 Illinois, (ii) is located in an enterprise zone
28 established pursuant to the Illinois Enterprise Zone Act
29 and (iii) is certified by the Department of Commerce and
30 Community Affairs as complying with the requirements
31 specified in clause (i) and (ii) by July 1, 1986. The
32 Department of Commerce and Community Affairs shall notify
33 the Department of Revenue of all such certifications
34 immediately. For tax years ending after December 31,
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1 1988, the credit shall be allowed for the tax year in
2 which the property is placed in service, or, if the
3 amount of the credit exceeds the tax liability for that
4 year, whether it exceeds the original liability or the
5 liability as later amended, such excess may be carried
6 forward and applied to the tax liability of the 5 taxable
7 years following the excess credit years. The credit shall
8 be applied to the earliest year for which there is a
9 liability. If there is credit from more than one tax year
10 that is available to offset a liability, earlier credit
11 shall be applied first.
12 (2) The term "qualified property" means property
13 which:
14 (A) is tangible, whether new or used,
15 including buildings and structural components of
16 buildings and signs that are real property, but not
17 including land or improvements to real property that
18 are not a structural component of a building such as
19 landscaping, sewer lines, local access roads,
20 fencing, parking lots, and other appurtenances;
21 (B) is depreciable pursuant to Section 167 of
22 the Internal Revenue Code, except that "3-year
23 property" as defined in Section 168(c)(2)(A) of that
24 Code is not eligible for the credit provided by this
25 subsection (e);
26 (C) is acquired by purchase as defined in
27 Section 179(d) of the Internal Revenue Code;
28 (D) is used in Illinois by a taxpayer who is
29 primarily engaged in manufacturing, or in mining
30 coal or fluorite, or in retailing; and
31 (E) has not previously been used in Illinois
32 in such a manner and by such a person as would
33 qualify for the credit provided by this subsection
34 (e) or subsection (f).
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1 (3) For purposes of this subsection (e),
2 "manufacturing" means the material staging and production
3 of tangible personal property by procedures commonly
4 regarded as manufacturing, processing, fabrication, or
5 assembling which changes some existing material into new
6 shapes, new qualities, or new combinations. For purposes
7 of this subsection (e) the term "mining" shall have the
8 same meaning as the term "mining" in Section 613(c) of
9 the Internal Revenue Code. For purposes of this
10 subsection (e), the term "retailing" means the sale of
11 tangible personal property or services rendered in
12 conjunction with the sale of tangible consumer goods or
13 commodities.
14 (4) The basis of qualified property shall be the
15 basis used to compute the depreciation deduction for
16 federal income tax purposes.
17 (5) If the basis of the property for federal income
18 tax depreciation purposes is increased after it has been
19 placed in service in Illinois by the taxpayer, the amount
20 of such increase shall be deemed property placed in
21 service on the date of such increase in basis.
22 (6) The term "placed in service" shall have the
23 same meaning as under Section 46 of the Internal Revenue
24 Code.
25 (7) If during any taxable year, any property ceases
26 to be qualified property in the hands of the taxpayer
27 within 48 months after being placed in service, or the
28 situs of any qualified property is moved outside Illinois
29 within 48 months after being placed in service, the
30 Personal Property Tax Replacement Income Tax for such
31 taxable year shall be increased. Such increase shall be
32 determined by (i) recomputing the investment credit which
33 would have been allowed for the year in which credit for
34 such property was originally allowed by eliminating such
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1 property from such computation and, (ii) subtracting such
2 recomputed credit from the amount of credit previously
3 allowed. For the purposes of this paragraph (7), a
4 reduction of the basis of qualified property resulting
5 from a redetermination of the purchase price shall be
6 deemed a disposition of qualified property to the extent
7 of such reduction.
8 (8) Unless the investment credit is extended by
9 law, the basis of qualified property shall not include
10 costs incurred after December 31, 2003, except for costs
11 incurred pursuant to a binding contract entered into on
12 or before December 31, 2003.
13 (9) Each taxable year, a partnership may elect to
14 pass through to its partners the credits to which the
15 partnership is entitled under this subsection (e) for the
16 taxable year. A partner may use the credit allocated to
17 him or her under this paragraph only against the tax
18 imposed in subsections (c) and (d) of this Section. If
19 the partnership makes that election, those credits shall
20 be allocated among the partners in the partnership in
21 accordance with the rules set forth in Section 704(b) of
22 the Internal Revenue Code, and the rules promulgated
23 under that Section, and the allocated amount of the
24 credits shall be allowed to the partners for that taxable
25 year. The partnership shall make this election on its
26 Personal Property Tax Replacement Income Tax return for
27 that taxable year. The election to pass through the
28 credits shall be irrevocable.
29 (f) Investment credit; Enterprise Zone.
30 (1) A taxpayer shall be allowed a credit against
31 the tax imposed by subsections (a) and (b) of this
32 Section for investment in qualified property which is
33 placed in service in an Enterprise Zone created pursuant
34 to the Illinois Enterprise Zone Act. For partners and for
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1 shareholders of Subchapter S corporations, there shall be
2 allowed a credit under this subsection (f) to be
3 determined in accordance with the determination of income
4 and distributive share of income under Sections 702 and
5 704 and Subchapter S of the Internal Revenue Code. The
6 credit shall be .5% of the basis for such property. The
7 credit shall be available only in the taxable year in
8 which the property is placed in service in the Enterprise
9 Zone and shall not be allowed to the extent that it would
10 reduce a taxpayer's liability for the tax imposed by
11 subsections (a) and (b) of this Section to below zero.
12 For tax years ending on or after December 31, 1985, the
13 credit shall be allowed for the tax year in which the
14 property is placed in service, or, if the amount of the
15 credit exceeds the tax liability for that year, whether
16 it exceeds the original liability or the liability as
17 later amended, such excess may be carried forward and
18 applied to the tax liability of the 5 taxable years
19 following the excess credit year. The credit shall be
20 applied to the earliest year for which there is a
21 liability. If there is credit from more than one tax year
22 that is available to offset a liability, the credit
23 accruing first in time shall be applied first.
24 (2) The term qualified property means property
25 which:
26 (A) is tangible, whether new or used,
27 including buildings and structural components of
28 buildings;
29 (B) is depreciable pursuant to Section 167 of
30 the Internal Revenue Code, except that "3-year
31 property" as defined in Section 168(c)(2)(A) of that
32 Code is not eligible for the credit provided by this
33 subsection (f);
34 (C) is acquired by purchase as defined in
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1 Section 179(d) of the Internal Revenue Code;
2 (D) is used in the Enterprise Zone by the
3 taxpayer; and
4 (E) has not been previously used in Illinois
5 in such a manner and by such a person as would
6 qualify for the credit provided by this subsection
7 (f) or subsection (e).
8 (3) The basis of qualified property shall be the
9 basis used to compute the depreciation deduction for
10 federal income tax purposes.
11 (4) If the basis of the property for federal income
12 tax depreciation purposes is increased after it has been
13 placed in service in the Enterprise Zone by the taxpayer,
14 the amount of such increase shall be deemed property
15 placed in service on the date of such increase in basis.
16 (5) The term "placed in service" shall have the
17 same meaning as under Section 46 of the Internal Revenue
18 Code.
19 (6) If during any taxable year, any property ceases
20 to be qualified property in the hands of the taxpayer
21 within 48 months after being placed in service, or the
22 situs of any qualified property is moved outside the
23 Enterprise Zone within 48 months after being placed in
24 service, the tax imposed under subsections (a) and (b) of
25 this Section for such taxable year shall be increased.
26 Such increase shall be determined by (i) recomputing the
27 investment credit which would have been allowed for the
28 year in which credit for such property was originally
29 allowed by eliminating such property from such
30 computation, and (ii) subtracting such recomputed credit
31 from the amount of credit previously allowed. For the
32 purposes of this paragraph (6), a reduction of the basis
33 of qualified property resulting from a redetermination of
34 the purchase price shall be deemed a disposition of
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1 qualified property to the extent of such reduction.
2 (g) Jobs Tax Credit; Enterprise Zone and Foreign
3 Trade Zone or Sub-Zone.
4 (1) A taxpayer conducting a trade or business in an
5 enterprise zone or a High Impact Business designated by
6 the Department of Commerce and Community Affairs
7 conducting a trade or business in a federally designated
8 Foreign Trade Zone or Sub-Zone shall be allowed a credit
9 against the tax imposed by subsections (a) and (b) of
10 this Section in the amount of $500 per eligible employee
11 hired to work in the zone during the taxable year.
12 (2) To qualify for the credit:
13 (A) the taxpayer must hire 5 or more eligible
14 employees to work in an enterprise zone or federally
15 designated Foreign Trade Zone or Sub-Zone during the
16 taxable year;
17 (B) the taxpayer's total employment within the
18 enterprise zone or federally designated Foreign
19 Trade Zone or Sub-Zone must increase by 5 or more
20 full-time employees beyond the total employed in
21 that zone at the end of the previous tax year for
22 which a jobs tax credit under this Section was
23 taken, or beyond the total employed by the taxpayer
24 as of December 31, 1985, whichever is later; and
25 (C) the eligible employees must be employed
26 180 consecutive days in order to be deemed hired for
27 purposes of this subsection.
28 (3) An "eligible employee" means an employee who
29 is:
30 (A) Certified by the Department of Commerce
31 and Community Affairs as "eligible for services"
32 pursuant to regulations promulgated in accordance
33 with Title II of the Job Training Partnership Act,
34 Training Services for the Disadvantaged or Title III
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1 of the Job Training Partnership Act, Employment and
2 Training Assistance for Dislocated Workers Program.
3 (B) Hired after the enterprise zone or
4 federally designated Foreign Trade Zone or Sub-Zone
5 was designated or the trade or business was located
6 in that zone, whichever is later.
7 (C) Employed in the enterprise zone or Foreign
8 Trade Zone or Sub-Zone. An employee is employed in
9 an enterprise zone or federally designated Foreign
10 Trade Zone or Sub-Zone if his services are rendered
11 there or it is the base of operations for the
12 services performed.
13 (D) A full-time employee working 30 or more
14 hours per week.
15 (4) For tax years ending on or after December 31,
16 1985 and prior to December 31, 1988, the credit shall be
17 allowed for the tax year in which the eligible employees
18 are hired. For tax years ending on or after December 31,
19 1988, the credit shall be allowed for the tax year
20 immediately following the tax year in which the eligible
21 employees are hired. If the amount of the credit exceeds
22 the tax liability for that year, whether it exceeds the
23 original liability or the liability as later amended,
24 such excess may be carried forward and applied to the tax
25 liability of the 5 taxable years following the excess
26 credit year. The credit shall be applied to the earliest
27 year for which there is a liability. If there is credit
28 from more than one tax year that is available to offset a
29 liability, earlier credit shall be applied first.
30 (5) The Department of Revenue shall promulgate such
31 rules and regulations as may be deemed necessary to carry
32 out the purposes of this subsection (g).
33 (6) The credit shall be available for eligible
34 employees hired on or after January 1, 1986.
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1 (h) Investment credit; High Impact Business.
2 (1) Subject to subsection (b) of Section 5.5 of the
3 Illinois Enterprise Zone Act, a taxpayer shall be allowed
4 a credit against the tax imposed by subsections (a) and
5 (b) of this Section for investment in qualified property
6 which is placed in service by a Department of Commerce
7 and Community Affairs designated High Impact Business.
8 The credit shall be .5% of the basis for such property.
9 The credit shall not be available until the minimum
10 investments in qualified property set forth in Section
11 5.5 of the Illinois Enterprise Zone Act have been
12 satisfied and shall not be allowed to the extent that it
13 would reduce a taxpayer's liability for the tax imposed
14 by subsections (a) and (b) of this Section to below zero.
15 The credit applicable to such minimum investments shall
16 be taken in the taxable year in which such minimum
17 investments have been completed. The credit for
18 additional investments beyond the minimum investment by a
19 designated high impact business shall be available only
20 in the taxable year in which the property is placed in
21 service and shall not be allowed to the extent that it
22 would reduce a taxpayer's liability for the tax imposed
23 by subsections (a) and (b) of this Section to below zero.
24 For tax years ending on or after December 31, 1987, the
25 credit shall be allowed for the tax year in which the
26 property is placed in service, or, if the amount of the
27 credit exceeds the tax liability for that year, whether
28 it exceeds the original liability or the liability as
29 later amended, such excess may be carried forward and
30 applied to the tax liability of the 5 taxable years
31 following the excess credit year. The credit shall be
32 applied to the earliest year for which there is a
33 liability. If there is credit from more than one tax
34 year that is available to offset a liability, the credit
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1 accruing first in time shall be applied first.
2 Changes made in this subdivision (h)(1) by Public
3 Act 88-670 restore changes made by Public Act 85-1182 and
4 reflect existing law.
5 (2) The term qualified property means property
6 which:
7 (A) is tangible, whether new or used,
8 including buildings and structural components of
9 buildings;
10 (B) is depreciable pursuant to Section 167 of
11 the Internal Revenue Code, except that "3-year
12 property" as defined in Section 168(c)(2)(A) of that
13 Code is not eligible for the credit provided by this
14 subsection (h);
15 (C) is acquired by purchase as defined in
16 Section 179(d) of the Internal Revenue Code; and
17 (D) is not eligible for the Enterprise Zone
18 Investment Credit provided by subsection (f) of this
19 Section.
20 (3) The basis of qualified property shall be the
21 basis used to compute the depreciation deduction for
22 federal income tax purposes.
23 (4) If the basis of the property for federal income
24 tax depreciation purposes is increased after it has been
25 placed in service in a federally designated Foreign Trade
26 Zone or Sub-Zone located in Illinois by the taxpayer, the
27 amount of such increase shall be deemed property placed
28 in service on the date of such increase in basis.
29 (5) The term "placed in service" shall have the
30 same meaning as under Section 46 of the Internal Revenue
31 Code.
32 (6) If during any taxable year ending on or before
33 December 31, 1996, any property ceases to be qualified
34 property in the hands of the taxpayer within 48 months
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1 after being placed in service, or the situs of any
2 qualified property is moved outside Illinois within 48
3 months after being placed in service, the tax imposed
4 under subsections (a) and (b) of this Section for such
5 taxable year shall be increased. Such increase shall be
6 determined by (i) recomputing the investment credit which
7 would have been allowed for the year in which credit for
8 such property was originally allowed by eliminating such
9 property from such computation, and (ii) subtracting such
10 recomputed credit from the amount of credit previously
11 allowed. For the purposes of this paragraph (6), a
12 reduction of the basis of qualified property resulting
13 from a redetermination of the purchase price shall be
14 deemed a disposition of qualified property to the extent
15 of such reduction.
16 (7) Beginning with tax years ending after December
17 31, 1996, if a taxpayer qualifies for the credit under
18 this subsection (h) and thereby is granted a tax
19 abatement and the taxpayer relocates its entire facility
20 in violation of the explicit terms and length of the
21 contract under Section 18-183 of the Property Tax Code,
22 the tax imposed under subsections (a) and (b) of this
23 Section shall be increased for the taxable year in which
24 the taxpayer relocated its facility by an amount equal to
25 the amount of credit received by the taxpayer under this
26 subsection (h).
27 (i) A credit shall be allowed against the tax imposed by
28 subsections (a) and (b) of this Section for the tax imposed
29 by subsections (c) and (d) of this Section. This credit
30 shall be computed by multiplying the tax imposed by
31 subsections (c) and (d) of this Section by a fraction, the
32 numerator of which is base income allocable to Illinois and
33 the denominator of which is Illinois base income, and further
34 multiplying the product by the tax rate imposed by
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1 subsections (a) and (b) of this Section.
2 Any credit earned on or after December 31, 1986 under
3 this subsection which is unused in the year the credit is
4 computed because it exceeds the tax liability imposed by
5 subsections (a) and (b) for that year (whether it exceeds the
6 original liability or the liability as later amended) may be
7 carried forward and applied to the tax liability imposed by
8 subsections (a) and (b) of the 5 taxable years following the
9 excess credit year. This credit shall be applied first to
10 the earliest year for which there is a liability. If there
11 is a credit under this subsection from more than one tax year
12 that is available to offset a liability the earliest credit
13 arising under this subsection shall be applied first.
14 If, during any taxable year ending on or after December
15 31, 1986, the tax imposed by subsections (c) and (d) of this
16 Section for which a taxpayer has claimed a credit under this
17 subsection (i) is reduced, the amount of credit for such tax
18 shall also be reduced. Such reduction shall be determined by
19 recomputing the credit to take into account the reduced tax
20 imposed by subsection (c) and (d). If any portion of the
21 reduced amount of credit has been carried to a different
22 taxable year, an amended return shall be filed for such
23 taxable year to reduce the amount of credit claimed.
24 (j) Training expense credit. Beginning with tax years
25 ending on or after December 31, 1986, a taxpayer shall be
26 allowed a credit against the tax imposed by subsection (a)
27 and (b) under this Section for all amounts paid or accrued,
28 on behalf of all persons employed by the taxpayer in Illinois
29 or Illinois residents employed outside of Illinois by a
30 taxpayer, for educational or vocational training in
31 semi-technical or technical fields or semi-skilled or skilled
32 fields, which were deducted from gross income in the
33 computation of taxable income. The credit against the tax
34 imposed by subsections (a) and (b) shall be 1.6% of such
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1 training expenses. For partners and for shareholders of
2 subchapter S corporations, there shall be allowed a credit
3 under this subsection (j) to be determined in accordance with
4 the determination of income and distributive share of income
5 under Sections 702 and 704 and subchapter S of the Internal
6 Revenue Code.
7 Any credit allowed under this subsection which is unused
8 in the year the credit is earned may be carried forward to
9 each of the 5 taxable years following the year for which the
10 credit is first computed until it is used. This credit shall
11 be applied first to the earliest year for which there is a
12 liability. If there is a credit under this subsection from
13 more than one tax year that is available to offset a
14 liability the earliest credit arising under this subsection
15 shall be applied first.
16 (k) Research and development credit.
17 Beginning with tax years ending after July 1, 1990, a
18 taxpayer shall be allowed a credit against the tax imposed by
19 subsections (a) and (b) of this Section for increasing
20 research activities in this State. The credit allowed
21 against the tax imposed by subsections (a) and (b) shall be
22 equal to 6 1/2% of the qualifying expenditures for increasing
23 research activities in this State.
24 For purposes of this subsection, "qualifying
25 expenditures" means the qualifying expenditures as defined
26 for the federal credit for increasing research activities
27 which would be allowable under Section 41 of the Internal
28 Revenue Code and which are conducted in this State,
29 "qualifying expenditures for increasing research activities
30 in this State" means the excess of qualifying expenditures
31 for the taxable year in which incurred over qualifying
32 expenditures for the base period, "qualifying expenditures
33 for the base period" means the average of the qualifying
34 expenditures for each year in the base period, and "base
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1 period" means the 3 taxable years immediately preceding the
2 taxable year for which the determination is being made.
3 Any credit in excess of the tax liability for the taxable
4 year may be carried forward. A taxpayer may elect to have the
5 unused credit shown on its final completed return carried
6 over as a credit against the tax liability for the following
7 5 taxable years or until it has been fully used, whichever
8 occurs first.
9 If an unused credit is carried forward to a given year
10 from 2 or more earlier years, that credit arising in the
11 earliest year will be applied first against the tax liability
12 for the given year. If a tax liability for the given year
13 still remains, the credit from the next earliest year will
14 then be applied, and so on, until all credits have been used
15 or no tax liability for the given year remains. Any
16 remaining unused credit or credits then will be carried
17 forward to the next following year in which a tax liability
18 is incurred, except that no credit can be carried forward to
19 a year which is more than 5 years after the year in which the
20 expense for which the credit is given was incurred.
21 Unless extended by law, the credit shall not include
22 costs incurred after December 31, 1999, except for costs
23 incurred pursuant to a binding contract entered into on or
24 before December 31, 1999.
25 (l) Environmental Remediation Tax Credit.
26 (i) For tax years ending after December 31, 1997
27 and on or before December 31, 2001, a taxpayer shall be
28 allowed a credit against the tax imposed by subsections
29 (a) and (b) of this Section for certain amounts paid for
30 unreimbursed eligible remediation costs, as specified in
31 this subsection. For purposes of this Section,
32 "unreimbursed eligible remediation costs" means costs
33 approved by the Illinois Environmental Protection Agency
34 ("Agency") under Section 58.14 of the Environmental
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1 Protection Act that were paid in performing environmental
2 remediation at a site for which a No Further Remediation
3 Letter was issued by the Agency and recorded under
4 Section 58.10 of the Environmental Protection Act, and
5 does not mean approved eligible remediation costs that
6 are at any time deducted under the provisions of the
7 Internal Revenue Code. The credit must be claimed for
8 the taxable year in which Agency approval of the eligible
9 remediation costs is granted. In no event shall
10 unreimbursed eligible remediation costs include any costs
11 taken into account in calculating an environmental
12 remediation credit granted against a tax imposed under
13 the provisions of the Internal Revenue Code. The credit
14 is not available to any taxpayer if the taxpayer or any
15 related party caused or contributed to, in any material
16 respect, a release of regulated substances on, in, or
17 under the site that was identified and addressed by the
18 remedial action pursuant to the Site Remediation Program
19 of the Environmental Protection Act. After the Pollution
20 Control Board rules are adopted pursuant to the Illinois
21 Administrative Procedure Act for the administration and
22 enforcement of Section 58.9 of the Environmental
23 Protection Act, determinations as to credit availability
24 for purposes of this Section shall be made consistent
25 with those rules. For purposes of this Section,
26 "taxpayer" includes a person whose tax attributes the
27 taxpayer has succeeded to under Section 381 of the
28 Internal Revenue Code and "related party" includes the
29 persons disallowed a deduction for losses by paragraphs
30 (b), (c), and (f)(1) of Section 267 of the Internal
31 Revenue Code by virtue of being a related taxpayer, as
32 well as any of its partners. The credit allowed against
33 the tax imposed by subsections (a) and (b) shall be equal
34 to 25% of the unreimbursed eligible remediation costs in
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1 excess of $100,000 per site, except that the $100,000
2 threshold shall not apply to any site contained in an
3 enterprise zone as and located in a census tract that is
4 located in a minor civil division and place or county
5 that has been determined by the Department of Commerce
6 and Community Affairs to contain a majority of households
7 consisting of low and moderate income persons. The total
8 credit allowed shall not exceed $40,000 per year with a
9 maximum total of $150,000 per site. For partners and
10 shareholders of subchapter S corporations, there shall be
11 allowed a credit under this subsection to be determined
12 in accordance with the determination of income and
13 distributive share of income under Sections 702 and 704
14 of subchapter S of the Internal Revenue Code.
15 (ii) A credit allowed under this subsection that is
16 unused in the year the credit is earned may be carried
17 forward to each of the 5 taxable years following the year
18 for which the credit is first earned until it is used.
19 The term "unused credit" does not include any amounts of
20 unreimbursed eligible remediation costs in excess of the
21 maximum credit per site authorized under paragraph (i).
22 This credit shall be applied first to the earliest year
23 for which there is a liability. If there is a credit
24 under this subsection from more than one tax year that is
25 available to offset a liability, the earliest credit
26 arising under this subsection shall be applied first. A
27 credit allowed under this subsection may be sold to a
28 buyer as part of a sale of all or part of the remediation
29 site for which the credit was granted. The purchaser of
30 a remediation site and the tax credit shall succeed to
31 the unused credit and remaining carry-forward period of
32 the seller. To perfect the transfer, the assignor shall
33 record the transfer in the chain of title for the site
34 and provide written notice to the Director of the
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1 Illinois Department of Revenue of the assignor's intent
2 to sell the remediation site and the amount of the tax
3 credit to be transferred as a portion of the sale. In no
4 event may a credit be transferred to any taxpayer if the
5 taxpayer or a related party would not be eligible under
6 the provisions of subsection (i).
7 (iii) For purposes of this Section, the term "site"
8 shall have the same meaning as under Section 58.2 of the
9 Environmental Protection Act.
10 (Source: P.A. 89-235, eff. 8-4-95; 89-519, eff. 7-18-96;
11 89-591, eff. 8-1-96; 90-123, eff. 7-21-97; 90-458, eff.
12 8-17-97; revised 10-16-97.)
13 Section 10. The Environmental Protection Act is amended
14 by changing Section 58.14 as follows:
15 (415 ILCS 5/58.14)
16 Sec. 58.14. Environmental Remediation Tax Credit review.
17 (a) Prior to applying for the Environmental Remediation
18 Tax Credit under Section 201 of the Illinois Income Tax Act,
19 Remediation Applicants shall first submit to the Agency an
20 application for review of remediation costs. The application
21 and review process shall be conducted in accordance with the
22 requirements of this Section and the rules adopted under
23 subsection (g). A preliminary review of the estimated
24 remediation costs for development and implementation of the
25 Remedial Action Plan may be obtained in accordance with
26 subsection (d).
27 (b) No application for review shall be submitted until a
28 No Further Remediation Letter has been issued by the Agency
29 and recorded in the chain of title for the site in accordance
30 with Section 58.10. The Agency shall review the application
31 to determine whether the costs submitted are remediation
32 costs, and whether the costs incurred are reasonable. The
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1 application shall be on forms prescribed and provided by the
2 Agency. At a minimum, the application shall include the
3 following:
4 (1) information identifying the Remediation
5 Applicant and the site for which the tax credit is being
6 sought and the date of acceptance of the site into the
7 Site Remediation Program;
8 (2) a copy of the No Further Remediation Letter
9 with official verification that the letter has been
10 recorded in the chain of title for the site and a
11 demonstration that the site for which the application is
12 submitted is the same site as the one for which the No
13 Further Remediation Letter is issued;
14 (3) a demonstration that the release of the
15 regulated substances of concern for which the No Further
16 Remediation Letter was issued were not caused or
17 contributed to in any material respect by the Remediation
18 Applicant. After the Pollution Control Board rules are
19 adopted pursuant to the Illinois Administrative Procedure
20 Act for the administration and enforcement of Section
21 58.9 of the Environmental Protection Act, determinations
22 as to credit availability shall be made consistent with
23 those rules;
24 (4) an itemization and documentation, including
25 receipts, of the remediation costs incurred;
26 (5) a demonstration that the costs incurred are
27 remediation costs as defined in this Act and its rules;
28 (6) a demonstration that the costs submitted for
29 review were incurred by the Remediation Applicant who
30 received the No Further Remediation Letter;
31 (7) an application fee in the amount set forth in
32 subsection (e) for each site for which review of
33 remediation costs is requested and, if applicable,
34 certification from the Department of Commerce and
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1 Community Affairs that the site is located in an
2 enterprise zone and is located in a census tract that is
3 located in a minor civil division and place or county
4 that has been determined by the Department of Commerce
5 and Community Affairs to contain a majority of households
6 consisting of low and moderate income persons;
7 (8) any other information deemed appropriate by the
8 Agency.
9 (c) Within 60 days after receipt by the Agency of an
10 application meeting the requirements of subsection (b), the
11 Agency shall issue a letter to the applicant approving,
12 disapproving, or modifying the remediation costs submitted in
13 the application. If the remediation costs are approved as
14 submitted, the Agency's letter shall state the amount of the
15 remediation costs to be applied toward the Environmental
16 Remediation Tax Credit. If an application is disapproved or
17 approved with modification of remediation costs, the Agency's
18 letter shall set forth the reasons for the disapproval or
19 modification and state the amount of the remediation costs,
20 if any, to be applied toward the Environmental Remediation
21 Tax Credit.
22 If a preliminary review of a budget plan has been
23 obtained under subsection (d), the Remediation Applicant may
24 submit, with the application and supporting documentation
25 under subsection (b), a copy of the Agency's final
26 determination accompanied by a certification that the actual
27 remediation costs incurred for the development and
28 implementation of the Remedial Action Plan are equal to or
29 less than the costs approved in the Agency's final
30 determination on the budget plan. The certification shall be
31 signed by the Remediation Applicant and notarized. Based on
32 that submission, the Agency shall not be required to conduct
33 further review of the costs incurred for development and
34 implementation of the Remedial Action Plan and may approve
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1 costs as submitted.
2 Within 35 days after receipt of an Agency letter
3 disapproving or modifying an application for approval of
4 remediation costs, the Remediation Applicant may appeal the
5 Agency's decision to the Board in the manner provided for the
6 review of permits in Section 40 of this Act.
7 (d) (1) A Remediation Applicant may obtain a preliminary
8 review of estimated remediation costs for the development
9 and implementation of the Remedial Action Plan by
10 submitting a budget plan along with the Remedial Action
11 Plan. The budget plan shall be set forth on forms
12 prescribed and provided by the Agency and shall include
13 but shall not be limited to line item estimates of the
14 costs associated with each line item (such as personnel,
15 equipment, and materials) that the Remediation Applicant
16 anticipates will be incurred for the development and
17 implementation of the Remedial Action Plan. The Agency
18 shall review the budget plan along with the Remedial
19 Action Plan to determine whether the estimated costs
20 submitted are remediation costs and whether the costs
21 estimated for the activities are reasonable.
22 (2) If the Remedial Action Plan is amended by the
23 Remediation Applicant or as a result of Agency action,
24 the corresponding budget plan shall be revised
25 accordingly and resubmitted for Agency review.
26 (3) The budget plan shall be accompanied by the
27 applicable fee as set forth in subsection (e).
28 (4) Submittal of a budget plan shall be deemed an
29 automatic 60-day waiver of the Remedial Action Plan
30 review deadlines set forth in this Section and its rules.
31 (5) Within the applicable period of review, the
32 Agency shall issue a letter to the Remediation Applicant
33 approving, disapproving, or modifying the estimated
34 remediation costs submitted in the budget plan. If a
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1 budget plan is disapproved or approved with modification
2 of estimated remediation costs, the Agency's letter shall
3 set forth the reasons for the disapproval or
4 modification.
5 (6) Within 35 days after receipt of an Agency
6 letter disapproving or modifying a budget plan, the
7 Remediation Applicant may appeal the Agency's decision to
8 the Board in the manner provided for the review of
9 permits in Section 40 of this Act.
10 (e) The fees for reviews conducted under this Section
11 are in addition to any other fees or payments for Agency
12 services rendered pursuant to the Site Remediation Program
13 and shall be as follows:
14 (1) The fee for an application for review of
15 remediation costs shall be $1,000 for each site reviewed.
16 (2) The fee for the review of the budget plan
17 submitted under subsection (d) shall be $500 for each
18 site reviewed.
19 (3) In the case of a Remediation Applicant
20 submitting for review total remediation costs of $100,000
21 or less for a site located within an enterprise zone (as
22 set forth in paragraph (i) of subsection (l) of Section
23 201 of the Illinois Income Tax Act), the fee for an
24 application for review of remediation costs shall be $250
25 for each site reviewed. For those sites, there shall be
26 no fee for review of a budget plan under subsection (d).
27 The application fee shall be made payable to the State of
28 Illinois, for deposit into the Hazardous Waste Fund.
29 Pursuant to appropriation, the Agency shall use the fees
30 collected under this subsection for development and
31 administration of the review program.
32 (f) The Agency shall have the authority to enter into
33 any contracts or agreements that may be necessary to carry
34 out its duties and responsibilities under this Section.
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1 (g) Within 6 months after the effective date of this
2 amendatory Act of 1997, the Agency shall propose rules
3 prescribing procedures and standards for its administration
4 of this Section. Within 6 months after receipt of the
5 Agency's proposed rules, the Board shall adopt on second
6 notice, pursuant to Sections 27 and 28 of this Act and the
7 Illinois Administrative Procedure Act, rules that are
8 consistent with this Section. Prior to the effective date of
9 rules adopted under this Section, the Agency may conduct
10 reviews of applications under this Section and the Agency is
11 further authorized to distribute guidance documents on costs
12 that are eligible or ineligible as remediation costs.
13 (Source: P.A. 90-123, eff. 7-21-97.)".