Public Act 90-0613 of the 90th General Assembly

State of Illinois
Public Acts
90th General Assembly

[ Home ] [ Public Acts ] [ ILCS ] [ Search ] [ Bottom ]


Public Act 90-0613

HB2363 Enrolled                                LRB9007368KDks

    AN ACT concerning taxes.

    Be it enacted by the People of  the  State  of  Illinois,
represented in the General Assembly:

    Section  5.   The  Illinois  Income Tax Act is amended by
changing Sections 204, 304, 502, 702, 703, 804, 901, and 1501
as follows:

    (35 ILCS 5/204) (from Ch. 120, par. 2-204)
    Sec. 204.  Standard Exemption.
    (a)  Allowance of  exemption.  In  computing  net  income
under  this  Act,  there shall be allowed as an exemption the
sum of the amounts determined under subsections (b), (c)  and
(d),  multiplied  by a fraction the numerator of which is the
amount of the taxpayer's base income allocable to this  State
for  the  taxable  year  and  the denominator of which is the
taxpayer's total base income for the taxable year.
    (b)  Basic amount. For the purpose of subsection  (a)  of
this Section, except as provided by subsection (a) of Section
205  and in this subsection, each taxpayer shall be allowed a
basic amount of $1000, except that for individuals the  basic
amount shall be:
         (1)  for  taxable  years ending on or after December
    31, 1998 and prior to December 31, 1999, $1,300;
         (2)  for taxable years ending on or  after  December
    31, 1999 and prior to December 31, 2000, $1,650;
         (3)  for  taxable  years ending on or after December
    31, 2000, $2,000.
For taxable years ending on or after  December  31,  1992,  a
taxpayer  whose Illinois base income exceeds the basic amount
$1,000 and who is claimed as a dependent on another  person's
tax  return under the Internal Revenue Code of 1986 shall not
be allowed any basic  amount  under  this  subsection.    The
provisions  of  Section 250 shall not apply to the amendments
made by this amendatory Act of 1998.
    (c)  Additional amount for individuals. In the case of an
individual taxpayer, there shall be allowed for  the  purpose
of  subsection  (a), in addition to the basic amount provided
by subsection (b), an additional exemption equal to the basic
amount in the amount of $1000 for each exemption in excess of
one allowable to such individual  taxpayer  for  the  taxable
year  under  Section  151  of the Internal Revenue Code.  The
provisions of Section 250 shall not apply to  the  amendments
made by this amendatory Act of 1998.
    (d)  Additional exemptions for an individual taxpayer and
his or her spouse.  In the case of an individual taxpayer and
his or her spouse, he or she shall each be allowed additional
exemptions as follows:
         (1)  Additional  exemption for taxpayer or spouse 65
    years of age or older.
              (A)  For taxpayer.  An additional exemption  of
         $1,000  for  the  taxpayer if he or she has attained
         the age of 65 before the end of the taxable year.
              (B)  For spouse when  a  joint  return  is  not
         filed.   An  additional  exemption of $1,000 for the
         spouse of the taxpayer if a joint return is not made
         by the taxpayer and his spouse, and  if  the  spouse
         has  attained  the  age of 65 before the end of such
         taxable year, and, for the calendar  year  in  which
         the  taxable  year  of  the  taxpayer begins, has no
         gross income and is not  the  dependent  of  another
         taxpayer.
         (2)  Additional  exemption for blindness of taxpayer
    or spouse.
              (A)  For taxpayer.  An additional exemption  of
         $1,000 for the taxpayer if he or she is blind at the
         end of the taxable year.
              (B)  For  spouse  when  a  joint  return is not
         filed.  An additional exemption of  $1,000  for  the
         spouse  of the taxpayer if a separate return is made
         by the taxpayer, and if the spouse is blind and, for
         the calendar year in which the taxable year  of  the
         taxpayer  begins, has no gross income and is not the
         dependent of another taxpayer. For purposes of  this
         paragraph,  the  determination of whether the spouse
         is blind shall be made as of the end of the  taxable
         year of the taxpayer; except that if the spouse dies
         during such taxable year such determination shall be
         made as of the time of such death.
              (C)  Blindness  defined.   For purposes of this
         subsection, an individual is blind only  if  his  or
         her  central visual acuity does not exceed 20/200 in
         the better eye with correcting lenses, or if his  or
         her  visual  acuity  is  greater  than 20/200 but is
         accompanied by a limitation in the fields of  vision
         such  that  the widest diameter of the visual fields
         subtends an angle no greater than 20 degrees.
    (e)  Cross reference. See Article 3  for  the  manner  of
determining base income allocable to this State.
(Source: P.A. 86-146; 87-880; 87-1246.)

    (35 ILCS 5/304) (from Ch. 120, par. 3-304)
    Sec.   304.   Business   income  of  persons  other  than
residents.
    (a)  In general. The business income of  a  person  other
than  a  resident  shall  be  allocated to this State if such
person's business income is derived solely from  this  State.
If  a  person  other  than a resident derives business income
from this State and one or more other states, then,  for  tax
years  ending  on  or before December 30, 1998, and except as
otherwise provided by this Section,  such  person's  business
income  shall be apportioned to this State by multiplying the
income by a fraction, the numerator of which is  the  sum  of
the property factor (if any), the payroll factor (if any) and
200%  of  the  sales  factor (if any), and the denominator of
which is 4 reduced by the number of factors  other  than  the
sales  factor  which  have  a  denominator  of zero and by an
additional 2 if the sales factor has a denominator  of  zero.
For  tax  years  ending  on  or  after December 31, 1998, and
except as otherwise provided by this Section,  persons  other
than residents who derive business income from this State and
one  or  more  other states shall compute their apportionment
factor  by  weighting  their  property,  payroll,  and  sales
factors as provided in subsection (h) of this Section.
    (1)  Property factor.
         (A)  The  property  factor  is   a   fraction,   the
    numerator  of  which is the average value of the person's
    real and tangible personal property owned or  rented  and
    used  in  the  trade or business in this State during the
    taxable year and the denominator of which is the  average
    value  of  all  the  person's  real and tangible personal
    property owned  or  rented  and  used  in  the  trade  or
    business during the taxable year.
         (B)  Property  owned  by the person is valued at its
    original cost. Property rented by the person is valued at
    8 times the net annual rental  rate.  Net  annual  rental
    rate  is  the  annual rental rate paid by the person less
    any annual  rental  rate  received  by  the  person  from
    sub-rentals.
         (C)  The   average   value   of  property  shall  be
    determined by averaging the values at the  beginning  and
    ending  of  the taxable year but the Director may require
    the averaging of monthly values during the  taxable  year
    if  reasonably  required  to reflect properly the average
    value of the person's property.
    (2)  Payroll factor.
         (A)  The payroll factor is a fraction, the numerator
    of which is the total amount paid in  this  State  during
    the  taxable year by the person for compensation, and the
    denominator of  which  is  the  total  compensation  paid
    everywhere during the taxable year.
         (B)  Compensation is paid in this State if:
              (i)  The   individual's  service  is  performed
         entirely within this State;
              (ii)  The  individual's  service  is  performed
         both within and without this State, but the  service
         performed  without  this  State is incidental to the
         individual's service performed within this State; or
              (iii)  Some of the service is performed  within
         this  State and either the base of operations, or if
         there is no base of operations, the place from which
         the service is directed or controlled is within this
         State, or the base of operations or the  place  from
         which  the  service is directed or controlled is not
         in any state in which some part of  the  service  is
         performed, but the individual's residence is in this
         State.
         Beginning  with  taxable  years  ending  on or after
    December 31, 1992, for residents of states that impose  a
    comparable  tax liability on residents of this State, for
    purposes of item (i) of this paragraph (B), in  the  case
    of  persons  who perform personal services under personal
    service contracts for sports  performances,  services  by
    that  person at a sporting event taking place in Illinois
    shall be deemed to be a performance entirely within  this
    State.
    (3)  Sales factor.
         (A)  The  sales  factor is a fraction, the numerator
    of which is the total sales of the person in  this  State
    during  the taxable year, and the denominator of which is
    the total sales  of  the  person  everywhere  during  the
    taxable year.
         (B)  Sales of tangible personal property are in this
    State if:
              (i)  The  property is delivered or shipped to a
         purchaser, other than the United States  government,
         within  this  State regardless of the f. o. b. point
         or other conditions of the sale; or
              (ii)  The property is shipped from  an  office,
         store,  warehouse, factory or other place of storage
         in this State and either the purchaser is the United
         States government or the person is  not  taxable  in
         the  state of the purchaser; provided, however, that
         premises  owned  or  leased  by  a  person  who  has
         independently contracted with  the  seller  for  the
         printing  of  newspapers, periodicals or books shall
         not be deemed to be  an  office,  store,  warehouse,
         factory  or  other  place of storage for purposes of
         this Section.  Sales of tangible  personal  property
         are  not  in  this State if the seller and purchaser
         would be members of the same unitary business  group
         but for the fact that either the seller or purchaser
         is  a  person  with  80%  or  more of total business
         activity  outside  of  the  United  States  and  the
         property is purchased for resale.
         (C)  Sales, other than sales  of  tangible  personal
    property, are in this State if:
              (i)  The income-producing activity is performed
         in this State; or
              (ii)  The    income-producing    activity    is
         performed  both  within and without this State and a
         greater proportion of the income-producing  activity
         is  performed  within  this  State than without this
         State, based on performance costs.
         (D)  For taxable years ending on or  after  December
    31,  1995,  the  following  items  of income shall not be
    included in the numerator or  denominator  of  the  sales
    factor:  dividends;  amounts included under Section 78 of
    the Internal  Revenue  Code;  and  Subpart  F  income  as
    defined  in  Section 952 of the Internal Revenue Code. No
    inference shall be  drawn  from  the  enactment  of  this
    paragraph  (D)  in  construing  this  Section for taxable
    years ending before December 31, 1995.
    (b)  Insurance companies.
    (1)  In  general.  Except  as   otherwise   provided   by
paragraph  (2), business income of an insurance company for a
taxable  year  shall  be  apportioned  to   this   State   by
multiplying such income by a fraction, the numerator of which
is the direct premiums written for insurance upon property or
risk  in  this  State,  and  the  denominator of which is the
direct premiums written for insurance upon property  or  risk
everywhere. For purposes of this subsection, the term "direct
premiums  written"  means the total amount of direct premiums
written, assessments and annuity considerations  as  reported
for  the  taxable  year  on the annual statement filed by the
company with the Illinois Director of Insurance in  the  form
approved    by   the   National   Convention   of   Insurance
Commissioners or such other form as may be prescribed in lieu
thereof.
    (2)  Reinsurance. If the  principal  source  of  premiums
written  by  an  insurance  company  consists of premiums for
reinsurance accepted by  it,  the  business  income  of  such
company  shall  be  apportioned  to this State by multiplying
such income by a fraction, the numerator of which is the  sum
of (i) direct premiums written for insurance upon property or
risk   in   this   State,  plus  (ii)  premiums  written  for
reinsurance accepted in respect of property or risk  in  this
State,  and  the  denominator  of  which  is the sum of (iii)
direct premiums written for insurance upon property  or  risk
everywhere,   plus  (iv)  premiums  written  for  reinsurance
accepted in respect  of  property  or  risk  everywhere.  For
purposes  of this paragraph, premiums written for reinsurance
accepted in respect  of  property  or  risk  in  this  State,
whether  or  not otherwise determinable, may, at the election
of the company, be determined on the basis of the  proportion
which   premiums   written   for  reinsurance  accepted  from
companies  commercially  domiciled  in  Illinois   bears   to
premiums  written  for reinsurance accepted from all sources,
or, alternatively, in the proportion which  the  sum  of  the
direct  premiums  written for insurance upon property or risk
in this State by each ceding company from  which  reinsurance
is  accepted  bears  to  the sum of the total direct premiums
written by each such ceding company for the taxable year.
    (c)  Financial organizations.
    (1)  In  general.  Business   income   of   a   financial
organization   shall   be   apportioned   to  this  State  by
multiplying such income by a fraction, the numerator of which
is its business income from sources within  this  State,  and
the  denominator  of  which  is  its business income from all
sources. For the purposes of this  subsection,  the  business
income  of  a financial organization from sources within this
State is the sum of the amounts referred to in  subparagraphs
(A)  through (E) following, but excluding the adjusted income
of  an  international  banking  facility  as  determined   in
paragraph (2):
         (A)  Fees,  commissions  or  other  compensation for
    financial services rendered within this State;
         (B)  Gross profits from trading in stocks, bonds  or
    other securities managed within this State;
         (C)  Dividends,    and    interest   from   Illinois
    customers, which are received within this State;
         (D)  Interest charged  to  customers  at  places  of
    business  maintained within this State for carrying debit
    balances of margin accounts,  without  deduction  of  any
    costs incurred in carrying such accounts; and
         (E)  Any  other  gross  income  resulting  from  the
    operation  as a financial organization within this State.
    In computing the amounts referred to  in  paragraphs  (A)
    through  (E) of this subsection, any amount received by a
    member of an affiliated group (determined  under  Section
    1504(a)   of   the  Internal  Revenue  Code  but  without
    reference  to  whether  any  such   corporation   is   an
    "includible  corporation"  under  Section  1504(b) of the
    Internal Revenue Code) from another member of such  group
    shall  be included only to the extent such amount exceeds
    expenses of the recipient directly related thereto.
    (2)  International Banking Facility.
         (A)  Adjusted Income.  The  adjusted  income  of  an
    international  banking  facility is its income reduced by
    the amount of the floor amount.
         (B)  Floor Amount.  The floor amount  shall  be  the
    amount,  if  any, determined by multiplying the income of
    the international banking facility  by  a  fraction,  not
    greater than one, which is determined as follows:
              (i)  The numerator shall be:
              The   average   aggregate,   determined   on  a
         quarterly basis,  of  the  financial  organization's
         loans  to  banks  in  foreign  countries, to foreign
         domiciled borrowers (except where secured  primarily
         by real estate) and to foreign governments and other
         foreign  official  institutions, as reported for its
         branches, agencies and offices within the  state  on
         its  "Consolidated Report of Condition", Schedule A,
         Lines 2.c., 5.b., and 7.a., which was filed with the
         Federal  Deposit  Insurance  Corporation  and  other
         regulatory authorities, for the year 1980, minus
              The  average   aggregate,   determined   on   a
         quarterly  basis, of such loans (other than loans of
         an international banking facility), as  reported  by
         the financial institution for its branches, agencies
         and  offices  within the state, on the corresponding
         Schedule and lines of  the  Consolidated  Report  of
         Condition  for  the  current taxable year, provided,
         however, that in no case shall the amount determined
         in this clause (the subtrahend)  exceed  the  amount
         determined  in  the  preceding clause (the minuend);
         and
              (ii)  the  denominator  shall  be  the  average
         aggregate, determined on a quarterly basis,  of  the
         international  banking  facility's loans to banks in
         foreign countries, to  foreign  domiciled  borrowers
         (except  where secured primarily by real estate) and
         to foreign governments and  other  foreign  official
         institutions,  which  were recorded in its financial
         accounts for the current taxable year.
         (C)  Change to Consolidated Report of Condition  and
    in  Qualification.   In the event the Consolidated Report
    of Condition which is  filed  with  the  Federal  Deposit
    Insurance Corporation and other regulatory authorities is
    altered  so that the information required for determining
    the floor amount is not found on Schedule A, lines  2.c.,
    5.b. and 7.a., the financial institution shall notify the
    Department  and  the  Department  may,  by regulations or
    otherwise,  prescribe  or  authorize  the   use   of   an
    alternative  source  for  such information. The financial
    institution shall also notify the Department  should  its
    international  banking  facility fail to qualify as such,
    in whole or in part, or should there be any amendment  or
    change  to  the  Consolidated  Report  of  Condition,  as
    originally  filed, to the extent such amendment or change
    alters the information  used  in  determining  the  floor
    amount.
    (d)  Transportation  services.  Business  income  derived
from  furnishing transportation services shall be apportioned
to this State in accordance with paragraphs (1) and (2):
         (1)  Such business income (other than  that  derived
    from  transportation by pipeline) shall be apportioned to
    this State by multiplying such income by a fraction,  the
    numerator  of which is the revenue miles of the person in
    this State, and the denominator of which is  the  revenue
    miles  of  the  person  everywhere.  For purposes of this
    paragraph, a revenue mile  is  the  transportation  of  1
    passenger  or 1 net ton of freight the distance of 1 mile
    for a consideration. Where a person  is  engaged  in  the
    transportation   of  both  passengers  and  freight,  the
    fraction above referred to shall be determined  by  means
    of  an average of the passenger revenue mile fraction and
    the freight revenue mile fraction,  weighted  to  reflect
    the person's
              (A)  relative  railway  operating  income  from
         total   passenger  and  total  freight  service,  as
         reported to the Interstate Commerce  Commission,  in
         the case of transportation by railroad, and
              (B)  relative gross receipts from passenger and
         freight  transportation,  in  case of transportation
         other than by railroad.
         (2)  Such    business    income     derived     from
    transportation  by  pipeline shall be apportioned to this
    State by multiplying  such  income  by  a  fraction,  the
    numerator  of which is the revenue miles of the person in
    this State, and the denominator of which is  the  revenue
    miles  of the person everywhere. For the purposes of this
    paragraph,  a  revenue  mile  is  the  transportation  by
    pipeline of 1 barrel of oil, 1,000 cubic feet of gas,  or
    of  any  specified  quantity  of any other substance, the
    distance of 1 mile for a consideration.
    (e)  Combined apportionment.  Where 2 or more persons are
engaged in a unitary  business  as  described  in  subsection
(a)(27) of Section 1501, a part of which is conducted in this
State  by  one  or  more  members  of the group, the business
income attributable to this  State  by  any  such  member  or
members  shall  be  apportioned  by  means  of  the  combined
apportionment method.
    (f)  Alternative   allocation.   If  the  allocation  and
apportionment provisions of subsections (a) through  (e)  and
of  subsection  (h)  do  not fairly represent the extent of a
person's business activity in  this  State,  the  person  may
petition  for, or the Director may require, in respect of all
or any part of the person's business activity, if reasonable:
         (1)  Separate accounting;
         (2)  The exclusion of any one or more factors;
         (3)  The inclusion of one or more additional factors
    which  will  fairly  represent  the   person's   business
    activities in this State; or
         (4)  The   employment   of   any   other  method  to
    effectuate an equitable allocation and  apportionment  of
    the person's business income.
    (g)  Cross  reference.  For allocation of business income
by residents, see Section 301(a).
    (h)  For tax years ending on or after December 31,  1998,
the  apportionment  factor  of  persons  who  apportion their
business income to this State under subsection (a)  shall  be
equal to:
         (1)  for  tax  years ending on or after December 31,
    1998 and  before  December  31,  1999,  16  2/3%  of  the
    property  factor  plus 16 2/3% of the payroll factor plus
    66 2/3% of the sales factor;
         (2)  for tax years ending on or after  December  31,
    1999 and before December 31, 2000, 8 1/3% of the property
    factor  plus 8 1/3% of the payroll factor plus 83 1/3% of
    the sales factor;
         (3)  for tax years ending on or after  December  31,
    2000, the sales factor.
If,  in any tax year ending on or after December 31, 1998 and
before December 31, 2000, the  denominator  of  the  payroll,
property,  or  sales factor is zero, the apportionment factor
computed in paragraph (1) or (2) of this subsection for  that
year  shall  be  divided by an amount equal to 100% minus the
percentage weight given to each factor whose  denominator  is
equal to zero.
(Source:  P.A.  89-379,  eff.  1-1-96;  89-399, eff. 8-20-95;
89-626, eff. 8-9-96; 90-562, eff. 12-16-97.)

    (35 ILCS 5/502) (from Ch. 120, par. 5-502)
    Sec. 502.  Returns and notices.
    (a)  In general. A  return  with  respect  to  the  taxes
imposed  by  this  Act  shall be made by every person for any
taxable year:
         (1)  For which such  person  is  liable  for  a  tax
    imposed by this Act, or
         (2)  In  the  case of a resident or in the case of a
    corporation which is qualified to  do  business  in  this
    State,  for  which  such  person  is  required  to make a
    federal income tax return,  regardless  of  whether  such
    person is liable for a tax imposed by this Act.  However,
    this  paragraph  shall  not  require a resident to make a
    return if, unless such person has an Illinois base income
    of the basic amount in Section 204(b) $1,000 or less  and
    is  either claimed as a dependent on another person's tax
    return under the Internal Revenue Code  of  1986,  or  is
    claimed  as  a  dependent  on another person's tax return
    under this Act.
    (b)  Fiduciaries and receivers.
         (1)  Decedents. If an individual  is  deceased,  any
    return  or  notice required of such individual under this
    Act shall be made  by  his  executor,  administrator,  or
    other person charged with the property of such decedent.
         (2)  Individuals   under   a   disability.   If   an
    individual  is unable to make a return or notice required
    under this Act, the return or  notice  required  of  such
    individual  shall  be  made by his duly authorized agent,
    guardian, fiduciary or other person charged with the care
    of the person or property of such individual.
         (3)  Estates and trusts. Returns or notices required
    of an estate or a trust shall be made  by  the  fiduciary
    thereof.
         (4)  Receivers,    trustees    and   assignees   for
    corporations. In a case  where  a  receiver,  trustee  in
    bankruptcy, or assignee, by order of a court of competent
    jurisdiction,  by  operation  of  law,  or otherwise, has
    possession of or holds title to all or substantially  all
    the property or business of a corporation, whether or not
    such   property  or  business  is  being  operated,  such
    receiver, trustee, or assignee shall make the returns and
    notices required of such corporation in the  same  manner
    and  form  as  corporations  are  required  to  make such
    returns and notices.
    (c)  Joint returns by husband and wife.
         (1)  Except as  provided  in  paragraph  (3),  if  a
    husband  and  wife file a joint federal income tax return
    for a taxable year they shall file a joint  return  under
    this  Act  for  such  taxable  year and their liabilities
    shall be joint and several, but if the federal income tax
    liability of either spouse is determined  on  a  separate
    federal  income  tax  return,  they  shall  file separate
    returns under this Act.
         (2)  If neither spouse is required to file a federal
    income tax return and either or both are required to file
    a return under this Act, they may elect to file  separate
    or  joint  returns  and  pursuant  to such election their
    liabilities shall be separate or joint and several.
         (3)  If either husband or wife is a resident and the
    other is a nonresident, they shall file separate  returns
    in  this  State  on  such forms as may be required by the
    Department in which event their tax liabilities shall  be
    separate; but they may elect to determine their joint net
    income  and file a joint return as if both were residents
    and in such case, their liabilities shall  be  joint  and
    several.
         (4)  However,  an  innocent spouse shall be relieved
    of liability for tax (including interest  and  penalties)
    for  any  taxable  year for which a joint return has been
    made, upon submission of proof that the Internal  Revenue
    Service has made a determination under Section 6013(e) of
    the  Internal  Revenue  Code,  for the same taxable year,
    which determination relieved the  spouse  from  liability
    for  federal  income taxes. If there is no federal income
    tax liability at issue for the  same  taxable  year,  the
    Department  shall  rely  on  the  provisions  of  Section
    6013(e)   to  determine  whether  the  person  requesting
    innocent spouse abatement of tax, penalty,  and  interest
    is entitled to that relief.
    (d)  Partnerships.  Every  partnership  having  any  base
income  allocable  to  this  State in accordance with section
305(c) shall  retain  information  concerning  all  items  of
income,  gain, loss and deduction; the names and addresses of
all of the partners, or names and addresses of members  of  a
limited  liability  company,  or  other  persons who would be
entitled to share in the base income of  the  partnership  if
distributed;  the  amount  of the distributive share of each;
and such other pertinent information as the Department may by
forms or regulations prescribe. The  partnership  shall  make
that  information  available to the Department when requested
by the Department.
    (e)  For taxable years ending on or  after  December  31,
1985,  and  before  December  31,  1993,  taxpayers  that are
corporations (other than Subchapter  S  corporations)  having
the  same  taxable  year  and  that  are  members of the same
unitary business  group  may  elect  to  be  treated  as  one
taxpayer  for purposes of any original return, amended return
which includes the same taxpayers of the unitary group  which
joined   in   the  election  to  file  the  original  return,
extension,  claim  for  refund,  assessment,  collection  and
payment and determination of the group's tax liability  under
this Act. This subsection (e) does not permit the election to
be  made  for  some,  but not all, of the purposes enumerated
above. For taxable years ending  on  or  after  December  31,
1987,    corporate   members   (other   than   Subchapter   S
corporations) of the same unitary business group making  this
subsection  (e)  election  are  not required to have the same
taxable year.
    For taxable years ending on or after December  31,  1993,
taxpayers  that  are  corporations  (other  than Subchapter S
corporations) and that  are  members   of  the  same  unitary
business  group shall be treated as one taxpayer for purposes
of any original return, amended  return  which  includes  the
same  taxpayers  of  the unitary group which joined in filing
the original return, extension, claim for refund, assessment,
collection and payment and determination of the  group's  tax
liability under this Act.
    (f)  The  Department may promulgate regulations to permit
nonresident individual  partners  of  the  same  partnership,
nonresident Subchapter S corporation shareholders of the same
Subchapter   S   corporation,   and  nonresident  individuals
transacting an insurance business in Illinois under a  Lloyds
plan  of operation, and nonresident individual members of the
same  limited  liability  company  that  is  treated   as   a
partnership  under  Section 1501 (a)(16) of this Act, to file
composite  individual  income  tax  returns  reflecting   the
composite  income  of  such individuals allocable to Illinois
and to make composite individual income  tax  payments.   The
Department  may  by  regulation  also  permit  such composite
returns to include the income tax owed by Illinois  residents
attributable  to their income from partnerships, Subchapter S
corporations, insurance businesses organized under  a  Lloyds
plan  of  operation,  or limited liability companies that are
treated as partnership under Section  1501  (a)(16)  of  this
Act,  in which case such Illinois residents will be permitted
to claim credits on their individual returns for their shares
of the composite tax payments.  This subsection  (f)  applies
to taxable years ending on or after December 31, 1987.
    (g)  The  Department  may  adopt  rules  to authorize the
electronic filing of any return required to  be  filed  under
this Section.
(Source: P.A.  87-879;  87-1246; 88-195; 88-480; 88-669, eff.
11-29-94; 88-670, eff. 12-2-94.)

    (35 ILCS 5/702) (from Ch. 120, par. 7-702)
    Sec. 702. Amount Exempt from Withholding. For purposes of
this Section an employee shall be entitled to  a  withholding
exemption  in  an amount equal to the basic amount in Section
204(b) $1,000 for each personal or dependent exemption  which
he  is  entitled  to  claim on his federal return pursuant to
Section 151 of the Internal Revenue Code  of  1986;  plus  an
allowance  equal  to $1,000 for each $1,000 he is entitled to
deduct from gross income in arriving at adjusted gross income
pursuant to Section 62 of the Internal Revenue Code of  1986;
plus  an additional allowance equal to $1,000 for each $1,000
eligible for subtraction on his Illinois income tax return as
Illinois real estate taxes paid during the taxable  year;  or
in  any  lesser  amount  claimed by him. Every employee shall
furnish to his employer such information as is  required  for
the  employer to make an accurate withholding under this Act.
The employer may rely on  this  information  for  withholding
purposes.  If  any  employee fails or refuses to furnish such
information, the employer shall withhold the full rate of tax
from the employee's total compensation.
(Source: P.A. 85-731.)

    (35 ILCS 5/703) (from Ch. 120, par. 7-703)
    Sec. 703. Information Statement. Every employer  required
to  deduct  and withhold tax under this Act from compensation
of an employee, or who would have been required so to  deduct
and withhold tax if the employee's withholding exemption were
not  in  excess of the basic amount in Section 204(b) $1,000,
shall furnish in duplicate to each such employee  in  respect
of  the  compensation  paid by such employer to such employee
during the calendar year on  or  before  January  31  of  the
succeeding  year,  or, if his employment is terminated before
the close of such calendar year, on the  date  on  which  the
last  payment of compensation is made, a written statement in
such form as  the  Department  may  by  regulation  prescribe
showing  the  amount  of compensation paid by the employer to
the employee, the amount deducted and withheld  as  tax,  and
such  other  information as the Department shall prescribe. A
copy of such statement shall be filed by  the  employee  with
his  return  for  his  taxable  year  to which it relates (as
determined under section 601(b) (1).
(Source: P.A. 76-261.)

    (35 ILCS 5/804) (from Ch. 120, par. 8-804)
    Sec. 804.  Failure to Pay Estimated Tax.
    (a)  In general. In case of any underpayment of estimated
tax by a taxpayer, except as provided in  subsection  (d)  or
(e),  the  taxpayer shall be liable to a penalty in an amount
determined at the rate  prescribed  by  Section  3-3  of  the
Uniform  Penalty  and  Interest  Act  upon  the amount of the
underpayment  (determined  under  subsection  (b))  for  each
required installment.
    (b)  Amount of underpayment. For purposes  of  subsection
(a), the amount of the underpayment shall be the excess of:
         (1)  the  amount  of  the installment which would be
    required to be paid under subsection (c), over
         (2)  the amount, if any, of the installment paid  on
    or before the last date prescribed for payment.
    (c)  Amount of Required Installments.
         (1)  Amount.
              (A)  In   General.    Except   as  provided  in
         paragraph  (2),   the   amount   of   any   required
         installment  shall  be  25%  of  the required annual
         payment.
              (B)  Required Annual Payment.  For purposes  of
         subparagraph (A), the term "required annual payment"
         means the lesser of
                   (i)  90%  of  the  tax shown on the return
              for the taxable year, or if no return is filed,
              90% of the tax for such year, or
                   (ii)  100% of the tax shown on the  return
              of  the taxpayer for the preceding taxable year
              if a return showing a  liability  for  tax  was
              filed by the taxpayer for the preceding taxable
              year and such preceding year was a taxable year
              of 12 months.
         (2)  Lower  Required  Installment  where  Annualized
    Income  Installment  is Less Than Amount Determined Under
    Paragraph (1).
              (A)  In General.  In the case of  any  required
         installment  if  a  taxpayer  establishes  that  the
         annualized  income  installment  is  less  than  the
         amount determined under paragraph (1),
                   (i)  the    amount    of   such   required
              installment  shall  be  the  annualized  income
              installment, and
                   (ii)  any   reduction   in   a    required
              installment  resulting  from the application of
              this  subparagraph  shall  be   recaptured   by
              increasing  the  amount  of  the  next required
              installment determined under paragraph  (1)  by
              the amount of such reduction, and by increasing
              subsequent  required installments to the extent
              that the  reduction  has  not  previously  been
              recaptured under this clause.
              (B)  Determination    of    Annualized   Income
         Installment.   In   the   case   of   any   required
         installment,  the  annualized  income installment is
         the excess, if any, of
                   (i)  an amount  equal  to  the  applicable
              percentage  of  the  tax  for  the taxable year
              computed by placing on an annualized basis  the
              net  income  for  months  in  the  taxable year
              ending before the due date for the installment,
              over
                   (ii)  the aggregate amount  of  any  prior
              required installments for the taxable year.
              (C)  Applicable Percentage.
         In the case of the following          The applicable
         required installments:                percentage is:
         1st ...............................            22.5%
         2nd ...............................              45%
         3rd ...............................            67.5%
         4th ...............................              90%
              (D)  Annualized  Net  Income; Individuals.  For
         individuals,  net  income  shall  be  placed  on  an
         annualized basis by:
                   (i)  multiplying by 12, or in the case  of
              a  taxable  year of less than 12 months, by the
              number of months in the taxable year,  the  net
              income  computed without regard to the standard
              exemption for the months in  the  taxable  year
              ending   before   the   month   in   which  the
              installment is required to be paid;
                   (ii)  dividing the resulting amount by the
              number of months in  the  taxable  year  ending
              before the month in which such installment date
              falls; and
                   (iii)  deducting   from  such  amount  the
              standard exemption allowable  for  the  taxable
              year,  such standard exemption being determined
              as of the last date prescribed for  payment  of
              the installment.
              (E)  Annualized  Net Income; Corporations.  For
         corporations, net  income  shall  be  placed  on  an
         annualized  basis  by  multiplying by 12 the taxable
         income
                   (i)  for the first 3 months of the taxable
              year, in the case of the  installment  required
              to be paid in the 4th month,
                   (ii)  for  the  first  3 months or for the
              first 5 months of the taxable year, in the case
              of the installment required to be paid  in  the
              6th month,
                   (iii)  for  the  first 6 months or for the
              first 8 months of the taxable year, in the case
              of the installment required to be paid  in  the
              9th month, and
                   (iv)  for  the  first  9 months or for the
              first 11 months of the  taxable  year,  in  the
              case  of the installment required to be paid in
              the 12th month of the taxable year,
         then dividing the resulting amount by the number  of
         months  in the taxable year (3, 5, 6, 8, 9, or 11 as
         the case may be).
    (d)  Exceptions. Notwithstanding the  provisions  of  the
preceding  subsections, the penalty imposed by subsection (a)
shall not be imposed if the taxpayer was not required to file
an Illinois income tax return for the preceding taxable year,
or if the taxpayer has underpaid taxes solely because of  the
increased  rate in effect during the period from July 1, 1989
through December 1989, or, for individuals, if  the  taxpayer
had  no tax liability for the preceding taxable year and such
year was a taxable year of 12 months. The penalty imposed  by
subsection (a) shall also not be imposed on any underpayments
of  estimated  tax  due  before  the  effective  date of this
amendatory  Act  of  1998  which  underpayments  are   solely
attributable  to  the change in apportionment from subsection
(a) to subsection (h) of Section 304.  The provisions of this
amendatory Act of 1998 apply to tax years ending on or  after
December 31, 1998.
    (e)  The  penalty  imposed  for underpayment of estimated
tax by subsection (a) of this Section shall not be imposed to
the extent that the Department or his  designate  determines,
pursuant  to  Section 3-8 of the Uniform Penalty and Interest
Act that the penalty should not be imposed.
    (f)  Definition of tax. For purposes of  subsections  (b)
and  (c),  the term "tax" means the excess of the tax imposed
under Article 2  of  this  Act,  over  the  amounts  credited
against such tax under Sections 601(b) (3) and (4).
    (g)  Application  of  Section  in case of tax withheld on
compensation.  For purposes of applying this Section  in  the
case  of  an individual, tax withheld under Article 7 for the
taxable year shall be deemed a payment of estimated tax,  and
an  equal  part  of  such amount shall be deemed paid on each
installment date for such taxable year, unless  the  taxpayer
establishes  the  dates  on  which  all amounts were actually
withheld, in which case the  amounts  so  withheld  shall  be
deemed  payments  of estimated tax on the dates on which such
amounts were actually withheld.
    (g-5)  Amounts  withheld  under  the  State  Salary   and
Annuity  Withholding  Act.   An  individual  who  has amounts
withheld under paragraph (10)  of  Section  4  of  the  State
Salary  and  Annuity  Withholding Act may elect to have those
amounts treated as payments of  estimated  tax  made  on  the
dates on which those amounts are actually withheld.
    (i)  Short taxable year.  The application of this Section
to  taxable  years  of  less  than  12  months  shall  be  in
accordance with regulations prescribed by the Department.
    The  changes  in  this  Section made by Public Act 84-127
shall apply to taxable years ending on or  after  January  1,
1986.
(Source: P.A. 90-448, eff. 8-16-97.)

    (35 ILCS 5/901) (from Ch. 120, par. 9-901)
    Sec. 901.  Collection Authority.
    (a)  In general.
    The  Department  shall  collect the taxes imposed by this
Act.  The Department shall collect certified past  due  child
support   amounts   under   Section   39b52   of   the  Civil
Administrative Code  of  Illinois.   Except  as  provided  in
subsections  (c)  and  (e)  of  this Section, money collected
pursuant to subsections (a) and (b) of Section  201  of  this
Act  shall be paid into the General Revenue Fund in the State
treasury; money collected pursuant to subsections (c) and (d)
of Section 201 of this Act shall be paid  into  the  Personal
Property  Tax  Replacement  Fund, a special fund in the State
Treasury; and money collected  under  Section  39b52  of  the
Civil  Administrative Code of Illinois shall be paid into the
Child Support Enforcement Trust Fund, a special fund  outside
the State Treasury.
    (b)  Local Governmental Distributive Fund.
    Beginning August 1, 1969, and continuing through June 30,
1994,  the  Treasurer  shall  transfer  each  month  from the
General Revenue Fund to a special fund in the State treasury,
to be known as the "Local Government Distributive  Fund",  an
amount equal to 1/12 of the net revenue realized from the tax
imposed by subsections (a) and (b) of Section 201 of this Act
during  the  preceding  month.  Beginning  July  1, 1994, and
continuing  through  June  30,  1995,  the  Treasurer   shall
transfer  each  month  from  the  General Revenue Fund to the
Local Government Distributive Fund an amount equal to 1/11 of
the net revenue realized from the tax imposed by  subsections
(a)  and  (b) of Section 201 of this Act during the preceding
month.  Beginning July 1, 1995, the Treasurer shall  transfer
each  month  from  the  General  Revenue  Fund  to  the Local
Government Distributive Fund an amount equal to 1/10  of  the
net  revenue realized from the tax imposed by subsections (a)
and (b) of Section 201 of the Illinois Income Tax Act  during
the  preceding  month. Net revenue realized for a month shall
be defined as the revenue from the tax imposed by subsections
(a) and (b) of Section 201 of this Act which is deposited  in
the General Revenue Fund, the Educational Assistance Fund and
the  Income  Tax Surcharge Local Government Distributive Fund
during the month minus the amount paid  out  of  the  General
Revenue  Fund  in  State  warrants  during that same month as
refunds to taxpayers for overpayment of liability  under  the
tax imposed by subsections (a) and (b) of Section 201 of this
Act.

    (c)  Deposits Into Income Tax Refund Fund.
         (1)  Beginning  on  January  1, 1989 and thereafter,
    the Department shall deposit a percentage of the  amounts
    collected  pursuant  to  subsections (a) and (b)(1), (2),
    and (3), of Section 201 of this Act into a  fund  in  the
    State  treasury known as the Income Tax Refund Fund.  The
    Department shall deposit 6% of such  amounts  during  the
    period  beginning  January 1, 1989 and ending on June 30,
    1989.  Beginning with State fiscal year 1990 and for each
    fiscal year thereafter, the percentage deposited into the
    Income Tax Refund Fund during a fiscal year shall be  the
    Annual  Percentage.   For fiscal years 1999 through 2001,
    the Annual Percentage  shall  be  7.1%.   For  all  other
    fiscal  years,  the Annual Percentage shall be calculated
    as a fraction, the numerator of which shall be the amount
    of refunds approved for payment by the Department  during
    the  preceding  fiscal year as a result of overpayment of
    tax liability under subsections (a) and (b)(1), (2),  and
    (3)  of  Section  201 of this Act plus the amount of such
    refunds remaining approved but unpaid at the end  of  the
    preceding  fiscal year minus any surplus which remains on
    deposit in the Income Tax Refund Fund at the end  of  the
    preceding  year,  the  denominator  of which shall be the
    amounts which will be collected pursuant  to  subsections
    (a)  and  (b)(1), (2), and (3) of Section 201 of this Act
    during  the  preceding  fiscal  year.   The  Director  of
    Revenue  shall  certify  the  Annual  Percentage  to  the
    Comptroller on the last business day of the  fiscal  year
    immediately  preceding the fiscal year for which it is it
    to be effective.
         (2)  Beginning on January 1,  1989  and  thereafter,
    the  Department shall deposit a percentage of the amounts
    collected pursuant to subsections (a)  and  (b)(6),  (7),
    and  (8),  (c)  and (d) of Section 201 of this Act into a
    fund in the State treasury known as the Income Tax Refund
    Fund.  The Department shall deposit 18% of  such  amounts
    during the period beginning January 1, 1989 and ending on
    June 30, 1989.  Beginning with State fiscal year 1990 and
    for each fiscal year thereafter, the percentage deposited
    into  the  Income  Tax  Refund  Fund during a fiscal year
    shall be the Annual Percentage.  For fiscal  years  1999,
    2000,  and 2001, the Annual Percentage shall be 19%.  For
    all other fiscal years, the Annual  Percentage  shall  be
    calculated as a fraction, the numerator of which shall be
    the  amount  of  refunds  approved  for  payment  by  the
    Department  during  the preceding fiscal year as a result
    of overpayment of tax liability under subsections (a) and
    (b)(6), (7), and (8), (c) and (d) of Section 201 of  this
    Act  plus  the  amount of such refunds remaining approved
    but unpaid at the end of the preceding fiscal  year,  the
    denominator  of  which shall be the amounts which will be
    collected pursuant to subsections (a)  and  (b)(6),  (7),
    and  (8),  (c)  and (d) of Section 201 of this Act during
    the preceding fiscal year.  The Director of Revenue shall
    certify the Annual Percentage to the Comptroller  on  the
    last   business   day  of  the  fiscal  year  immediately
    preceding  the  fiscal  year  for  which  it  is  to   be
    effective.

    (d)  Expenditures from Income Tax Refund Fund.
         (1)  Beginning  January 1, 1989, money in the Income
    Tax Refund Fund shall be  expended  exclusively  for  the
    purpose  of  paying refunds resulting from overpayment of
    tax liability under Section  201  of  this  Act  and  for
    making transfers pursuant to this subsection (d).
         (2)  The  Director  shall  order  payment of refunds
    resulting from overpayment of tax liability under Section
    201 of this Act from the Income Tax Refund Fund  only  to
    the extent that amounts collected pursuant to Section 201
    of this Act and transfers pursuant to this subsection (d)
    have been deposited and retained in the Fund.
         (3)  As  soon  as  possible  after the end of On the
    last business day of each fiscal year, the Director shall
    order transferred  and  the  State  Treasurer  and  State
    Comptroller  shall  transfer  from  the Income Tax Refund
    Fund to the Personal Property  Tax  Replacement  Fund  an
    amount,  certified  by  the  Director to the Comptroller,
    equal to the excess of the amount collected  pursuant  to
    subsections  (c)  and  (d)  of  Section  201  of this Act
    deposited into the Income  Tax  Refund  Fund  during  the
    fiscal  year  over  the  amount of refunds resulting from
    overpayment of tax liability under  subsections  (c)  and
    (d)  of  Section 201 of this Act paid from the Income Tax
    Refund Fund during the fiscal year.
         (4)  As soon as possible after the  end  of  On  the
    last business day of each fiscal year, the Director shall
    order  transferred  and  the  State  Treasurer  and State
    Comptroller shall transfer from the Personal Property Tax
    Replacement Fund to the Income Tax Refund Fund an amount,
    certified by the Director to the  Comptroller,  equal  to
    the  excess  of  the  amount  of  refunds  resulting from
    overpayment of tax liability under  subsections  (c)  and
    (d)  of  Section 201 of this Act paid from the Income Tax
    Refund Fund  during  the  fiscal  year  over  the  amount
    collected  pursuant to subsections (c) and (d) of Section
    201 of this Act deposited into the Income Tax Refund Fund
    during the fiscal year.
         (4.5)  As soon as possible after the end  of  fiscal
    year  1999  and  of  each  fiscal  year  thereafter,  the
    Director  shall order transferred and the State Treasurer
    and State Comptroller shall transfer from the Income  Tax
    Refund  Fund  to  the  General  Revenue  Fund any surplus
    remaining in the Income Tax Refund Fund as of the end  of
    such fiscal year.
         (5)  This  Act  shall  constitute an irrevocable and
    continuing appropriation from the Income Tax Refund  Fund
    for  the  purpose of paying refunds upon the order of the
    Director  in  accordance  with  the  provisions  of  this
    Section.
    (e)  Deposits into the Education Assistance Fund and  the
Income Tax Surcharge Local Government Distributive Fund.
    On July 1, 1991, and thereafter, of the amounts collected
pursuant  to  subsections  (a) and (b) of Section 201 of this
Act, minus deposits into the  Income  Tax  Refund  Fund,  the
Department  shall  deposit 7.3% into the Education Assistance
Fund in the State Treasury.   Beginning  July  1,  1991,  and
continuing through January 31, 1993, of the amounts collected
pursuant  to  subsections  (a)  and (b) of Section 201 of the
Illinois Income Tax Act, minus deposits into the  Income  Tax
Refund  Fund,  the  Department  shall  deposit  3.0% into the
Income Tax Surcharge Local Government  Distributive  Fund  in
the   State   Treasury.    Beginning  February  1,  1993  and
continuing through June 30, 1993, of  the  amounts  collected
pursuant  to  subsections  (a)  and (b) of Section 201 of the
Illinois Income Tax Act, minus deposits into the  Income  Tax
Refund  Fund,  the  Department  shall  deposit  4.4% into the
Income Tax Surcharge Local Government  Distributive  Fund  in
the  State  Treasury.  Beginning July 1, 1993, and continuing
through  June  30,  1994,  of  the  amounts  collected  under
subsections (a) and (b) of Section 201  of  this  Act,  minus
deposits  into  the  Income  Tax  Refund Fund, the Department
shall deposit 1.475% into  the  Income  Tax  Surcharge  Local
Government Distributive Fund in the State Treasury.
(Source: P.A. 88-89; 89-6, eff. 12-31-95; revised 12-18-97.)

    (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
    Sec. 1501.  Definitions.
    (a)  In  general.  When  used  in  this  Act,  where  not
otherwise  distinctly  expressed  or  manifestly incompatible
with the intent thereof:
         (1)  Business income.  The  term  "business  income"
    means  income  arising  from transactions and activity in
    the regular course of the taxpayer's trade  or  business,
    net  of  the  deductions  allocable thereto, and includes
    income from  tangible  and  intangible  property  if  the
    acquisition,  management, and disposition of the property
    constitute integral parts of the taxpayer's regular trade
    or  business  operations.  Such  term  does  not  include
    compensation or the deductions allocable thereto.
         (2)  Commercial  domicile.  The   term   "commercial
    domicile"  means the principal place from which the trade
    or business of the taxpayer is directed or managed.
         (3)  Compensation.  The  term  "compensation"  means
    wages,  salaries,  commissions  and  any  other  form  of
    remuneration paid to employees for personal services.
         (4)  Corporation. The  term  "corporation"  includes
    associations,  joint-stock companies, insurance companies
    and  cooperatives.  Any  entity,  including   a   limited
    liability  company  formed  under  the  Illinois  Limited
    Liability  Company Act, shall be treated as a corporation
    if it is so classified for federal income tax purposes.
         (5)  Department. The  term  "Department"  means  the
    Department of Revenue of this State.
         (6)  Director.   The   term   "Director"  means  the
    Director of Revenue of this State.
         (7)  Fiduciary.  The  term   "fiduciary"   means   a
    guardian,  trustee, executor, administrator, receiver, or
    any person acting  in  any  fiduciary  capacity  for  any
    person.
         (8)  Financial organization.
              (A)  The  term  "financial  organization" means
         any  bank,  bank  holding  company,  trust  company,
         savings  bank,  industrial  bank,  land  bank,  safe
         deposit company, private banker,  savings  and  loan
         association,  building  and loan association, credit
         union, currency exchange,  cooperative  bank,  small
         loan  company,  sales  finance  company,  investment
         company,  or  any person which is owned by a bank or
         bank holding  company.   For  the  purpose  of  this
         Section  a  "person" will include only those persons
         which a bank holding company may acquire and hold an
         interest  in,  directly  or  indirectly,  under  the
         provisions of the Bank Holding Company Act  of  1956
         (12 U.S.C. 1841, et seq.), except where interests in
         any  person  must  be  disposed  of  within  certain
         required  time limits under the Bank Holding Company
         Act of 1956.
              (B)  For purposes of subparagraph (A)  of  this
         paragraph,  the  term "bank" includes (i) any entity
         that is regulated by the Comptroller of the Currency
         under the National  Bank  Act,  or  by  the  Federal
         Reserve  Board,  or by the Federal Deposit Insurance
         Corporation  and  (ii)  any   federally   or   State
         chartered bank operating as a credit card bank.
              (C)  For  purposes  of subparagraph (A) of this
         paragraph, the term "sales finance company" means  a
         person   primarily   engaged   in  the  business  of
         purchasing or making  loans  upon  the  security  of
         retail   installment   contracts  or  retail  charge
         agreements or the outstanding  balances  under  such
         contracts  or  agreements.  The term includes but is
         not limited  to  persons:  (i)  to  whom  the  Sales
         Finance  Agency  Act  is  rendered  inapplicable  by
         subsection  (b)  of Section 17 thereof; (ii) engaged
         in consumer sales finance activities governed by the
         Sales Finance Agency Act or that would  be  governed
         by  that  Act  if  conducted  in  this  State; (iii)
         engaged  in  activities  governed  by   the   Retail
         Installment  Sales  Act,  including  the  making  or
         purchasing of retail installment contracts or retail
         charge  agreements  for  "goods"  or  "services"  as
         defined  in  that  Act,  or activities that would be
         governed by that Act if  conducted  in  this  State;
         (iv)  engaged  in  activities  governed by the Motor
         Vehicle Retail Installment Sales Act or  that  would
         be  governed by that Act if conducted in this State;
         (v)  engaged  in   commercial   finance   activities
         governed  by the Illinois Uniform Commercial Code or
         that would be governed by that Code if conducted  in
         this  State;  or (vi) engaged in the finance leasing
         of  tangible  personal   property   where   "finance
         leasing" is activity that is the economic equivalent
         of  an extension of credit and for which a deduction
         for depreciation under Section 167 of  the  Internal
         Revenue Code of 1986 is not available to a lessor.
              (D)  Subparagraphs   (B)   and   (C)   of  this
         paragraph are declaratory of existing law and  apply
         retroactively,  for  all  tax  years beginning on or
         before December 31, 1996,  to all original  returns,
         to  all  amended returns filed no later than 30 days
         after the effective date of this amendatory  Act  of
         1996,  and  to  all  notices issued on or before the
         effective date of this amendatory Act of 1996  under
         subsection  (a)  of  Section  903, subsection (a) of
         Section 904,  subsection  (e)  of  Section  909,  or
         Section   912.  A  taxpayer  that  is  a  "financial
         organization" that engages in any  transaction  with
         an affiliate shall be a "financial organization" for
         all purposes of this Act.
              (E)  For  all  tax years beginning on or before
         December 31, 1996, a taxpayer that falls within  the
         definition   of  a  "financial  organization"  under
         subparagraphs (B) or (C) of this paragraph, but  who
         does  not fall within the definition of a "financial
         organization" under the Proposed Regulations  issued
         by  the  Department of Revenue on July 19, 1996, may
         irrevocably elect to apply the Proposed  Regulations
         for  all  of  those  years  as  though  the Proposed
         Regulations had been lawfully promulgated,  adopted,
         and  in effect for all of those years.  For purposes
         of  applying  subparagraphs  (B)  or  (C)  of   this
         paragraph  to  all  of  those  years,  the  election
         allowed  by  this  subparagraph  applies only to the
         taxpayer making the election and to those members of
         the  taxpayer's  unitary  business  group  who   are
         ordinarily  required  to  apportion  business income
         under the same subsection of Section 304 of this Act
         as the taxpayer making the  election.   No  election
         allowed  by  this subparagraph shall be made under a
         claim filed under subsection (d) of Section 909 more
         than 30  days  after  the  effective  date  of  this
         amendatory Act of 1996.
         (9)  Fiscal  year.  The  term "fiscal year" means an
    accounting period of 12 months ending on the last day  of
    any month other than December.
         (10)  Includes  and  including. The terms "includes"
    and "including" when used in a  definition  contained  in
    this  Act  shall  not  be  deemed to exclude other things
    otherwise within the meaning of the term defined.
         (11)  Internal  Revenue  Code.  The  term  "Internal
    Revenue Code" means the United  States  Internal  Revenue
    Code  of  1954  or  any successor law or laws relating to
    federal income taxes in effect for the taxable year.
         (12)  Mathematical  error.  The  term  "mathematical
    error" includes the following types of errors, omissions,
    or defects in a return filed by a taxpayer which prevents
    acceptance of the return as filed for processing:
              (A)  arithmetic     errors     or     incorrect
         computations on the return or supporting schedules;
              (B)  entries on the wrong lines;
              (C)  omission of required supporting  forms  or
         schedules  or  the  omission  of  the information in
         whole or in part called for thereon; and
              (D)  an attempt to claim, exclude,  deduct,  or
         improperly  report, in a manner directly contrary to
         the provisions of the Act and regulations thereunder
         any item of income, exemption, deduction, or credit.
         (13)  Nonbusiness  income.  The  term   "nonbusiness
    income"  means  all  income other than business income or
    compensation.
         (14)  Nonresident. The term  "nonresident"  means  a
    person who is not a resident.
         (15)  Paid,  incurred and accrued. The terms "paid",
    "incurred" and "accrued" shall be construed according  to
    the  method  of  accounting  upon  the basis of which the
    person's base income is computed under this Act.
         (16)  Partnership    and    partner.    The     term
    "partnership"  includes  a  syndicate, group, pool, joint
    venture or other unincorporated organization, through  or
    by  means  of which any business, financial operation, or
    venture is carried on,  and  which  is  not,  within  the
    meaning  of this Act, a trust or estate or a corporation;
    and  the  term  "partner"  includes  a  member  in   such
    syndicate, group, pool, joint venture or organization.
         Any  entity,  including  a limited liability company
    formed under the Illinois Limited Liability Company  Act,
    shall  be treated as a partnership if it is so classified
    for federal income tax purposes.
         For purposes of the tax imposed at subsection (c) of
    Section 201 of this Act, the term "partnership" does  not
    include  a syndicate, group, pool, joint venture or other
    unincorporated  organization  established  for  the  sole
    purpose of playing the Illinois State Lottery.
         (17)  Part-year  resident.   The   term   "part-year
    resident"  means  an  individual  who  became  a resident
    during the taxable year or ceased to be a resident during
    the taxable year. Under Section 1501  (a)  (20)  (A)  (i)
    residence commences with presence in this State for other
    than  a  temporary  or transitory purpose and ceases with
    absence from this State for other  than  a  temporary  or
    transitory  purpose. Under Section 1501 (a) (20) (A) (ii)
    residence commences with the establishment of domicile in
    this State and ceases with the establishment of  domicile
    in another State.
         (18)  Person.  The  term "person" shall be construed
    to mean and  include  an  individual,  a  trust,  estate,
    partnership,  association,  firm,  company,  corporation,
    limited  liability company, or fiduciary. For purposes of
    Section 1301 and 1302 of this Act, a "person"  means  (i)
    an  individual,  (ii)  a  corporation,  (iii) an officer,
    agent, or employee of a corporation, (iv) a member, agent
    or employee of a partnership, or (v) a  member,  manager,
    employee,  officer,  director,  or  agent  of  a  limited
    liability company who in such capacity commits an offense
    specified in Section 1301 and 1302.
         (18A)  Records.   The  term  "records"  includes all
    data  maintained  by  the  taxpayer,  whether  on  paper,
    microfilm, microfiche, or any  type  of  machine-sensible
    data compilation.
         (19)  Regulations.  The  term "regulations" includes
    rules promulgated and forms prescribed by the Department.
         (20)  Resident. The term "resident" means:
              (A)  an individual (i) who is in this State for
         other than a temporary or transitory purpose  during
         the  taxable  year; or (ii) who is domiciled in this
         State but is absent from the State for  a  temporary
         or transitory purpose during the taxable year;
              (B)  The estate of a decedent who at his or her
         death was domiciled in this State;
              (C)  A  trust  created  by a will of a decedent
         who at his death was domiciled in this State; and
              (D)  An irrevocable trust, the grantor of which
         was domiciled in this State at the time  such  trust
         became    irrevocable.    For    purpose   of   this
         subparagraph,   a   trust   shall   be    considered
         irrevocable  to  the  extent that the grantor is not
         treated as the  owner  thereof  under  Sections  671
         through 678 of the Internal Revenue Code.
         (21)  Sales.   The  term  "sales"  means  all  gross
    receipts of the taxpayer  not  allocated  under  Sections
    301, 302 and 303.
         (22)  State.  The  term  "state"  when  applied to a
    jurisdiction other than this State means any state of the
    United States, the District of Columbia, the Commonwealth
    of Puerto Rico, any Territory or Possession of the United
    States,  and  any  foreign  country,  or  any   political
    subdivision of any of the foregoing.  For purposes of the
    foreign  tax  credit  under Section 601, the term "state"
    means any state of the United  States,  the  District  of
    Columbia,  the  Commonwealth  of  Puerto  Rico,  and  any
    territory  or  possession  of  the  United States, or any
    political subdivision of any of the foregoing,  effective
    for tax years ending on or after December 31, 1989.
         (23)  Taxable  year.  The  term "taxable year" means
    the calendar year, or the fiscal year ending during  such
    calendar year, upon the basis of which the base income is
    computed  under  this  Act.  "Taxable year" means, in the
    case of a return made for a fractional  part  of  a  year
    under  the  provisions  of this Act, the period for which
    such return is made.
         (24)  Taxpayer. The term "taxpayer" means any person
    subject to the tax imposed by this Act.
         (25)  International  banking  facility.   The   term
    international   banking  facility  shall  have  the  same
    meaning as is set forth in the Illinois Banking Act or as
    is set  forth  in  the  laws  of  the  United  States  or
    regulations  of  the  Board  of  Governors of the Federal
    Reserve System.
         (26)  Income Tax Return Preparer.
              (A)  The  term  "income  tax  return  preparer"
         means any person who prepares for  compensation,  or
         who  employs  one  or  more  persons  to prepare for
         compensation, any return of tax imposed by this  Act
         or  any claim for refund of tax imposed by this Act.
         The preparation of a substantial portion of a return
         or  claim  for  refund  shall  be  treated  as   the
         preparation of that return or claim for refund.
              (B)  A  person  is  not  an  income  tax return
         preparer if all he or she does is
                   (i)  furnish typing, reproducing, or other
              mechanical assistance;
                   (ii)  prepare  returns   or   claims   for
              refunds  for  the employer by whom he or she is
              regularly and continuously employed;
                   (iii)  prepare as a fiduciary  returns  or
              claims for refunds for any person; or
                   (iv)  prepare  claims  for  refunds  for a
              taxpayer  in  response   to   any   notice   of
              deficiency   issued  to  that  taxpayer  or  in
              response to any waiver of restriction after the
              commencement of an audit of that taxpayer or of
              another taxpayer  if  a  determination  in  the
              audit   of   the  other  taxpayer  directly  or
              indirectly affects the  tax  liability  of  the
              taxpayer whose claims he or she is preparing.
         (27)  Unitary  business  group.   The  term "unitary
    business group" means a group of persons related  through
    common ownership whose business activities are integrated
    with,  dependent  upon and contribute to each other.  The
    group will  not  include  those  members  whose  business
    activity  outside the United States is 80% or more of any
    such member's total business activity;  for  purposes  of
    this  paragraph  and  clause  (a) (3) (B) (ii) of Section
    304, business activity within the United States shall  be
    measured  by  means  of the factors ordinarily applicable
    under subsections (a), (b),  (c),  and  (d),  or  (h)  of
    Section   304   except  that,  in  the  case  of  members
    ordinarily required to apportion business income by means
    of the 3 factor formula of property,  payroll  and  sales
    specified in subsection (a) of Section 304, including the
    formula  as  weighted  in  subsection (h) of Section 304,
    such members shall  not  use  the  sales  factor  in  the
    computation  and  the results of the property and payroll
    factor computations of  subsection  (a)  of  Section  304
    shall  be  divided by 2 (by one if either the property or
    payroll  factor  has  a   denominator   of   zero).   The
    computation  required by the preceding sentence shall, in
    each case, involve the division of the member's property,
    payroll, or revenue miles in the United States, insurance
    premiums on property or risk in  the  United  States,  or
    financial   organization  business  income  from  sources
    within the United States, as the  case  may  be,  by  the
    respective  worldwide  figures  for  such  items.  Common
    ownership in the case of corporations is  the  direct  or
    indirect  control  or  ownership  of more than 50% of the
    outstanding voting  stock  of  the  persons  carrying  on
    unitary business activity.  Unitary business activity can
    ordinarily  be  illustrated  where  the activities of the
    members are:  (1) in  the  same  general  line  (such  as
    manufacturing,   wholesaling,   retailing   of   tangible
    personal property, insurance, transportation or finance);
    or (2) are steps in a vertically structured enterprise or
    process  (such as the steps involved in the production of
    natural  resources,  which  might  include   exploration,
    mining,   refining,   and   marketing);  and,  in  either
    instance, the members are functionally integrated through
    the exercise of strong centralized management (where, for
    example,  authority  over  such  matters  as  purchasing,
    financing,  tax  compliance,  product  line,   personnel,
    marketing  and  capital  investment  is  not left to each
    member). In no event, however, will any unitary  business
    group  include  members  which are ordinarily required to
    apportion business income under different subsections  of
    Section  304 except that for tax years ending on or after
    December 31, 1987 this prohibition shall not apply  to  a
    unitary  business group composed of one or more taxpayers
    all  of  which  apportion  business  income  pursuant  to
    subsection (b) of Section 304, or all of which  apportion
    business  income  pursuant  to  subsection (d) of Section
    304,  and  a  holding  company  of   such   single-factor
    taxpayers (see definition of "financial organization" for
    rule    regarding    holding   companies   of   financial
    organizations).  If a unitary business group  would,  but
    for  the  preceding  sentence,  include  members that are
    ordinarily required to apportion  business  income  under
    different  subsections  of  Section  304,  then  for each
    subsection of Section 304 for which there are two or more
    members, there shall be a separate unitary business group
    composed of such members.  For purposes of the  preceding
    two  sentences,  a  member  is  "ordinarily  required  to
    apportion  business income" under a particular subsection
    of Section 304  if  it  would  be  required  to  use  the
    apportionment method prescribed by such subsection except
    for  the fact that it derives business income solely from
    Illinois.   If  the  unitary  business   group   members'
    accounting periods differ, the common parent's accounting
    period  or,  if there is no common parent, the accounting
    period of the member that  is  expected  to  have,  on  a
    recurring   basis,   the  greatest  Illinois  income  tax
    liability must be used to determine whether  to  use  the
    apportionment   method  provided  in  subsection  (a)  or
    subsection (h) of Section 304.  The  prohibition  against
    membership  in  a  unitary  business  group for taxpayers
    ordinarily required to apportion income  under  different
    subsections  of  Section  304 does not apply to taxpayers
    required to apportion income  under  subsection  (a)  and
    subsection  (h)  of  Section 304.  The provisions of this
    amendatory Act of 1998 apply to tax years  ending  on  or
    after December 31, 1998.
         (28)  Subchapter    S    corporation.     The   term
    "Subchapter S corporation" means a corporation for  which
    there  is in effect an election under Section 1362 of the
    Internal Revenue Code, or for which there  is  a  federal
    election to opt out of the provisions of the Subchapter S
    Revision  Act  of 1982 and have applied instead the prior
    federal Subchapter S rules as in effect on July 1, 1982.

    (b)  Other definitions.
         (1)  Words denoting number, gender,  and  so  forth,
    when  used  in  this  Act, where not otherwise distinctly
    expressed or  manifestly  incompatible  with  the  intent
    thereof:
              (A)  Words  importing  the singular include and
         apply to several persons, parties or things;
              (B)  Words importing  the  plural  include  the
         singular; and
              (C)  Words   importing   the  masculine  gender
         include the feminine as well.
         (2)  "Company"   or   "association"   as   including
    successors   and   assigns.   The   word   "company"   or
    "association", when used in reference to  a  corporation,
    shall  be  deemed  to  embrace  the words "successors and
    assigns of such company  or  association",  and  in  like
    manner  as if these last-named words, or words of similar
    import, were expressed.
         (3)  Other terms. Any term used in  any  Section  of
    this  Act  with  respect  to  the  application  of, or in
    connection with, the provisions of any other  Section  of
    this  Act  shall  have  the same meaning as in such other
    Section.
(Source: P.A. 88-480;  89-399,  eff.  8-20-95;  89-711,  eff.
2-14-97.)

    Section  99.  Effective date.  This Act takes effect upon
becoming law.

[ Top ]