Public Act 90-0613 of the 90th General Assembly
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.