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91_HB2154
LRB9104563PTpk
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 201.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 201 as follows:
7 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
8 Sec. 201. Tax Imposed.
9 (a) In general. A tax measured by net income is hereby
10 imposed on every individual, corporation, trust and estate
11 for each taxable year ending after July 31, 1969 on the
12 privilege of earning or receiving income in or as a resident
13 of this State. Such tax shall be in addition to all other
14 occupation or privilege taxes imposed by this State or by any
15 municipal corporation or political subdivision thereof.
16 (b) Rates. The tax imposed by subsection (a) of this
17 Section shall be determined as follows:
18 (1) In the case of an individual, trust or estate,
19 for taxable years ending prior to July 1, 1989, an amount
20 equal to 2 1/2% of the taxpayer's net income for the
21 taxable year.
22 (2) In the case of an individual, trust or estate,
23 for taxable years beginning prior to July 1, 1989 and
24 ending after June 30, 1989, an amount equal to the sum of
25 (i) 2 1/2% of the taxpayer's net income for the period
26 prior to July 1, 1989, as calculated under Section 202.3,
27 and (ii) 3% of the taxpayer's net income for the period
28 after June 30, 1989, as calculated under Section 202.3.
29 (3) In the case of an individual, trust or estate,
30 for taxable years beginning after June 30, 1989, an
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1 amount equal to 3% of the taxpayer's net income for the
2 taxable year.
3 (4) (Blank).
4 (5) (Blank).
5 (6) In the case of a corporation, for taxable years
6 ending prior to July 1, 1989, an amount equal to 4% of
7 the taxpayer's net income for the taxable year.
8 (7) In the case of a corporation, for taxable years
9 beginning prior to July 1, 1989 and ending after June 30,
10 1989, an amount equal to the sum of (i) 4% of the
11 taxpayer's net income for the period prior to July 1,
12 1989, as calculated under Section 202.3, and (ii) 4.8% of
13 the taxpayer's net income for the period after June 30,
14 1989, as calculated under Section 202.3.
15 (8) In the case of a corporation, for taxable years
16 beginning after June 30, 1989, an amount equal to 4.8% of
17 the taxpayer's net income for the taxable year.
18 (c) Beginning on July 1, 1979 and thereafter, in
19 addition to such income tax, there is also hereby imposed the
20 Personal Property Tax Replacement Income Tax measured by net
21 income on every corporation (including Subchapter S
22 corporations), partnership and trust, for each taxable year
23 ending after June 30, 1979. Such taxes are imposed on the
24 privilege of earning or receiving income in or as a resident
25 of this State. The Personal Property Tax Replacement Income
26 Tax shall be in addition to the income tax imposed by
27 subsections (a) and (b) of this Section and in addition to
28 all other occupation or privilege taxes imposed by this State
29 or by any municipal corporation or political subdivision
30 thereof.
31 (d) Additional Personal Property Tax Replacement Income
32 Tax Rates. The personal property tax replacement income tax
33 imposed by this subsection and subsection (c) of this Section
34 in the case of a corporation, other than a Subchapter S
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1 corporation, shall be an additional amount equal to 2.85% of
2 such taxpayer's net income for the taxable year, except that
3 beginning on January 1, 1981, and thereafter, the rate of
4 2.85% specified in this subsection shall be reduced to 2.5%,
5 and in the case of a partnership, trust or a Subchapter S
6 corporation shall be an additional amount equal to 1.5% of
7 such taxpayer's net income for the taxable year.
8 (e) Investment credit. A taxpayer shall be allowed a
9 credit against the Personal Property Tax Replacement Income
10 Tax for investment in qualified property.
11 (1) A taxpayer shall be allowed a credit equal to
12 .5% of the basis of qualified property placed in service
13 during the taxable year, provided such property is placed
14 in service on or after July 1, 1984. There shall be
15 allowed an additional credit equal to .5% of the basis of
16 qualified property placed in service during the taxable
17 year, provided such property is placed in service on or
18 after July 1, 1986, and the taxpayer's base employment
19 within Illinois has increased by 1% or more over the
20 preceding year as determined by the taxpayer's employment
21 records filed with the Illinois Department of Employment
22 Security. Taxpayers who are new to Illinois shall be
23 deemed to have met the 1% growth in base employment for
24 the first year in which they file employment records with
25 the Illinois Department of Employment Security. The
26 provisions added to this Section by Public Act 85-1200
27 (and restored by Public Act 87-895) shall be construed as
28 declaratory of existing law and not as a new enactment.
29 If, in any year, the increase in base employment within
30 Illinois over the preceding year is less than 1%, the
31 additional credit shall be limited to that percentage
32 times a fraction, the numerator of which is .5% and the
33 denominator of which is 1%, but shall not exceed .5%.
34 The investment credit shall not be allowed to the extent
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1 that it would reduce a taxpayer's liability in any tax
2 year below zero, nor may any credit for qualified
3 property be allowed for any year other than the year in
4 which the property was placed in service in Illinois. For
5 tax years ending on or after December 31, 1987, and on or
6 before December 31, 1988, the credit shall be allowed for
7 the tax year in which the property is placed in service,
8 or, if the amount of the credit exceeds the tax liability
9 for that year, whether it exceeds the original liability
10 or the liability as later amended, such excess may be
11 carried forward and applied to the tax liability of the 5
12 taxable years following the excess credit years if the
13 taxpayer (i) makes investments which cause the creation
14 of a minimum of 2,000 full-time equivalent jobs in
15 Illinois, (ii) is located in an enterprise zone
16 established pursuant to the Illinois Enterprise Zone Act
17 and (iii) is certified by the Department of Commerce and
18 Community Affairs as complying with the requirements
19 specified in clause (i) and (ii) by July 1, 1986. The
20 Department of Commerce and Community Affairs shall notify
21 the Department of Revenue of all such certifications
22 immediately. For tax years ending after December 31,
23 1988, the credit shall be allowed for the tax year in
24 which the property is placed in service, or, if the
25 amount of the credit exceeds the tax liability for that
26 year, whether it exceeds the original liability or the
27 liability as later amended, such excess may be carried
28 forward and applied to the tax liability of the 5 taxable
29 years following the excess credit years. The credit shall
30 be applied to the earliest year for which there is a
31 liability. If there is credit from more than one tax year
32 that is available to offset a liability, earlier credit
33 shall be applied first.
34 (2) The term "qualified property" means property
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1 which:
2 (A) is tangible, whether new or used,
3 including buildings and structural components of
4 buildings and signs that are real property, but not
5 including land or improvements to real property that
6 are not a structural component of a building such as
7 landscaping, sewer lines, local access roads,
8 fencing, parking lots, and other appurtenances;
9 (B) is depreciable pursuant to Section 167 of
10 the Internal Revenue Code, except that "3-year
11 property" as defined in Section 168(c)(2)(A) of that
12 Code is not eligible for the credit provided by this
13 subsection (e);
14 (C) is acquired by purchase as defined in
15 Section 179(d) of the Internal Revenue Code;
16 (D) is used in Illinois by a taxpayer who is
17 primarily engaged in manufacturing, or in mining
18 coal or fluorite, or in retailing; and
19 (E) has not previously been used in Illinois
20 in such a manner and by such a person as would
21 qualify for the credit provided by this subsection
22 (e) or subsection (f).
23 (3) For purposes of this subsection (e),
24 "manufacturing" means the material staging and production
25 of tangible personal property by procedures commonly
26 regarded as manufacturing, processing, fabrication, or
27 assembling which changes some existing material into new
28 shapes, new qualities, or new combinations. For purposes
29 of this subsection (e) the term "mining" shall have the
30 same meaning as the term "mining" in Section 613(c) of
31 the Internal Revenue Code. For purposes of this
32 subsection (e), the term "retailing" means the sale of
33 tangible personal property or services rendered in
34 conjunction with the sale of tangible consumer goods or
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1 commodities.
2 (4) The basis of qualified property shall be the
3 basis used to compute the depreciation deduction for
4 federal income tax purposes.
5 (5) If the basis of the property for federal income
6 tax depreciation purposes is increased after it has been
7 placed in service in Illinois by the taxpayer, the amount
8 of such increase shall be deemed property placed in
9 service on the date of such increase in basis.
10 (6) The term "placed in service" shall have the
11 same meaning as under Section 46 of the Internal Revenue
12 Code.
13 (7) If during any taxable year, any property ceases
14 to be qualified property in the hands of the taxpayer
15 within 48 months after being placed in service, or the
16 situs of any qualified property is moved outside Illinois
17 within 48 months after being placed in service, the
18 Personal Property Tax Replacement Income Tax for such
19 taxable year shall be increased. Such increase shall be
20 determined by (i) recomputing the investment credit which
21 would have been allowed for the year in which credit for
22 such property was originally allowed by eliminating such
23 property from such computation and, (ii) subtracting such
24 recomputed credit from the amount of credit previously
25 allowed. For the purposes of this paragraph (7), a
26 reduction of the basis of qualified property resulting
27 from a redetermination of the purchase price shall be
28 deemed a disposition of qualified property to the extent
29 of such reduction.
30 (8) Unless the investment credit is extended by
31 law, the basis of qualified property shall not include
32 costs incurred after December 31, 2003, except for costs
33 incurred pursuant to a binding contract entered into on
34 or before December 31, 2003.
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1 (9) Each taxable year, a partnership may elect to
2 pass through to its partners the credits to which the
3 partnership is entitled under this subsection (e) for the
4 taxable year. A partner may use the credit allocated to
5 him or her under this paragraph only against the tax
6 imposed in subsections (c) and (d) of this Section. If
7 the partnership makes that election, those credits shall
8 be allocated among the partners in the partnership in
9 accordance with the rules set forth in Section 704(b) of
10 the Internal Revenue Code, and the rules promulgated
11 under that Section, and the allocated amount of the
12 credits shall be allowed to the partners for that taxable
13 year. The partnership shall make this election on its
14 Personal Property Tax Replacement Income Tax return for
15 that taxable year. The election to pass through the
16 credits shall be irrevocable.
17 (f) Investment credit; Enterprise Zone.
18 (1) A taxpayer shall be allowed a credit against
19 the tax imposed by subsections (a) and (b) of this
20 Section for investment in qualified property which is
21 placed in service in an Enterprise Zone created pursuant
22 to the Illinois Enterprise Zone Act. For partners and for
23 shareholders of Subchapter S corporations, there shall be
24 allowed a credit under this subsection (f) to be
25 determined in accordance with the determination of income
26 and distributive share of income under Sections 702 and
27 704 and Subchapter S of the Internal Revenue Code. The
28 credit shall be .5% of the basis for such property. The
29 credit shall be available only in the taxable year in
30 which the property is placed in service in the Enterprise
31 Zone and shall not be allowed to the extent that it would
32 reduce a taxpayer's liability for the tax imposed by
33 subsections (a) and (b) of this Section to below zero.
34 For tax years ending on or after December 31, 1985, the
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1 credit shall be allowed for the tax year in which the
2 property is placed in service, or, if the amount of the
3 credit exceeds the tax liability for that year, whether
4 it exceeds the original liability or the liability as
5 later amended, such excess may be carried forward and
6 applied to the tax liability of the 5 taxable years
7 following the excess credit year. The credit shall be
8 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, the credit
11 accruing first in time 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;
17 (B) is depreciable pursuant to Section 167 of
18 the Internal Revenue Code, except that "3-year
19 property" as defined in Section 168(c)(2)(A) of that
20 Code is not eligible for the credit provided by this
21 subsection (f);
22 (C) is acquired by purchase as defined in
23 Section 179(d) of the Internal Revenue Code;
24 (D) is used in the Enterprise Zone by the
25 taxpayer; and
26 (E) has not been previously used in Illinois
27 in such a manner and by such a person as would
28 qualify for the credit provided by this subsection
29 (f) or subsection (e).
30 (3) The basis of qualified property shall be the
31 basis used to compute the depreciation deduction for
32 federal income tax purposes.
33 (4) If the basis of the property for federal income
34 tax depreciation purposes is increased after it has been
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1 placed in service in the Enterprise Zone by the taxpayer,
2 the amount of such increase shall be deemed property
3 placed in service on the date of such increase in basis.
4 (5) The term "placed in service" shall have the
5 same meaning as under Section 46 of the Internal Revenue
6 Code.
7 (6) If during any taxable year, any property ceases
8 to be qualified property in the hands of the taxpayer
9 within 48 months after being placed in service, or the
10 situs of any qualified property is moved outside the
11 Enterprise Zone within 48 months after being placed in
12 service, the tax imposed under subsections (a) and (b) of
13 this Section for such taxable year shall be increased.
14 Such increase shall be determined by (i) recomputing the
15 investment credit which would have been allowed for the
16 year in which credit for such property was originally
17 allowed by eliminating such property from such
18 computation, and (ii) subtracting such recomputed credit
19 from the amount of credit previously allowed. For the
20 purposes of this paragraph (6), a reduction of the basis
21 of qualified property resulting from a redetermination of
22 the purchase price shall be deemed a disposition of
23 qualified property to the extent of such reduction.
24 (g) Jobs Tax Credit; Enterprise Zone and Foreign Trade
25 Zone or Sub-Zone.
26 (1) A taxpayer conducting a trade or business in an
27 enterprise zone or a High Impact Business designated by
28 the Department of Commerce and Community Affairs
29 conducting a trade or business in a federally designated
30 Foreign Trade Zone or Sub-Zone shall be allowed a credit
31 against the tax imposed by subsections (a) and (b) of
32 this Section in the amount of $500 per eligible employee
33 hired to work in the zone during the taxable year.
34 (2) To qualify for the credit:
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1 (A) the taxpayer must hire 5 or more eligible
2 employees to work in an enterprise zone or federally
3 designated Foreign Trade Zone or Sub-Zone during the
4 taxable year;
5 (B) the taxpayer's total employment within the
6 enterprise zone or federally designated Foreign
7 Trade Zone or Sub-Zone must increase by 5 or more
8 full-time employees beyond the total employed in
9 that zone at the end of the previous tax year for
10 which a jobs tax credit under this Section was
11 taken, or beyond the total employed by the taxpayer
12 as of December 31, 1985, whichever is later; and
13 (C) the eligible employees must be employed
14 180 consecutive days in order to be deemed hired for
15 purposes of this subsection.
16 (3) An "eligible employee" means an employee who
17 is:
18 (A) Certified by the Department of Commerce
19 and Community Affairs as "eligible for services"
20 pursuant to regulations promulgated in accordance
21 with Title II of the Job Training Partnership Act,
22 Training Services for the Disadvantaged or Title III
23 of the Job Training Partnership Act, Employment and
24 Training Assistance for Dislocated Workers Program.
25 (B) Hired after the enterprise zone or
26 federally designated Foreign Trade Zone or Sub-Zone
27 was designated or the trade or business was located
28 in that zone, whichever is later.
29 (C) Employed in the enterprise zone or Foreign
30 Trade Zone or Sub-Zone. An employee is employed in
31 an enterprise zone or federally designated Foreign
32 Trade Zone or Sub-Zone if his services are rendered
33 there or it is the base of operations for the
34 services performed.
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1 (D) A full-time employee working 30 or more
2 hours per week.
3 (4) For tax years ending on or after December 31,
4 1985 and prior to December 31, 1988, the credit shall be
5 allowed for the tax year in which the eligible employees
6 are hired. For tax years ending on or after December 31,
7 1988, the credit shall be allowed for the tax year
8 immediately following the tax year in which the eligible
9 employees are hired. If the amount of the credit exceeds
10 the tax liability for that year, whether it exceeds the
11 original liability or the liability as later amended,
12 such excess may be carried forward and applied to the tax
13 liability of the 5 taxable years following the excess
14 credit year. The credit shall be applied to the earliest
15 year for which there is a liability. If there is credit
16 from more than one tax year that is available to offset a
17 liability, earlier credit shall be applied first.
18 (5) The Department of Revenue shall promulgate such
19 rules and regulations as may be deemed necessary to carry
20 out the purposes of this subsection (g).
21 (6) The credit shall be available for eligible
22 employees hired on or after January 1, 1986.
23 (7) For taxable year 2000 and thereafter, a
24 taxpayer conducting a trade or business in an enterprise
25 zone or a High Impact Business designated by the
26 Department of Commerce and Community Affairs conducting a
27 trade or business in a federally designated Foreign Trade
28 Zone or Sub-Zone shall be allowed an additional credit
29 against the tax imposed by subsections (a) and (b) of
30 this Section in the amount of 5% of the taxpayer's net
31 income if the taxpayer hires 25 or more eligible
32 employees to work in the zone during the taxable year.
33 The provisions of this paragraph are exempt from the
34 provisions of Section 250.
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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, 2004, except for costs
23 incurred pursuant to a binding contract entered into on or
24 before December 31, 2004.
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. The
5 credit must be claimed for the taxable year in which
6 Agency approval of the eligible remediation costs is
7 granted. The credit is not available to any taxpayer if
8 the taxpayer or any related party caused or contributed
9 to, in any material respect, a release of regulated
10 substances on, in, or under the site that was identified
11 and addressed by the remedial action pursuant to the Site
12 Remediation Program of the Environmental Protection Act.
13 After the Pollution Control Board rules are adopted
14 pursuant to the Illinois Administrative Procedure Act for
15 the administration and enforcement of Section 58.9 of the
16 Environmental Protection Act, determinations as to credit
17 availability for purposes of this Section shall be made
18 consistent with those rules. For purposes of this
19 Section, "taxpayer" includes a person whose tax
20 attributes the taxpayer has succeeded to under Section
21 381 of the Internal Revenue Code and "related party"
22 includes the persons disallowed a deduction for losses by
23 paragraphs (b), (c), and (f)(1) of Section 267 of the
24 Internal Revenue Code by virtue of being a related
25 taxpayer, as well as any of its partners. The credit
26 allowed against the tax imposed by subsections (a) and
27 (b) shall be equal to 25% of the unreimbursed eligible
28 remediation costs in excess of $100,000 per site, except
29 that the $100,000 threshold shall not apply to any site
30 contained in an enterprise zone as determined by the
31 Department of Commerce and Community Affairs. The total
32 credit allowed shall not exceed $40,000 per year with a
33 maximum total of $150,000 per site. For partners and
34 shareholders of subchapter S corporations, there shall be
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1 allowed a credit under this subsection to be determined
2 in accordance with the determination of income and
3 distributive share of income under Sections 702 and 704
4 of subchapter S of the Internal Revenue Code.
5 (ii) A credit allowed under this subsection that is
6 unused in the year the credit is earned may be carried
7 forward to each of the 5 taxable years following the year
8 for which the credit is first earned until it is used.
9 The term "unused credit" does not include any amounts of
10 unreimbursed eligible remediation costs in excess of the
11 maximum credit per site authorized under paragraph (i).
12 This credit shall be applied first to the earliest year
13 for which there is a liability. If there is a credit
14 under this subsection from more than one tax year that is
15 available to offset a liability, the earliest credit
16 arising under this subsection shall be applied first. A
17 credit allowed under this subsection may be sold to a
18 buyer as part of a sale of all or part of the remediation
19 site for which the credit was granted. The purchaser of
20 a remediation site and the tax credit shall succeed to
21 the unused credit and remaining carry-forward period of
22 the seller. To perfect the transfer, the assignor shall
23 record the transfer in the chain of title for the site
24 and provide written notice to the Director of the
25 Illinois Department of Revenue of the assignor's intent
26 to sell the remediation site and the amount of the tax
27 credit to be transferred as a portion of the sale. In no
28 event may a credit be transferred to any taxpayer if the
29 taxpayer or a related party would not be eligible under
30 the provisions of subsection (i).
31 (iii) For purposes of this Section, the term "site"
32 shall have the same meaning as under Section 58.2 of the
33 Environmental Protection Act. (e-mailed)
34 (m) Job creation tax credit. For taxable year 2000 and
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1 thereafter, a taxpayer is entitled to a credit against the
2 taxes imposed by subsections (a) and (b) of this Section in
3 an amount equal to 2.5% of the taxpayer's net income if the
4 taxpayer hires 25 or more employees to work for at least 180
5 consecutive days for the taxpayer in the taxable year. The
6 Department of Revenue must adopt rules to carry out the
7 purposes of this subsection. If the amount of a credit
8 exceeds the tax liability for the year, then the excess may
9 be carried forward and applied to the tax liability of the 5
10 taxable years following the excess credit year. A credit
11 must be applied to the earliest year for which there is a tax
12 liability. If there are credits from more than one taxable
13 year that are available to offset a liability, then the
14 earlier credit must be applied first. This Section is exempt
15 from the provisions of Section 250.
16 (Source: P.A. 89-235, eff. 8-4-95; 89-519, eff. 7-18-96;
17 89-591, eff. 8-1-96; 90-123, eff. 7-21-97; 90-458, eff.
18 8-17-97; 90-605, eff. 6-30-98; 90-655, eff. 7-30-98; 90-717,
19 eff. 8-7-98; 90-792, eff. 1-1-99; revised 9-16-98.)