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Public Act 92-0846
SB2212 Enrolled LRB9215616SMdv
AN ACT in relation to 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 201, 202, 203, 209, 502, 506, 601.1, 701,
905, 911, and 1501 as follows:
(35 ILCS 5/201) (from Ch. 120, par. 2-201)
Sec. 201. Tax Imposed.
(a) In general. A tax measured by net income is hereby
imposed on every individual, corporation, trust and estate
for each taxable year ending after July 31, 1969 on the
privilege of earning or receiving income in or as a resident
of this State. Such tax shall be in addition to all other
occupation or privilege taxes imposed by this State or by any
municipal corporation or political subdivision thereof.
(b) Rates. The tax imposed by subsection (a) of this
Section shall be determined as follows, except as adjusted by
subsection (d-1):
(1) In the case of an individual, trust or estate,
for taxable years ending prior to July 1, 1989, an amount
equal to 2 1/2% of the taxpayer's net income for the
taxable year.
(2) In the case of an individual, trust or estate,
for taxable years beginning prior to July 1, 1989 and
ending after June 30, 1989, an amount equal to the sum of
(i) 2 1/2% of the taxpayer's net income for the period
prior to July 1, 1989, as calculated under Section 202.3,
and (ii) 3% of the taxpayer's net income for the period
after June 30, 1989, as calculated under Section 202.3.
(3) In the case of an individual, trust or estate,
for taxable years beginning after June 30, 1989, an
amount equal to 3% of the taxpayer's net income for the
taxable year.
(4) (Blank).
(5) (Blank).
(6) In the case of a corporation, for taxable years
ending prior to July 1, 1989, an amount equal to 4% of
the taxpayer's net income for the taxable year.
(7) In the case of a corporation, for taxable years
beginning prior to July 1, 1989 and ending after June 30,
1989, an amount equal to the sum of (i) 4% of the
taxpayer's net income for the period prior to July 1,
1989, as calculated under Section 202.3, and (ii) 4.8% of
the taxpayer's net income for the period after June 30,
1989, as calculated under Section 202.3.
(8) In the case of a corporation, for taxable years
beginning after June 30, 1989, an amount equal to 4.8% of
the taxpayer's net income for the taxable year.
(c) Personal Property Tax Replacement Income Tax.
Beginning on July 1, 1979 and thereafter, in addition to such
income tax, there is also hereby imposed the Personal
Property Tax Replacement Income Tax measured by net income on
every corporation (including Subchapter S corporations),
partnership and trust, for each taxable year ending after
June 30, 1979. Such taxes are imposed on the privilege of
earning or receiving income in or as a resident of this
State. The Personal Property Tax Replacement Income Tax
shall be in addition to the income tax imposed by subsections
(a) and (b) of this Section and in addition to all other
occupation or privilege taxes imposed by this State or by any
municipal corporation or political subdivision thereof.
(d) Additional Personal Property Tax Replacement Income
Tax Rates. The personal property tax replacement income tax
imposed by this subsection and subsection (c) of this Section
in the case of a corporation, other than a Subchapter S
corporation and except as adjusted by subsection (d-1), shall
be an additional amount equal to 2.85% of such taxpayer's net
income for the taxable year, except that beginning on January
1, 1981, and thereafter, the rate of 2.85% specified in this
subsection shall be reduced to 2.5%, and in the case of a
partnership, trust or a Subchapter S corporation shall be an
additional amount equal to 1.5% of such taxpayer's net income
for the taxable year.
(d-1) Rate reduction for certain foreign insurers. In
the case of a foreign insurer, as defined by Section 35A-5 of
the Illinois Insurance Code, whose state or country of
domicile imposes on insurers domiciled in Illinois a
retaliatory tax (excluding any insurer whose premiums from
reinsurance assumed are 50% or more of its total insurance
premiums as determined under paragraph (2) of subsection (b)
of Section 304, except that for purposes of this
determination premiums from reinsurance do not include
premiums from inter-affiliate reinsurance arrangements),
beginning with taxable years ending on or after December 31,
1999, the sum of the rates of tax imposed by subsections (b)
and (d) shall be reduced (but not increased) to the rate at
which the total amount of tax imposed under this Act, net of
all credits allowed under this Act, shall equal (i) the total
amount of tax that would be imposed on the foreign insurer's
net income allocable to Illinois for the taxable year by such
foreign insurer's state or country of domicile if that net
income were subject to all income taxes and taxes measured by
net income imposed by such foreign insurer's state or country
of domicile, net of all credits allowed or (ii) a rate of
zero if no such tax is imposed on such income by the foreign
insurer's state of domicile. For the purposes of this
subsection (d-1), an inter-affiliate includes a mutual
insurer under common management.
(1) For the purposes of subsection (d-1), in no
event shall the sum of the rates of tax imposed by
subsections (b) and (d) be reduced below the rate at
which the sum of:
(A) the total amount of tax imposed on such
foreign insurer under this Act for a taxable year,
net of all credits allowed under this Act, plus
(B) the privilege tax imposed by Section 409
of the Illinois Insurance Code, the fire insurance
company tax imposed by Section 12 of the Fire
Investigation Act, and the fire department taxes
imposed under Section 11-10-1 of the Illinois
Municipal Code,
equals 1.25% of the net taxable premiums written for the
taxable year, as described by subsection (1) of Section
409 of the Illinois Insurance Code. This paragraph will
in no event increase the rates imposed under subsections
(b) and (d).
(2) Any reduction in the rates of tax imposed by
this subsection shall be applied first against the rates
imposed by subsection (b) and only after the tax imposed
by subsection (a) net of all credits allowed under this
Section other than the credit allowed under subsection
(i) has been reduced to zero, against the rates imposed
by subsection (d).
This subsection (d-1) is exempt from the provisions of
Section 250.
(e) Investment credit. A taxpayer shall be allowed a
credit against the Personal Property Tax Replacement Income
Tax for investment in qualified property.
(1) A taxpayer shall be allowed a credit equal to
.5% of the basis of qualified property placed in service
during the taxable year, provided such property is placed
in service on or after July 1, 1984. There shall be
allowed an additional credit equal to .5% of the basis of
qualified property placed in service during the taxable
year, provided such property is placed in service on or
after July 1, 1986, and the taxpayer's base employment
within Illinois has increased by 1% or more over the
preceding year as determined by the taxpayer's employment
records filed with the Illinois Department of Employment
Security. Taxpayers who are new to Illinois shall be
deemed to have met the 1% growth in base employment for
the first year in which they file employment records with
the Illinois Department of Employment Security. The
provisions added to this Section by Public Act 85-1200
(and restored by Public Act 87-895) shall be construed as
declaratory of existing law and not as a new enactment.
If, in any year, the increase in base employment within
Illinois over the preceding year is less than 1%, the
additional credit shall be limited to that percentage
times a fraction, the numerator of which is .5% and the
denominator of which is 1%, but shall not exceed .5%.
The investment credit shall not be allowed to the extent
that it would reduce a taxpayer's liability in any tax
year below zero, nor may any credit for qualified
property be allowed for any year other than the year in
which the property was placed in service in Illinois. For
tax years ending on or after December 31, 1987, and on or
before December 31, 1988, the credit shall be allowed for
the tax year in which the property is placed in service,
or, if the amount of the credit exceeds the tax liability
for that year, whether it exceeds the original liability
or the liability as later amended, such excess may be
carried forward and applied to the tax liability of the 5
taxable years following the excess credit years if the
taxpayer (i) makes investments which cause the creation
of a minimum of 2,000 full-time equivalent jobs in
Illinois, (ii) is located in an enterprise zone
established pursuant to the Illinois Enterprise Zone Act
and (iii) is certified by the Department of Commerce and
Community Affairs as complying with the requirements
specified in clause (i) and (ii) by July 1, 1986. The
Department of Commerce and Community Affairs shall notify
the Department of Revenue of all such certifications
immediately. For tax years ending after December 31,
1988, the credit shall be allowed for the tax year in
which the property is placed in service, or, if the
amount of the credit exceeds the tax liability for that
year, whether it exceeds the original liability or the
liability as later amended, such excess may be carried
forward and applied to the tax liability of the 5 taxable
years following the excess credit years. The credit shall
be applied to the earliest year for which there is a
liability. If there is credit from more than one tax year
that is available to offset a liability, earlier credit
shall be applied first.
(2) The term "qualified property" means property
which:
(A) is tangible, whether new or used,
including buildings and structural components of
buildings and signs that are real property, but not
including land or improvements to real property that
are not a structural component of a building such as
landscaping, sewer lines, local access roads,
fencing, parking lots, and other appurtenances;
(B) is depreciable pursuant to Section 167 of
the Internal Revenue Code, except that "3-year
property" as defined in Section 168(c)(2)(A) of that
Code is not eligible for the credit provided by this
subsection (e);
(C) is acquired by purchase as defined in
Section 179(d) of the Internal Revenue Code;
(D) is used in Illinois by a taxpayer who is
primarily engaged in manufacturing, or in mining
coal or fluorite, or in retailing; and
(E) has not previously been used in Illinois
in such a manner and by such a person as would
qualify for the credit provided by this subsection
(e) or subsection (f).
(3) For purposes of this subsection (e),
"manufacturing" means the material staging and production
of tangible personal property by procedures commonly
regarded as manufacturing, processing, fabrication, or
assembling which changes some existing material into new
shapes, new qualities, or new combinations. For purposes
of this subsection (e) the term "mining" shall have the
same meaning as the term "mining" in Section 613(c) of
the Internal Revenue Code. For purposes of this
subsection (e), the term "retailing" means the sale of
tangible personal property or services rendered in
conjunction with the sale of tangible consumer goods or
commodities.
(4) The basis of qualified property shall be the
basis used to compute the depreciation deduction for
federal income tax purposes.
(5) If the basis of the property for federal income
tax depreciation purposes is increased after it has been
placed in service in Illinois by the taxpayer, the amount
of such increase shall be deemed property placed in
service on the date of such increase in basis.
(6) The term "placed in service" shall have the
same meaning as under Section 46 of the Internal Revenue
Code.
(7) If during any taxable year, any property ceases
to be qualified property in the hands of the taxpayer
within 48 months after being placed in service, or the
situs of any qualified property is moved outside Illinois
within 48 months after being placed in service, the
Personal Property Tax Replacement Income Tax for such
taxable year shall be increased. Such increase shall be
determined by (i) recomputing the investment credit which
would have been allowed for the year in which credit for
such property was originally allowed by eliminating such
property from such computation and, (ii) subtracting such
recomputed credit from the amount of credit previously
allowed. For the purposes of this paragraph (7), a
reduction of the basis of qualified property resulting
from a redetermination of the purchase price shall be
deemed a disposition of qualified property to the extent
of such reduction.
(8) Unless the investment credit is extended by
law, the basis of qualified property shall not include
costs incurred after December 31, 2003, except for costs
incurred pursuant to a binding contract entered into on
or before December 31, 2003.
(9) Each taxable year ending before December 31,
2000, a partnership may elect to pass through to its
partners the credits to which the partnership is entitled
under this subsection (e) for the taxable year. A
partner may use the credit allocated to him or her under
this paragraph only against the tax imposed in
subsections (c) and (d) of this Section. If the
partnership makes that election, those credits shall be
allocated among the partners in the partnership in
accordance with the rules set forth in Section 704(b) of
the Internal Revenue Code, and the rules promulgated
under that Section, and the allocated amount of the
credits shall be allowed to the partners for that taxable
year. The partnership shall make this election on its
Personal Property Tax Replacement Income Tax return for
that taxable year. The election to pass through the
credits shall be irrevocable.
For taxable years ending on or after December 31,
2000, a partner that qualifies its partnership for a
subtraction under subparagraph (I) of paragraph (2) of
subsection (d) of Section 203 or a shareholder that
qualifies a Subchapter S corporation for a subtraction
under subparagraph (S) of paragraph (2) of subsection (b)
of Section 203 shall be allowed a credit under this
subsection (e) equal to its share of the credit earned
under this subsection (e) during the taxable year by the
partnership or Subchapter S corporation, determined in
accordance with the determination of income and
distributive share of income under Sections 702 and 704
and Subchapter S of the Internal Revenue Code. This
paragraph is exempt from the provisions of Section 250.
(f) Investment credit; Enterprise Zone.
(1) A taxpayer shall be allowed a credit against
the tax imposed by subsections (a) and (b) of this
Section for investment in qualified property which is
placed in service in an Enterprise Zone created pursuant
to the Illinois Enterprise Zone Act. For partners,
shareholders of Subchapter S corporations, and owners of
limited liability companies, if the liability company is
treated as a partnership for purposes of federal and
State income taxation, there shall be allowed a credit
under this subsection (f) to be determined in accordance
with the determination of income and distributive share
of income under Sections 702 and 704 and Subchapter S of
the Internal Revenue Code. The credit shall be .5% of
the basis for such property. The credit shall be
available only in the taxable year in which the property
is placed in service in the Enterprise Zone and shall not
be allowed to the extent that it would reduce a
taxpayer's liability for the tax imposed by subsections
(a) and (b) of this Section to below zero. For tax years
ending on or after December 31, 1985, the credit shall be
allowed for the tax year in which the property is placed
in service, or, if the amount of the credit exceeds the
tax liability for that year, whether it exceeds the
original liability or the liability as later amended,
such excess may be carried forward and applied to the tax
liability of the 5 taxable years following the excess
credit year. The credit shall be applied to the earliest
year for which there is a liability. If there is credit
from more than one tax year that is available to offset a
liability, the credit accruing first in time shall be
applied first.
(2) The term qualified property means property
which:
(A) is tangible, whether new or used,
including buildings and structural components of
buildings;
(B) is depreciable pursuant to Section 167 of
the Internal Revenue Code, except that "3-year
property" as defined in Section 168(c)(2)(A) of that
Code is not eligible for the credit provided by this
subsection (f);
(C) is acquired by purchase as defined in
Section 179(d) of the Internal Revenue Code;
(D) is used in the Enterprise Zone by the
taxpayer; and
(E) has not been previously used in Illinois
in such a manner and by such a person as would
qualify for the credit provided by this subsection
(f) or subsection (e).
(3) The basis of qualified property shall be the
basis used to compute the depreciation deduction for
federal income tax purposes.
(4) If the basis of the property for federal income
tax depreciation purposes is increased after it has been
placed in service in the Enterprise Zone by the taxpayer,
the amount of such increase shall be deemed property
placed in service on the date of such increase in basis.
(5) The term "placed in service" shall have the
same meaning as under Section 46 of the Internal Revenue
Code.
(6) If during any taxable year, any property ceases
to be qualified property in the hands of the taxpayer
within 48 months after being placed in service, or the
situs of any qualified property is moved outside the
Enterprise Zone within 48 months after being placed in
service, the tax imposed under subsections (a) and (b) of
this Section for such taxable year shall be increased.
Such increase shall be determined by (i) recomputing the
investment credit which would have been allowed for the
year in which credit for such property was originally
allowed by eliminating such property from such
computation, and (ii) subtracting such recomputed credit
from the amount of credit previously allowed. For the
purposes of this paragraph (6), a reduction of the basis
of qualified property resulting from a redetermination of
the purchase price shall be deemed a disposition of
qualified property to the extent of such reduction.
(g) Jobs Tax Credit; Enterprise Zone and Foreign Trade
Zone or Sub-Zone.
(1) A taxpayer conducting a trade or business in an
enterprise zone or a High Impact Business designated by
the Department of Commerce and Community Affairs
conducting a trade or business in a federally designated
Foreign Trade Zone or Sub-Zone shall be allowed a credit
against the tax imposed by subsections (a) and (b) of
this Section in the amount of $500 per eligible employee
hired to work in the zone during the taxable year.
(2) To qualify for the credit:
(A) the taxpayer must hire 5 or more eligible
employees to work in an enterprise zone or federally
designated Foreign Trade Zone or Sub-Zone during the
taxable year;
(B) the taxpayer's total employment within the
enterprise zone or federally designated Foreign
Trade Zone or Sub-Zone must increase by 5 or more
full-time employees beyond the total employed in
that zone at the end of the previous tax year for
which a jobs tax credit under this Section was
taken, or beyond the total employed by the taxpayer
as of December 31, 1985, whichever is later; and
(C) the eligible employees must be employed
180 consecutive days in order to be deemed hired for
purposes of this subsection.
(3) An "eligible employee" means an employee who
is:
(A) Certified by the Department of Commerce
and Community Affairs as "eligible for services"
pursuant to regulations promulgated in accordance
with Title II of the Job Training Partnership Act,
Training Services for the Disadvantaged or Title III
of the Job Training Partnership Act, Employment and
Training Assistance for Dislocated Workers Program.
(B) Hired after the enterprise zone or
federally designated Foreign Trade Zone or Sub-Zone
was designated or the trade or business was located
in that zone, whichever is later.
(C) Employed in the enterprise zone or Foreign
Trade Zone or Sub-Zone. An employee is employed in
an enterprise zone or federally designated Foreign
Trade Zone or Sub-Zone if his services are rendered
there or it is the base of operations for the
services performed.
(D) A full-time employee working 30 or more
hours per week.
(4) For tax years ending on or after December 31,
1985 and prior to December 31, 1988, the credit shall be
allowed for the tax year in which the eligible employees
are hired. For tax years ending on or after December 31,
1988, the credit shall be allowed for the tax year
immediately following the tax year in which the eligible
employees are hired. If the amount of the credit exceeds
the tax liability for that year, whether it exceeds the
original liability or the liability as later amended,
such excess may be carried forward and applied to the tax
liability of the 5 taxable years following the excess
credit year. The credit shall be applied to the earliest
year for which there is a liability. If there is credit
from more than one tax year that is available to offset a
liability, earlier credit shall be applied first.
(5) The Department of Revenue shall promulgate such
rules and regulations as may be deemed necessary to carry
out the purposes of this subsection (g).
(6) The credit shall be available for eligible
employees hired on or after January 1, 1986.
(h) Investment credit; High Impact Business.
(1) Subject to subsections (b) and (b-5) of Section
5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
be allowed a credit against the tax imposed by
subsections (a) and (b) of this Section for investment in
qualified property which is placed in service by a
Department of Commerce and Community Affairs designated
High Impact Business. The credit shall be .5% of the
basis for such property. The credit shall not be
available (i) until the minimum investments in qualified
property set forth in subdivision (a)(3)(A) of Section
5.5 of the Illinois Enterprise Zone Act have been
satisfied or (ii) until the time authorized in subsection
(b-5) of the Illinois Enterprise Zone Act for entities
designated as High Impact Businesses under subdivisions
(a)(3)(B), (a)(3)(C), and (a)(3)(D) of Section 5.5 of the
Illinois Enterprise Zone Act, and shall not be allowed to
the extent that it would reduce a taxpayer's liability
for the tax imposed by subsections (a) and (b) of this
Section to below zero. The credit applicable to such
investments shall be taken in the taxable year in which
such investments have been completed. The credit for
additional investments beyond the minimum investment by a
designated high impact business authorized under
subdivision (a)(3)(A) of Section 5.5 of the Illinois
Enterprise Zone Act shall be available only in the
taxable year in which the property is placed in service
and shall not be allowed to the extent that it would
reduce a taxpayer's liability for the tax imposed by
subsections (a) and (b) of this Section to below zero.
For tax years ending on or after December 31, 1987, the
credit shall be allowed for the tax year in which the
property is placed in service, or, if the amount of the
credit exceeds the tax liability for that year, whether
it exceeds the original liability or the liability as
later amended, such excess may be carried forward and
applied to the tax liability of the 5 taxable years
following the excess credit year. The credit shall be
applied to the earliest year for which there is a
liability. If there is credit from more than one tax
year that is available to offset a liability, the credit
accruing first in time shall be applied first.
Changes made in this subdivision (h)(1) by Public
Act 88-670 restore changes made by Public Act 85-1182 and
reflect existing law.
(2) The term qualified property means property
which:
(A) is tangible, whether new or used,
including buildings and structural components of
buildings;
(B) is depreciable pursuant to Section 167 of
the Internal Revenue Code, except that "3-year
property" as defined in Section 168(c)(2)(A) of that
Code is not eligible for the credit provided by this
subsection (h);
(C) is acquired by purchase as defined in
Section 179(d) of the Internal Revenue Code; and
(D) is not eligible for the Enterprise Zone
Investment Credit provided by subsection (f) of this
Section.
(3) The basis of qualified property shall be the
basis used to compute the depreciation deduction for
federal income tax purposes.
(4) If the basis of the property for federal income
tax depreciation purposes is increased after it has been
placed in service in a federally designated Foreign Trade
Zone or Sub-Zone located in Illinois by the taxpayer, the
amount of such increase shall be deemed property placed
in service on the date of such increase in basis.
(5) The term "placed in service" shall have the
same meaning as under Section 46 of the Internal Revenue
Code.
(6) If during any taxable year ending on or before
December 31, 1996, any property ceases to be qualified
property in the hands of the taxpayer within 48 months
after being placed in service, or the situs of any
qualified property is moved outside Illinois within 48
months after being placed in service, the tax imposed
under subsections (a) and (b) of this Section for such
taxable year shall be increased. Such increase shall be
determined by (i) recomputing the investment credit which
would have been allowed for the year in which credit for
such property was originally allowed by eliminating such
property from such computation, and (ii) subtracting such
recomputed credit from the amount of credit previously
allowed. For the purposes of this paragraph (6), a
reduction of the basis of qualified property resulting
from a redetermination of the purchase price shall be
deemed a disposition of qualified property to the extent
of such reduction.
(7) Beginning with tax years ending after December
31, 1996, if a taxpayer qualifies for the credit under
this subsection (h) and thereby is granted a tax
abatement and the taxpayer relocates its entire facility
in violation of the explicit terms and length of the
contract under Section 18-183 of the Property Tax Code,
the tax imposed under subsections (a) and (b) of this
Section shall be increased for the taxable year in which
the taxpayer relocated its facility by an amount equal to
the amount of credit received by the taxpayer under this
subsection (h).
(i) Credit for Personal Property Tax Replacement Income
Tax. A credit shall be allowed against the tax imposed by
subsections (a) and (b) of this Section for the tax imposed
by subsections (c) and (d) of this Section. This credit
shall be computed by multiplying the tax imposed by
subsections (c) and (d) of this Section by a fraction, the
numerator of which is base income allocable to Illinois and
the denominator of which is Illinois base income, and further
multiplying the product by the tax rate imposed by
subsections (a) and (b) of this Section.
Any credit earned on or after December 31, 1986 under
this subsection which is unused in the year the credit is
computed because it exceeds the tax liability imposed by
subsections (a) and (b) for that year (whether it exceeds the
original liability or the liability as later amended) may be
carried forward and applied to the tax liability imposed by
subsections (a) and (b) of the 5 taxable years following the
excess credit year. This credit shall be applied first to
the earliest year for which there is a liability. If there
is a credit under this subsection from more than one tax year
that is available to offset a liability the earliest credit
arising under this subsection shall be applied first.
If, during any taxable year ending on or after December
31, 1986, the tax imposed by subsections (c) and (d) of this
Section for which a taxpayer has claimed a credit under this
subsection (i) is reduced, the amount of credit for such tax
shall also be reduced. Such reduction shall be determined by
recomputing the credit to take into account the reduced tax
imposed by subsections subsection (c) and (d). If any
portion of the reduced amount of credit has been carried to a
different taxable year, an amended return shall be filed for
such taxable year to reduce the amount of credit claimed.
(j) Training expense credit. Beginning with tax years
ending on or after December 31, 1986, a taxpayer shall be
allowed a credit against the tax imposed by subsections
subsection (a) and (b) under this Section for all amounts
paid or accrued, on behalf of all persons employed by the
taxpayer in Illinois or Illinois residents employed outside
of Illinois by a taxpayer, for educational or vocational
training in semi-technical or technical fields or
semi-skilled or skilled fields, which were deducted from
gross income in the computation of taxable income. The
credit against the tax imposed by subsections (a) and (b)
shall be 1.6% of such training expenses. For partners,
shareholders of subchapter S corporations, and owners of
limited liability companies, if the liability company is
treated as a partnership for purposes of federal and State
income taxation, there shall be allowed a credit under this
subsection (j) to be determined in accordance with the
determination of income and distributive share of income
under Sections 702 and 704 and subchapter S of the Internal
Revenue Code.
Any credit allowed under this subsection which is unused
in the year the credit is earned may be carried forward to
each of the 5 taxable years following the year for which the
credit is first computed until it is used. This credit shall
be applied first to the earliest year for which there is a
liability. If there is a credit under this subsection from
more than one tax year that is available to offset a
liability the earliest credit arising under this subsection
shall be applied first.
(k) Research and development credit.
Beginning with tax years ending after July 1, 1990, a
taxpayer shall be allowed a credit against the tax imposed by
subsections (a) and (b) of this Section for increasing
research activities in this State. The credit allowed
against the tax imposed by subsections (a) and (b) shall be
equal to 6 1/2% of the qualifying expenditures for increasing
research activities in this State. For partners,
shareholders of subchapter S corporations, and owners of
limited liability companies, if the liability company is
treated as a partnership for purposes of federal and State
income taxation, there shall be allowed a credit under this
subsection to be determined in accordance with the
determination of income and distributive share of income
under Sections 702 and 704 and subchapter S of the Internal
Revenue Code.
For purposes of this subsection, "qualifying
expenditures" means the qualifying expenditures as defined
for the federal credit for increasing research activities
which would be allowable under Section 41 of the Internal
Revenue Code and which are conducted in this State,
"qualifying expenditures for increasing research activities
in this State" means the excess of qualifying expenditures
for the taxable year in which incurred over qualifying
expenditures for the base period, "qualifying expenditures
for the base period" means the average of the qualifying
expenditures for each year in the base period, and "base
period" means the 3 taxable years immediately preceding the
taxable year for which the determination is being made.
Any credit in excess of the tax liability for the taxable
year may be carried forward. A taxpayer may elect to have the
unused credit shown on its final completed return carried
over as a credit against the tax liability for the following
5 taxable years or until it has been fully used, whichever
occurs first.
If an unused credit is carried forward to a given year
from 2 or more earlier years, that credit arising in the
earliest year will be applied first against the tax liability
for the given year. If a tax liability for the given year
still remains, the credit from the next earliest year will
then be applied, and so on, until all credits have been used
or no tax liability for the given year remains. Any
remaining unused credit or credits then will be carried
forward to the next following year in which a tax liability
is incurred, except that no credit can be carried forward to
a year which is more than 5 years after the year in which the
expense for which the credit is given was incurred.
Unless extended by law, the credit shall not include
costs incurred after December 31, 2004, except for costs
incurred pursuant to a binding contract entered into on or
before December 31, 2004.
No inference shall be drawn from this amendatory Act of
the 91st General Assembly in construing this Section for
taxable years beginning before January 1, 1999.
(l) Environmental Remediation Tax Credit.
(i) For tax years ending after December 31, 1997
and on or before December 31, 2001, a taxpayer shall be
allowed a credit against the tax imposed by subsections
(a) and (b) of this Section for certain amounts paid for
unreimbursed eligible remediation costs, as specified in
this subsection. For purposes of this Section,
"unreimbursed eligible remediation costs" means costs
approved by the Illinois Environmental Protection Agency
("Agency") under Section 58.14 of the Environmental
Protection Act that were paid in performing environmental
remediation at a site for which a No Further Remediation
Letter was issued by the Agency and recorded under
Section 58.10 of the Environmental Protection Act. The
credit must be claimed for the taxable year in which
Agency approval of the eligible remediation costs is
granted. The credit is not available to any taxpayer if
the taxpayer or any related party caused or contributed
to, in any material respect, a release of regulated
substances on, in, or under the site that was identified
and addressed by the remedial action pursuant to the Site
Remediation Program of the Environmental Protection Act.
After the Pollution Control Board rules are adopted
pursuant to the Illinois Administrative Procedure Act for
the administration and enforcement of Section 58.9 of the
Environmental Protection Act, determinations as to credit
availability for purposes of this Section shall be made
consistent with those rules. For purposes of this
Section, "taxpayer" includes a person whose tax
attributes the taxpayer has succeeded to under Section
381 of the Internal Revenue Code and "related party"
includes the persons disallowed a deduction for losses by
paragraphs (b), (c), and (f)(1) of Section 267 of the
Internal Revenue Code by virtue of being a related
taxpayer, as well as any of its partners. The credit
allowed against the tax imposed by subsections (a) and
(b) shall be equal to 25% of the unreimbursed eligible
remediation costs in excess of $100,000 per site, except
that the $100,000 threshold shall not apply to any site
contained in an enterprise zone as determined by the
Department of Commerce and Community Affairs. The total
credit allowed shall not exceed $40,000 per year with a
maximum total of $150,000 per site. For partners and
shareholders of subchapter S corporations, there shall be
allowed a credit under this subsection to be determined
in accordance with the determination of income and
distributive share of income under Sections 702 and 704
and subchapter S of the Internal Revenue Code.
(ii) A credit allowed under this subsection that is
unused in the year the credit is earned may be carried
forward to each of the 5 taxable years following the year
for which the credit is first earned until it is used.
The term "unused credit" does not include any amounts of
unreimbursed eligible remediation costs in excess of the
maximum credit per site authorized under paragraph (i).
This credit shall be applied first to the earliest year
for which there is a liability. If there is a credit
under this subsection from more than one tax year that is
available to offset a liability, the earliest credit
arising under this subsection shall be applied first. A
credit allowed under this subsection may be sold to a
buyer as part of a sale of all or part of the remediation
site for which the credit was granted. The purchaser of
a remediation site and the tax credit shall succeed to
the unused credit and remaining carry-forward period of
the seller. To perfect the transfer, the assignor shall
record the transfer in the chain of title for the site
and provide written notice to the Director of the
Illinois Department of Revenue of the assignor's intent
to sell the remediation site and the amount of the tax
credit to be transferred as a portion of the sale. In no
event may a credit be transferred to any taxpayer if the
taxpayer or a related party would not be eligible under
the provisions of subsection (i).
(iii) For purposes of this Section, the term "site"
shall have the same meaning as under Section 58.2 of the
Environmental Protection Act.
(m) Education expense credit.
Beginning with tax years ending after December 31, 1999,
a taxpayer who is the custodian of one or more qualifying
pupils shall be allowed a credit against the tax imposed by
subsections (a) and (b) of this Section for qualified
education expenses incurred on behalf of the qualifying
pupils. The credit shall be equal to 25% of qualified
education expenses, but in no event may the total credit
under this subsection Section claimed by a family that is the
custodian of qualifying pupils exceed $500. In no event
shall a credit under this subsection reduce the taxpayer's
liability under this Act to less than zero. This subsection
is exempt from the provisions of Section 250 of this Act.
For purposes of this subsection:;
"Qualifying pupils" means individuals who (i) are
residents of the State of Illinois, (ii) are under the age of
21 at the close of the school year for which a credit is
sought, and (iii) during the school year for which a credit
is sought were full-time pupils enrolled in a kindergarten
through twelfth grade education program at any school, as
defined in this subsection.
"Qualified education expense" means the amount incurred
on behalf of a qualifying pupil in excess of $250 for
tuition, book fees, and lab fees at the school in which the
pupil is enrolled during the regular school year.
"School" means any public or nonpublic elementary or
secondary school in Illinois that is in compliance with Title
VI of the Civil Rights Act of 1964 and attendance at which
satisfies the requirements of Section 26-1 of the School
Code, except that nothing shall be construed to require a
child to attend any particular public or nonpublic school to
qualify for the credit under this Section.
"Custodian" means, with respect to qualifying pupils, an
Illinois resident who is a parent, the parents, a legal
guardian, or the legal guardians of the qualifying pupils.
(Source: P.A. 91-9, eff. 1-1-00; 91-357, eff. 7-29-99;
91-643, eff. 8-20-99; 91-644, eff. 8-20-99; 91-860, eff.
6-22-00; 91-913, eff. 1-1-01; 92-12, eff. 7-1-01; 92-16, eff.
6-28-01; revised 12-3-01.)
(35 ILCS 5/202) (from Ch. 120, par. 2-202)
Sec. 202. Net Income Defined. In general. For purposes of
this Act, a taxpayer's net income for a taxable year shall be
that portion of his base income for such year except money
and other benefits, other than salary, received by a driver
in a ridesharing arrangement using a motor vehicle, which is
allocable to this State under the provisions of Article 3,
less the standard exemption allowed by Section 204 and the
deduction allowed by Section 207.
(Source: P.A. 85-731.)
(35 ILCS 5/203) (from Ch. 120, par. 2-203)
Sec. 203. Base income defined.
(a) Individuals.
(1) In general. In the case of an individual, base
income means an amount equal to the taxpayer's adjusted
gross income for the taxable year as modified by
paragraph (2).
(2) Modifications. The adjusted gross income
referred to in paragraph (1) shall be modified by adding
thereto the sum of the following amounts:
(A) An amount equal to all amounts paid or
accrued to the taxpayer as interest or dividends
during the taxable year to the extent excluded from
gross income in the computation of adjusted gross
income, except stock dividends of qualified public
utilities described in Section 305(e) of the
Internal Revenue Code;
(B) An amount equal to the amount of tax
imposed by this Act to the extent deducted from
gross income in the computation of adjusted gross
income for the taxable year;
(C) An amount equal to the amount received
during the taxable year as a recovery or refund of
real property taxes paid with respect to the
taxpayer's principal residence under the Revenue Act
of 1939 and for which a deduction was previously
taken under subparagraph (L) of this paragraph (2)
prior to July 1, 1991, the retrospective application
date of Article 4 of Public Act 87-17. In the case
of multi-unit or multi-use structures and farm
dwellings, the taxes on the taxpayer's principal
residence shall be that portion of the total taxes
for the entire property which is attributable to
such principal residence;
(D) An amount equal to the amount of the
capital gain deduction allowable under the Internal
Revenue Code, to the extent deducted from gross
income in the computation of adjusted gross income;
(D-5) An amount, to the extent not included in
adjusted gross income, equal to the amount of money
withdrawn by the taxpayer in the taxable year from a
medical care savings account and the interest earned
on the account in the taxable year of a withdrawal
pursuant to subsection (b) of Section 20 of the
Medical Care Savings Account Act or subsection (b)
of Section 20 of the Medical Care Savings Account
Act of 2000; and
(D-10) For taxable years ending after December
31, 1997, an amount equal to any eligible
remediation costs that the individual deducted in
computing adjusted gross income and for which the
individual claims a credit under subsection (l) of
Section 201;
and by deducting from the total so obtained the sum of
the following amounts:
(E) For taxable years ending before December
31, 2001, any amount included in such total in
respect of any compensation (including but not
limited to any compensation paid or accrued to a
serviceman while a prisoner of war or missing in
action) paid to a resident by reason of being on
active duty in the Armed Forces of the United States
and in respect of any compensation paid or accrued
to a resident who as a governmental employee was a
prisoner of war or missing in action, and in respect
of any compensation paid to a resident in 1971 or
thereafter for annual training performed pursuant to
Sections 502 and 503, Title 32, United States Code
as a member of the Illinois National Guard. For
taxable years ending on or after December 31, 2001,
any amount included in such total in respect of any
compensation (including but not limited to any
compensation paid or accrued to a serviceman while a
prisoner of war or missing in action) paid to a
resident by reason of being a member of any
component of the Armed Forces of the United States
and in respect of any compensation paid or accrued
to a resident who as a governmental employee was a
prisoner of war or missing in action, and in respect
of any compensation paid to a resident in 2001 or
thereafter by reason of being a member of the
Illinois National Guard. The provisions of this
amendatory Act of the 92nd General Assembly are
exempt from the provisions of Section 250;
(F) An amount equal to all amounts included in
such total pursuant to the provisions of Sections
402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
408 of the Internal Revenue Code, or included in
such total as distributions under the provisions of
any retirement or disability plan for employees of
any governmental agency or unit, or retirement
payments to retired partners, which payments are
excluded in computing net earnings from self
employment by Section 1402 of the Internal Revenue
Code and regulations adopted pursuant thereto;
(G) The valuation limitation amount;
(H) An amount equal to the amount of any tax
imposed by this Act which was refunded to the
taxpayer and included in such total for the taxable
year;
(I) An amount equal to all amounts included in
such total pursuant to the provisions of Section 111
of the Internal Revenue Code as a recovery of items
previously deducted from adjusted gross income in
the computation of taxable income;
(J) An amount equal to those dividends
included in such total which were paid by a
corporation which conducts business operations in an
Enterprise Zone or zones created under the Illinois
Enterprise Zone Act, and conducts substantially all
of its operations in an Enterprise Zone or zones;
(K) An amount equal to those dividends
included in such total that were paid by a
corporation that conducts business operations in a
federally designated Foreign Trade Zone or Sub-Zone
and that is designated a High Impact Business
located in Illinois; provided that dividends
eligible for the deduction provided in subparagraph
(J) of paragraph (2) of this subsection shall not be
eligible for the deduction provided under this
subparagraph (K);
(L) For taxable years ending after December
31, 1983, an amount equal to all social security
benefits and railroad retirement benefits included
in such total pursuant to Sections 72(r) and 86 of
the Internal Revenue Code;
(M) With the exception of any amounts
subtracted under subparagraph (N), an amount equal
to the sum of all amounts disallowed as deductions
by (i) Sections 171(a) (2), and 265(2) of the
Internal Revenue Code of 1954, as now or hereafter
amended, and all amounts of expenses allocable to
interest and disallowed as deductions by Section
265(1) of the Internal Revenue Code of 1954, as now
or hereafter amended; and (ii) for taxable years
ending on or after August 13, 1999, Sections
171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
Internal Revenue Code; the provisions of this
subparagraph are exempt from the provisions of
Section 250;
(N) An amount equal to all amounts included in
such total which are exempt from taxation by this
State either by reason of its statutes or
Constitution or by reason of the Constitution,
treaties or statutes of the United States; provided
that, in the case of any statute of this State that
exempts income derived from bonds or other
obligations from the tax imposed under this Act, the
amount exempted shall be the interest net of bond
premium amortization;
(O) An amount equal to any contribution made
to a job training project established pursuant to
the Tax Increment Allocation Redevelopment Act;
(P) An amount equal to the amount of the
deduction used to compute the federal income tax
credit for restoration of substantial amounts held
under claim of right for the taxable year pursuant
to Section 1341 of the Internal Revenue Code of
1986;
(Q) An amount equal to any amounts included in
such total, received by the taxpayer as an
acceleration in the payment of life, endowment or
annuity benefits in advance of the time they would
otherwise be payable as an indemnity for a terminal
illness;
(R) An amount equal to the amount of any
federal or State bonus paid to veterans of the
Persian Gulf War;
(S) An amount, to the extent included in
adjusted gross income, equal to the amount of a
contribution made in the taxable year on behalf of
the taxpayer to a medical care savings account
established under the Medical Care Savings Account
Act or the Medical Care Savings Account Act of 2000
to the extent the contribution is accepted by the
account administrator as provided in that Act;
(T) An amount, to the extent included in
adjusted gross income, equal to the amount of
interest earned in the taxable year on a medical
care savings account established under the Medical
Care Savings Account Act or the Medical Care Savings
Account Act of 2000 on behalf of the taxpayer, other
than interest added pursuant to item (D-5) of this
paragraph (2);
(U) For one taxable year beginning on or after
January 1, 1994, an amount equal to the total amount
of tax imposed and paid under subsections (a) and
(b) of Section 201 of this Act on grant amounts
received by the taxpayer under the Nursing Home
Grant Assistance Act during the taxpayer's taxable
years 1992 and 1993;
(V) Beginning with tax years ending on or
after December 31, 1995 and ending with tax years
ending on or before December 31, 2004, an amount
equal to the amount paid by a taxpayer who is a
self-employed taxpayer, a partner of a partnership,
or a shareholder in a Subchapter S corporation for
health insurance or long-term care insurance for
that taxpayer or that taxpayer's spouse or
dependents, to the extent that the amount paid for
that health insurance or long-term care insurance
may be deducted under Section 213 of the Internal
Revenue Code of 1986, has not been deducted on the
federal income tax return of the taxpayer, and does
not exceed the taxable income attributable to that
taxpayer's income, self-employment income, or
Subchapter S corporation income; except that no
deduction shall be allowed under this item (V) if
the taxpayer is eligible to participate in any
health insurance or long-term care insurance plan of
an employer of the taxpayer or the taxpayer's
spouse. The amount of the health insurance and
long-term care insurance subtracted under this item
(V) shall be determined by multiplying total health
insurance and long-term care insurance premiums paid
by the taxpayer times a number that represents the
fractional percentage of eligible medical expenses
under Section 213 of the Internal Revenue Code of
1986 not actually deducted on the taxpayer's federal
income tax return;
(W) For taxable years beginning on or after
January 1, 1998, all amounts included in the
taxpayer's federal gross income in the taxable year
from amounts converted from a regular IRA to a Roth
IRA. This paragraph is exempt from the provisions of
Section 250;
(X) For taxable year 1999 and thereafter, an
amount equal to the amount of any (i) distributions,
to the extent includible in gross income for federal
income tax purposes, made to the taxpayer because of
his or her status as a victim of persecution for
racial or religious reasons by Nazi Germany or any
other Axis regime or as an heir of the victim and
(ii) items of income, to the extent includible in
gross income for federal income tax purposes,
attributable to, derived from or in any way related
to assets stolen from, hidden from, or otherwise
lost to a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime immediately prior to, during, and immediately
after World War II, including, but not limited to,
interest on the proceeds receivable as insurance
under policies issued to a victim of persecution for
racial or religious reasons by Nazi Germany or any
other Axis regime by European insurance companies
immediately prior to and during World War II;
provided, however, this subtraction from federal
adjusted gross income does not apply to assets
acquired with such assets or with the proceeds from
the sale of such assets; provided, further, this
paragraph shall only apply to a taxpayer who was the
first recipient of such assets after their recovery
and who is a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim. The amount of
and the eligibility for any public assistance,
benefit, or similar entitlement is not affected by
the inclusion of items (i) and (ii) of this
paragraph in gross income for federal income tax
purposes. This paragraph is exempt from the
provisions of Section 250; and
(Y) For taxable years beginning on or after
January 1, 2002, moneys contributed in the taxable
year to a College Savings Pool account under Section
16.5 of the State Treasurer Act. This subparagraph
(Y) is exempt from the provisions of Section 250;
and
(Z) Any amount included in adjusted gross
income, other than salary, received by a driver in a
ridesharing arrangement using a motor vehicle.
(b) Corporations.
(1) In general. In the case of a corporation, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. The taxable income referred to
in paragraph (1) shall be modified by adding thereto the
sum of the following amounts:
(A) An amount equal to all amounts paid or
accrued to the taxpayer as interest and all
distributions received from regulated investment
companies during the taxable year to the extent
excluded from gross income in the computation of
taxable income;
(B) An amount equal to the amount of tax
imposed by this Act to the extent deducted from
gross income in the computation of taxable income
for the taxable year;
(C) In the case of a regulated investment
company, an amount equal to the excess of (i) the
net long-term capital gain for the taxable year,
over (ii) the amount of the capital gain dividends
designated as such in accordance with Section
852(b)(3)(C) of the Internal Revenue Code and any
amount designated under Section 852(b)(3)(D) of the
Internal Revenue Code, attributable to the taxable
year (this amendatory Act of 1995 (Public Act 89-89)
is declarative of existing law and is not a new
enactment);
(D) The amount of any net operating loss
deduction taken in arriving at taxable income, other
than a net operating loss carried forward from a
taxable year ending prior to December 31, 1986;
(E) For taxable years in which a net operating
loss carryback or carryforward from a taxable year
ending prior to December 31, 1986 is an element of
taxable income under paragraph (1) of subsection (e)
or subparagraph (E) of paragraph (2) of subsection
(e), the amount by which addition modifications
other than those provided by this subparagraph (E)
exceeded subtraction modifications in such earlier
taxable year, with the following limitations applied
in the order that they are listed:
(i) the addition modification relating to
the net operating loss carried back or forward
to the taxable year from any taxable year
ending prior to December 31, 1986 shall be
reduced by the amount of addition modification
under this subparagraph (E) which related to
that net operating loss and which was taken
into account in calculating the base income of
an earlier taxable year, and
(ii) the addition modification relating
to the net operating loss carried back or
forward to the taxable year from any taxable
year ending prior to December 31, 1986 shall
not exceed the amount of such carryback or
carryforward;
For taxable years in which there is a net
operating loss carryback or carryforward from more
than one other taxable year ending prior to December
31, 1986, the addition modification provided in this
subparagraph (E) shall be the sum of the amounts
computed independently under the preceding
provisions of this subparagraph (E) for each such
taxable year; and
(E-5) For taxable years ending after December
31, 1997, an amount equal to any eligible
remediation costs that the corporation deducted in
computing adjusted gross income and for which the
corporation claims a credit under subsection (l) of
Section 201;
and by deducting from the total so obtained the sum of
the following amounts:
(F) An amount equal to the amount of any tax
imposed by this Act which was refunded to the
taxpayer and included in such total for the taxable
year;
(G) An amount equal to any amount included in
such total under Section 78 of the Internal Revenue
Code;
(H) In the case of a regulated investment
company, an amount equal to the amount of exempt
interest dividends as defined in subsection (b) (5)
of Section 852 of the Internal Revenue Code, paid to
shareholders for the taxable year;
(I) With the exception of any amounts
subtracted under subparagraph (J), an amount equal
to the sum of all amounts disallowed as deductions
by (i) Sections 171(a) (2), and 265(a)(2) and
amounts disallowed as interest expense by Section
291(a)(3) of the Internal Revenue Code, as now or
hereafter amended, and all amounts of expenses
allocable to interest and disallowed as deductions
by Section 265(a)(1) of the Internal Revenue Code,
as now or hereafter amended; and (ii) for taxable
years ending on or after August 13, 1999, Sections
171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
of the Internal Revenue Code; the provisions of this
subparagraph are exempt from the provisions of
Section 250;
(J) An amount equal to all amounts included in
such total which are exempt from taxation by this
State either by reason of its statutes or
Constitution or by reason of the Constitution,
treaties or statutes of the United States; provided
that, in the case of any statute of this State that
exempts income derived from bonds or other
obligations from the tax imposed under this Act, the
amount exempted shall be the interest net of bond
premium amortization;
(K) An amount equal to those dividends
included in such total which were paid by a
corporation which conducts business operations in an
Enterprise Zone or zones created under the Illinois
Enterprise Zone Act and conducts substantially all
of its operations in an Enterprise Zone or zones;
(L) An amount equal to those dividends
included in such total that were paid by a
corporation that conducts business operations in a
federally designated Foreign Trade Zone or Sub-Zone
and that is designated a High Impact Business
located in Illinois; provided that dividends
eligible for the deduction provided in subparagraph
(K) of paragraph 2 of this subsection shall not be
eligible for the deduction provided under this
subparagraph (L);
(M) For any taxpayer that is a financial
organization within the meaning of Section 304(c) of
this Act, an amount included in such total as
interest income from a loan or loans made by such
taxpayer to a borrower, to the extent that such a
loan is secured by property which is eligible for
the Enterprise Zone Investment Credit. To determine
the portion of a loan or loans that is secured by
property eligible for a Section 201(f) investment
credit to the borrower, the entire principal amount
of the loan or loans between the taxpayer and the
borrower should be divided into the basis of the
Section 201(f) investment credit property which
secures the loan or loans, using for this purpose
the original basis of such property on the date that
it was placed in service in the Enterprise Zone.
The subtraction modification available to taxpayer
in any year under this subsection shall be that
portion of the total interest paid by the borrower
with respect to such loan attributable to the
eligible property as calculated under the previous
sentence;
(M-1) For any taxpayer that is a financial
organization within the meaning of Section 304(c) of
this Act, an amount included in such total as
interest income from a loan or loans made by such
taxpayer to a borrower, to the extent that such a
loan is secured by property which is eligible for
the High Impact Business Investment Credit. To
determine the portion of a loan or loans that is
secured by property eligible for a Section 201(h)
investment credit to the borrower, the entire
principal amount of the loan or loans between the
taxpayer and the borrower should be divided into the
basis of the Section 201(h) investment credit
property which secures the loan or loans, using for
this purpose the original basis of such property on
the date that it was placed in service in a
federally designated Foreign Trade Zone or Sub-Zone
located in Illinois. No taxpayer that is eligible
for the deduction provided in subparagraph (M) of
paragraph (2) of this subsection shall be eligible
for the deduction provided under this subparagraph
(M-1). The subtraction modification available to
taxpayers in any year under this subsection shall be
that portion of the total interest paid by the
borrower with respect to such loan attributable to
the eligible property as calculated under the
previous sentence;
(N) Two times any contribution made during the
taxable year to a designated zone organization to
the extent that the contribution (i) qualifies as a
charitable contribution under subsection (c) of
Section 170 of the Internal Revenue Code and (ii)
must, by its terms, be used for a project approved
by the Department of Commerce and Community Affairs
under Section 11 of the Illinois Enterprise Zone
Act;
(O) An amount equal to: (i) 85% for taxable
years ending on or before December 31, 1992, or, a
percentage equal to the percentage allowable under
Section 243(a)(1) of the Internal Revenue Code of
1986 for taxable years ending after December 31,
1992, of the amount by which dividends included in
taxable income and received from a corporation that
is not created or organized under the laws of the
United States or any state or political subdivision
thereof, including, for taxable years ending on or
after December 31, 1988, dividends received or
deemed received or paid or deemed paid under
Sections 951 through 964 of the Internal Revenue
Code, exceed the amount of the modification provided
under subparagraph (G) of paragraph (2) of this
subsection (b) which is related to such dividends;
plus (ii) 100% of the amount by which dividends,
included in taxable income and received, including,
for taxable years ending on or after December 31,
1988, dividends received or deemed received or paid
or deemed paid under Sections 951 through 964 of the
Internal Revenue Code, from any such corporation
specified in clause (i) that would but for the
provisions of Section 1504 (b) (3) of the Internal
Revenue Code be treated as a member of the
affiliated group which includes the dividend
recipient, exceed the amount of the modification
provided under subparagraph (G) of paragraph (2) of
this subsection (b) which is related to such
dividends;
(P) An amount equal to any contribution made
to a job training project established pursuant to
the Tax Increment Allocation Redevelopment Act;
(Q) An amount equal to the amount of the
deduction used to compute the federal income tax
credit for restoration of substantial amounts held
under claim of right for the taxable year pursuant
to Section 1341 of the Internal Revenue Code of
1986;
(R) In the case of an attorney-in-fact with
respect to whom an interinsurer or a reciprocal
insurer has made the election under Section 835 of
the Internal Revenue Code, 26 U.S.C. 835, an amount
equal to the excess, if any, of the amounts paid or
incurred by that interinsurer or reciprocal insurer
in the taxable year to the attorney-in-fact over the
deduction allowed to that interinsurer or reciprocal
insurer with respect to the attorney-in-fact under
Section 835(b) of the Internal Revenue Code for the
taxable year; and
(S) For taxable years ending on or after
December 31, 1997, in the case of a Subchapter S
corporation, an amount equal to all amounts of
income allocable to a shareholder subject to the
Personal Property Tax Replacement Income Tax imposed
by subsections (c) and (d) of Section 201 of this
Act, including amounts allocable to organizations
exempt from federal income tax by reason of Section
501(a) of the Internal Revenue Code. This
subparagraph (S) is exempt from the provisions of
Section 250.
(3) Special rule. For purposes of paragraph (2)
(A), "gross income" in the case of a life insurance
company, for tax years ending on and after December 31,
1994, shall mean the gross investment income for the
taxable year.
(c) Trusts and estates.
(1) In general. In the case of a trust or estate,
base income means an amount equal to the taxpayer's
taxable income for the taxable year as modified by
paragraph (2).
(2) Modifications. Subject to the provisions of
paragraph (3), the taxable income referred to in
paragraph (1) shall be modified by adding thereto the sum
of the following amounts:
(A) An amount equal to all amounts paid or
accrued to the taxpayer as interest or dividends
during the taxable year to the extent excluded from
gross income in the computation of taxable income;
(B) In the case of (i) an estate, $600; (ii) a
trust which, under its governing instrument, is
required to distribute all of its income currently,
$300; and (iii) any other trust, $100, but in each
such case, only to the extent such amount was
deducted in the computation of taxable income;
(C) An amount equal to the amount of tax
imposed by this Act to the extent deducted from
gross income in the computation of taxable income
for the taxable year;
(D) The amount of any net operating loss
deduction taken in arriving at taxable income, other
than a net operating loss carried forward from a
taxable year ending prior to December 31, 1986;
(E) For taxable years in which a net operating
loss carryback or carryforward from a taxable year
ending prior to December 31, 1986 is an element of
taxable income under paragraph (1) of subsection (e)
or subparagraph (E) of paragraph (2) of subsection
(e), the amount by which addition modifications
other than those provided by this subparagraph (E)
exceeded subtraction modifications in such taxable
year, with the following limitations applied in the
order that they are listed:
(i) the addition modification relating to
the net operating loss carried back or forward
to the taxable year from any taxable year
ending prior to December 31, 1986 shall be
reduced by the amount of addition modification
under this subparagraph (E) which related to
that net operating loss and which was taken
into account in calculating the base income of
an earlier taxable year, and
(ii) the addition modification relating
to the net operating loss carried back or
forward to the taxable year from any taxable
year ending prior to December 31, 1986 shall
not exceed the amount of such carryback or
carryforward;
For taxable years in which there is a net
operating loss carryback or carryforward from more
than one other taxable year ending prior to December
31, 1986, the addition modification provided in this
subparagraph (E) shall be the sum of the amounts
computed independently under the preceding
provisions of this subparagraph (E) for each such
taxable year;
(F) For taxable years ending on or after
January 1, 1989, an amount equal to the tax deducted
pursuant to Section 164 of the Internal Revenue Code
if the trust or estate is claiming the same tax for
purposes of the Illinois foreign tax credit under
Section 601 of this Act;
(G) An amount equal to the amount of the
capital gain deduction allowable under the Internal
Revenue Code, to the extent deducted from gross
income in the computation of taxable income; and
(G-5) For taxable years ending after December
31, 1997, an amount equal to any eligible
remediation costs that the trust or estate deducted
in computing adjusted gross income and for which the
trust or estate claims a credit under subsection (l)
of Section 201;
and by deducting from the total so obtained the sum of
the following amounts:
(H) An amount equal to all amounts included in
such total pursuant to the provisions of Sections
402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
408 of the Internal Revenue Code or included in such
total as distributions under the provisions of any
retirement or disability plan for employees of any
governmental agency or unit, or retirement payments
to retired partners, which payments are excluded in
computing net earnings from self employment by
Section 1402 of the Internal Revenue Code and
regulations adopted pursuant thereto;
(I) The valuation limitation amount;
(J) An amount equal to the amount of any tax
imposed by this Act which was refunded to the
taxpayer and included in such total for the taxable
year;
(K) An amount equal to all amounts included in
taxable income as modified by subparagraphs (A),
(B), (C), (D), (E), (F) and (G) which are exempt
from taxation by this State either by reason of its
statutes or Constitution or by reason of the
Constitution, treaties or statutes of the United
States; provided that, in the case of any statute of
this State that exempts income derived from bonds or
other obligations from the tax imposed under this
Act, the amount exempted shall be the interest net
of bond premium amortization;
(L) With the exception of any amounts
subtracted under subparagraph (K), an amount equal
to the sum of all amounts disallowed as deductions
by (i) Sections 171(a) (2) and 265(a)(2) of the
Internal Revenue Code, as now or hereafter amended,
and all amounts of expenses allocable to interest
and disallowed as deductions by Section 265(1) of
the Internal Revenue Code of 1954, as now or
hereafter amended; and (ii) for taxable years ending
on or after August 13, 1999, Sections 171(a)(2),
265, 280C, and 832(b)(5)(B)(i) of the Internal
Revenue Code; the provisions of this subparagraph
are exempt from the provisions of Section 250;
(M) An amount equal to those dividends
included in such total which were paid by a
corporation which conducts business operations in an
Enterprise Zone or zones created under the Illinois
Enterprise Zone Act and conducts substantially all
of its operations in an Enterprise Zone or Zones;
(N) An amount equal to any contribution made
to a job training project established pursuant to
the Tax Increment Allocation Redevelopment Act;
(O) An amount equal to those dividends
included in such total that were paid by a
corporation that conducts business operations in a
federally designated Foreign Trade Zone or Sub-Zone
and that is designated a High Impact Business
located in Illinois; provided that dividends
eligible for the deduction provided in subparagraph
(M) of paragraph (2) of this subsection shall not be
eligible for the deduction provided under this
subparagraph (O);
(P) An amount equal to the amount of the
deduction used to compute the federal income tax
credit for restoration of substantial amounts held
under claim of right for the taxable year pursuant
to Section 1341 of the Internal Revenue Code of
1986; and
(Q) For taxable year 1999 and thereafter, an
amount equal to the amount of any (i) distributions,
to the extent includible in gross income for federal
income tax purposes, made to the taxpayer because of
his or her status as a victim of persecution for
racial or religious reasons by Nazi Germany or any
other Axis regime or as an heir of the victim and
(ii) items of income, to the extent includible in
gross income for federal income tax purposes,
attributable to, derived from or in any way related
to assets stolen from, hidden from, or otherwise
lost to a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime immediately prior to, during, and immediately
after World War II, including, but not limited to,
interest on the proceeds receivable as insurance
under policies issued to a victim of persecution for
racial or religious reasons by Nazi Germany or any
other Axis regime by European insurance companies
immediately prior to and during World War II;
provided, however, this subtraction from federal
adjusted gross income does not apply to assets
acquired with such assets or with the proceeds from
the sale of such assets; provided, further, this
paragraph shall only apply to a taxpayer who was the
first recipient of such assets after their recovery
and who is a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim. The amount of
and the eligibility for any public assistance,
benefit, or similar entitlement is not affected by
the inclusion of items (i) and (ii) of this
paragraph in gross income for federal income tax
purposes. This paragraph is exempt from the
provisions of Section 250.
(3) Limitation. The amount of any modification
otherwise required under this subsection shall, under
regulations prescribed by the Department, be adjusted by
any amounts included therein which were properly paid,
credited, or required to be distributed, or permanently
set aside for charitable purposes pursuant to Internal
Revenue Code Section 642(c) during the taxable year.
(d) Partnerships.
(1) In general. In the case of a partnership, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. The taxable income referred to
in paragraph (1) shall be modified by adding thereto the
sum of the following amounts:
(A) An amount equal to all amounts paid or
accrued to the taxpayer as interest or dividends
during the taxable year to the extent excluded from
gross income in the computation of taxable income;
(B) An amount equal to the amount of tax
imposed by this Act to the extent deducted from
gross income for the taxable year;
(C) The amount of deductions allowed to the
partnership pursuant to Section 707 (c) of the
Internal Revenue Code in calculating its taxable
income; and
(D) An amount equal to the amount of the
capital gain deduction allowable under the Internal
Revenue Code, to the extent deducted from gross
income in the computation of taxable income;
and by deducting from the total so obtained the following
amounts:
(E) The valuation limitation amount;
(F) An amount equal to the amount of any tax
imposed by this Act which was refunded to the
taxpayer and included in such total for the taxable
year;
(G) An amount equal to all amounts included in
taxable income as modified by subparagraphs (A),
(B), (C) and (D) which are exempt from taxation by
this State either by reason of its statutes or
Constitution or by reason of the Constitution,
treaties or statutes of the United States; provided
that, in the case of any statute of this State that
exempts income derived from bonds or other
obligations from the tax imposed under this Act, the
amount exempted shall be the interest net of bond
premium amortization;
(H) Any income of the partnership which
constitutes personal service income as defined in
Section 1348 (b) (1) of the Internal Revenue Code
(as in effect December 31, 1981) or a reasonable
allowance for compensation paid or accrued for
services rendered by partners to the partnership,
whichever is greater;
(I) An amount equal to all amounts of income
distributable to an entity subject to the Personal
Property Tax Replacement Income Tax imposed by
subsections (c) and (d) of Section 201 of this Act
including amounts distributable to organizations
exempt from federal income tax by reason of Section
501(a) of the Internal Revenue Code;
(J) With the exception of any amounts
subtracted under subparagraph (G), an amount equal
to the sum of all amounts disallowed as deductions
by (i) Sections 171(a) (2), and 265(2) of the
Internal Revenue Code of 1954, as now or hereafter
amended, and all amounts of expenses allocable to
interest and disallowed as deductions by Section
265(1) of the Internal Revenue Code, as now or
hereafter amended; and (ii) for taxable years ending
on or after August 13, 1999, Sections 171(a)(2),
265, 280C, and 832(b)(5)(B)(i) of the Internal
Revenue Code; the provisions of this subparagraph
are exempt from the provisions of Section 250;
(K) An amount equal to those dividends
included in such total which were paid by a
corporation which conducts business operations in an
Enterprise Zone or zones created under the Illinois
Enterprise Zone Act, enacted by the 82nd General
Assembly, and conducts substantially all of its
operations which does not conduct such operations
other than in an Enterprise Zone or Zones;
(L) An amount equal to any contribution made
to a job training project established pursuant to
the Real Property Tax Increment Allocation
Redevelopment Act;
(M) An amount equal to those dividends
included in such total that were paid by a
corporation that conducts business operations in a
federally designated Foreign Trade Zone or Sub-Zone
and that is designated a High Impact Business
located in Illinois; provided that dividends
eligible for the deduction provided in subparagraph
(K) of paragraph (2) of this subsection shall not be
eligible for the deduction provided under this
subparagraph (M); and
(N) An amount equal to the amount of the
deduction used to compute the federal income tax
credit for restoration of substantial amounts held
under claim of right for the taxable year pursuant
to Section 1341 of the Internal Revenue Code of
1986.
(e) Gross income; adjusted gross income; taxable income.
(1) In general. Subject to the provisions of
paragraph (2) and subsection (b) (3), for purposes of
this Section and Section 803(e), a taxpayer's gross
income, adjusted gross income, or taxable income for the
taxable year shall mean the amount of gross income,
adjusted gross income or taxable income properly
reportable for federal income tax purposes for the
taxable year under the provisions of the Internal Revenue
Code. Taxable income may be less than zero. However, for
taxable years ending on or after December 31, 1986, net
operating loss carryforwards from taxable years ending
prior to December 31, 1986, may not exceed the sum of
federal taxable income for the taxable year before net
operating loss deduction, plus the excess of addition
modifications over subtraction modifications for the
taxable year. For taxable years ending prior to December
31, 1986, taxable income may never be an amount in excess
of the net operating loss for the taxable year as defined
in subsections (c) and (d) of Section 172 of the Internal
Revenue Code, provided that when taxable income of a
corporation (other than a Subchapter S corporation),
trust, or estate is less than zero and addition
modifications, other than those provided by subparagraph
(E) of paragraph (2) of subsection (b) for corporations
or subparagraph (E) of paragraph (2) of subsection (c)
for trusts and estates, exceed subtraction modifications,
an addition modification must be made under those
subparagraphs for any other taxable year to which the
taxable income less than zero (net operating loss) is
applied under Section 172 of the Internal Revenue Code or
under subparagraph (E) of paragraph (2) of this
subsection (e) applied in conjunction with Section 172 of
the Internal Revenue Code.
(2) Special rule. For purposes of paragraph (1) of
this subsection, the taxable income properly reportable
for federal income tax purposes shall mean:
(A) Certain life insurance companies. In the
case of a life insurance company subject to the tax
imposed by Section 801 of the Internal Revenue Code,
life insurance company taxable income, plus the
amount of distribution from pre-1984 policyholder
surplus accounts as calculated under Section 815a of
the Internal Revenue Code;
(B) Certain other insurance companies. In the
case of mutual insurance companies subject to the
tax imposed by Section 831 of the Internal Revenue
Code, insurance company taxable income;
(C) Regulated investment companies. In the
case of a regulated investment company subject to
the tax imposed by Section 852 of the Internal
Revenue Code, investment company taxable income;
(D) Real estate investment trusts. In the
case of a real estate investment trust subject to
the tax imposed by Section 857 of the Internal
Revenue Code, real estate investment trust taxable
income;
(E) Consolidated corporations. In the case of
a corporation which is a member of an affiliated
group of corporations filing a consolidated income
tax return for the taxable year for federal income
tax purposes, taxable income determined as if such
corporation had filed a separate return for federal
income tax purposes for the taxable year and each
preceding taxable year for which it was a member of
an affiliated group. For purposes of this
subparagraph, the taxpayer's separate taxable income
shall be determined as if the election provided by
Section 243(b) (2) of the Internal Revenue Code had
been in effect for all such years;
(F) Cooperatives. In the case of a
cooperative corporation or association, the taxable
income of such organization determined in accordance
with the provisions of Section 1381 through 1388 of
the Internal Revenue Code;
(G) Subchapter S corporations. In the case
of: (i) a Subchapter S corporation for which there
is in effect an election for the taxable year under
Section 1362 of the Internal Revenue Code, the
taxable income of such corporation determined in
accordance with Section 1363(b) of the Internal
Revenue Code, except that taxable income shall take
into account those items which are required by
Section 1363(b)(1) of the Internal Revenue Code to
be separately stated; and (ii) a Subchapter S
corporation for which there is in effect 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, the taxable income of such
corporation determined in accordance with the
federal Subchapter S rules as in effect on July 1,
1982; and
(H) Partnerships. In the case of a
partnership, taxable income determined in accordance
with Section 703 of the Internal Revenue Code,
except that taxable income shall take into account
those items which are required by Section 703(a)(1)
to be separately stated but which would be taken
into account by an individual in calculating his
taxable income.
(f) Valuation limitation amount.
(1) In general. The valuation limitation amount
referred to in subsections (a) (2) (G), (c) (2) (I) and
(d)(2) (E) is an amount equal to:
(A) The sum of the pre-August 1, 1969
appreciation amounts (to the extent consisting of
gain reportable under the provisions of Section 1245
or 1250 of the Internal Revenue Code) for all
property in respect of which such gain was reported
for the taxable year; plus
(B) The lesser of (i) the sum of the
pre-August 1, 1969 appreciation amounts (to the
extent consisting of capital gain) for all property
in respect of which such gain was reported for
federal income tax purposes for the taxable year, or
(ii) the net capital gain for the taxable year,
reduced in either case by any amount of such gain
included in the amount determined under subsection
(a) (2) (F) or (c) (2) (H).
(2) Pre-August 1, 1969 appreciation amount.
(A) If the fair market value of property
referred to in paragraph (1) was readily
ascertainable on August 1, 1969, the pre-August 1,
1969 appreciation amount for such property is the
lesser of (i) the excess of such fair market value
over the taxpayer's basis (for determining gain) for
such property on that date (determined under the
Internal Revenue Code as in effect on that date), or
(ii) the total gain realized and reportable for
federal income tax purposes in respect of the sale,
exchange or other disposition of such property.
(B) If the fair market value of property
referred to in paragraph (1) was not readily
ascertainable on August 1, 1969, the pre-August 1,
1969 appreciation amount for such property is that
amount which bears the same ratio to the total gain
reported in respect of the property for federal
income tax purposes for the taxable year, as the
number of full calendar months in that part of the
taxpayer's holding period for the property ending
July 31, 1969 bears to the number of full calendar
months in the taxpayer's entire holding period for
the property.
(C) The Department shall prescribe such
regulations as may be necessary to carry out the
purposes of this paragraph.
(g) Double deductions. Unless specifically provided
otherwise, nothing in this Section shall permit the same item
to be deducted more than once.
(h) Legislative intention. Except as expressly provided
by this Section there shall be no modifications or
limitations on the amounts of income, gain, loss or deduction
taken into account in determining gross income, adjusted
gross income or taxable income for federal income tax
purposes for the taxable year, or in the amount of such items
entering into the computation of base income and net income
under this Act for such taxable year, whether in respect of
property values as of August 1, 1969 or otherwise.
(Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99;
91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, eff.
12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff. 8-17-01;
revised 9-21-01.)
(35 ILCS 5/209)
Sec. 209. Tax Credit for "TECH-PREP" youth vocational
programs.
(a) Beginning with tax years ending on or after June 30,
1995, every taxpayer who is primarily engaged in
manufacturing is allowed a credit against the tax imposed by
subsections (a) and (b) of Section 201 in an amount equal to
20% of the taxpayer's direct payroll expenditures for which a
credit has not already been claimed under subsection (j) of
Section 201 of this Act, in the tax year for which the credit
is claimed, for cooperative secondary school youth vocational
programs in Illinois which are certified as qualifying
TECH-PREP programs by the State Board of Education and the
Department of Revenue because the programs prepare students
to be technically skilled workers and meet the performance
standards of business and industry and the admission
standards of higher education. The credit may also be claimed
for personal services rendered to the taxpayer by a TECH-PREP
student or instructor (i) which would be subject to the
provisions of Article 7 of this Act if the student or
instructor was an employee of the taxpayer and (ii) for which
no credit under this Section is claimed by another taxpayer.
(b) If the amount of the credit exceeds the tax
liability for the year, the excess may be carried forward and
applied to the tax liability of the 2 taxable years following
the excess credit year. The credit shall be applied to the
earliest year for which there is a tax liability. If there
are credits from more than one tax year that are available to
offset a liability, the earlier credit shall be applied
first.
(c) A taxpayer claiming the credit provided by this
Section shall maintain and record such information regarding
its participation in a qualifying TECH-PREP program as the
Department may require by regulation. When claiming the
credit provided by this Section, the taxpayer shall provide
such information regarding the taxpayer's participation in a
qualifying TECH-PREP program as the Department of Revenue may
require by regulation.
(d) This Section does not apply to those programs with
national standards that have been or in the future are
approved by the U.S. Department of Labor, Bureau of
Apprenticeship Training or any federal agency succeeding to
the responsibilities of that Bureau.
(Source: P.A. 88-505; 89-399, eff. 8-20-95.)
(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 such person has an Illinois base income of the
basic amount in Section 204(b) 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) Innocent spouses.
(A) However, for tax liabilities arising and
paid prior to August 13, 1999 the effective date of
this amendatory Act of the 91st General Assembly, 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.
(B) For tax liabilities arising on and after
August 13, 1999 the effective date of this
amendatory Act of the 91st General Assembly or which
arose prior to that effective date, but remain
unpaid as of that the effective date, if an
individual who filed a joint return for any taxable
year has made an election under this paragraph, the
individual's liability for any tax shown on the
joint return shall not exceed the individual's
separate return amount and the individual's
liability for any deficiency assessed for that
taxable year shall not exceed the portion of the
deficiency properly allocable to the individual.
For purposes of this paragraph:
(i) An election properly made pursuant to
Section 6015 of the Internal Revenue Code shall
constitute an election under this paragraph,
provided that the election shall not be
effective until the individual has notified the
Department of the election in the form and
manner prescribed by the Department.
(ii) If no election has been made under
Section 6015, the individual may make an
election under this paragraph in the form and
manner prescribed by the Department, provided
that no election may be made if the Department
finds that assets were transferred between
individuals filing a joint return as part of a
scheme by such individuals to avoid payment of
Illinois income tax and the election shall not
eliminate the individual's liability for any
portion of a deficiency attributable to an
error on the return of which the individual had
actual knowledge as of the date of filing.
(iii) In determining the separate return
amount or portion of any deficiency
attributable to an individual, the Department
shall follow the provisions in subsections (c)
and (d) of Section 6015 6015(b) and (c) of the
Internal Revenue Code.
(iv) In determining the validity of an
individual's election under subparagraph (ii)
and in determining an electing individual's
separate return amount or portion of any
deficiency under subparagraph (iii), any
determination made by the Secretary of the
Treasury, by the United States Tax Court on
petition for review of a determination by the
Secretary of the Treasury, or on appeal from
the United States Tax Court under Section 6015
6015(a) of the Internal Revenue Code regarding
criteria for eligibility or under subsection
(d) of Section 6015 6015(b) or (c) of the
Internal Revenue Code regarding the allocation
of any item of income, deduction, payment, or
credit between an individual making the federal
election and that individual's spouse shall be
conclusively presumed to be correct. With
respect to any item that is not the subject of
a determination by the Secretary of the
Treasury or the federal courts, in any
proceeding involving this subsection, the
individual making the election shall have the
burden of proof with respect to any item except
that the Department shall have the burden of
proof with respect to items in subdivision
(ii).
(v) Any election made by an individual
under this subsection shall apply to all years
for which that individual and the spouse named
in the election have filed a joint return.
(vi) After receiving a notice that the
federal election has been made or after
receiving an election under subdivision (ii),
the Department shall take no collection action
against the electing individual for any
liability arising from a joint return covered
by the election until the Department has
notified the electing individual in writing
that the election is invalid or of the portion
of the liability the Department has allocated
to the electing individual. Within 60 days
(150 days if the individual is outside the
United States) after the issuance of such
notification, the individual may file a written
protest of the denial of the election or of the
Department's determination of the liability
allocated to him or her and shall be granted a
hearing within the Department under the
provisions of Section 908. If a protest is
filed, the Department shall take no collection
action against the electing individual until
the decision regarding the protest has become
final under subsection (d) of Section 908 or,
if administrative review of the Department's
decision is requested under Section 1201, until
the decision of the court becomes final.
(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 paragraph of subsection
(f) applies to taxable years ending on or after December 31,
1987.
For taxable years ending on or after December 31, 1999,
the Department may, by regulation, also permit any persons
transacting an insurance business organized under a Lloyds
plan of operation to file composite returns reflecting the
income of such persons allocable to Illinois and the tax
rates applicable to such persons under Section 201 and to
make composite tax payments and shall, by regulation, also
provide that the income and apportionment factors
attributable to the transaction of an insurance business
organized under a Lloyds plan of operation by any person
joining in the filing of a composite return shall, for
purposes of allocating and apportioning income under Article
3 of this Act and computing net income under Section 202 of
this Act, be excluded from any other income and apportionment
factors of that person or of any unitary business group, as
defined in subdivision (a)(27) of Section 1501, to which that
person may belong.
(g) The Department may adopt rules to authorize the
electronic filing of any return required to be filed under
this Section.
(Source: P.A. 90-613, eff. 7-9-98; 91-541, eff. 8-13-99;
91-913, eff. 1-1-01.)
(35 ILCS 5/506) (from Ch. 120, par. 5-506)
Sec. 506. Federal Returns.
(a) In general. Any person required to make a return
for a taxable year under this Act may, at any time that a
deficiency could be assessed or a refund claimed under this
Act in respect of any item reported or properly reportable on
such return or any amendment thereof, be required to furnish
to the Department a true and correct copy of any return which
may pertain to such item and which was filed by such person
under the provisions of the Internal Revenue Code.
(b) Changes affecting federal income tax. A person shall
notify the Department if: In the event
(1) the taxable income, any item of income or
deduction, the income tax liability, or any tax credit
reported in a federal income tax return of that any
person for any year is altered by amendment of such
return or as a result of any other recomputation or
redetermination of federal taxable income or loss, and
such alteration reflects a change or settlement with
respect to any item or items, affecting the computation
of such person's net income, net loss, or of any credit
provided by Article 2 of this Act for any year under this
Act, or in the number of personal exemptions allowable to
such person under Section 151 of the Internal Revenue
Code, or
(2) the amount of tax required to be withheld by
that person from compensation paid to employees and
required to be reported by that person on a federal
return is altered by amendment of the return or by any
other recomputation or redetermination that is agreed to
or finally determined on or after January 1, 2003, and
the alteration affects the amount of compensation subject
to withholding by that person under Section 701 of this
Act such person shall notify the Department of such
alteration.
Such notification shall be in the form of an amended return
or such other form as the Department may by regulations
prescribe, shall contain the person's name and address and
such other information as the Department may by regulations
prescribe, shall be signed by such person or his duly
authorized representative, and shall be filed not later than
120 days after such alteration has been agreed to or finally
determined for federal income tax purposes or any federal
income tax deficiency or refund, tentative carryback
adjustment, abatement or credit resulting therefrom has been
assessed or paid, whichever shall first occur.
(Source: P.A. 90-491, eff. 1-1-98.)
(35 ILCS 5/601.1) (Ch. 120, par. 6-601.1)
Sec. 601.1. Payment by electronic funds transfer.
(a) Beginning on October 1, 1993, a taxpayer who has an
average monthly tax liability of $150,000 or more under
Article 7 of this Act shall make all payments required by
rules of the Department by electronic funds transfer.
Beginning October 1, 1993, a taxpayer who has an average
quarterly estimated tax payment obligation of $450,000 or
more under Article 8 of this Act shall make all payments
required by rules of the Department by electronic funds
transfer. Beginning on October 1, 1994, a taxpayer who has
an average monthly tax liability of $100,000 or more under
Article 7 of this Act shall make all payments required by
rules of the Department by electronic funds transfer.
Beginning October 1, 1994, a taxpayer who has an average
quarterly estimated tax payment obligation of $300,000 or
more under Article 8 of this Act shall make all payments
required by rules of the Department by electronic funds
transfer. Beginning on October 1, 1995, a taxpayer who has
an average monthly tax liability of $50,000 or more under
Article 7 of this Act shall make all payments required by
rules of the Department by electronic funds transfer.
Beginning October 1, 1995, a taxpayer who has an average
quarterly estimated tax payment obligation of $150,000 or
more under Article 8 of this Act shall make all payments
required by rules of the Department by electronic funds
transfer. Beginning on October 1, 2000, and for all liability
periods thereafter, a taxpayer who has an average annual tax
liability of $200,000 or more under Article 7 of this Act
shall make all payments required by rules of the Department
by electronic funds transfer. Beginning October 1, 2000, a
taxpayer who has an average quarterly estimated tax payment
obligation of $50,000 or more under Article 8 of this Act
shall make all payments required by rules of the Department
by electronic funds transfer. Beginning on October 1, 2002, a
taxpayer who has a tax liability in the amount set forth in
subsection (b) of Section 2505-210 of the Department of
Revenue Law shall make all payments required by rules of the
Department by electronic funds transfer. Beginning on October
1, 2002, a taxpayer who has a tax liability in the amount set
forth in subsection (b) of Section 2505-210 of the Department
of Revenue Law shall make all payments required by rules of
the Department by electronic funds transfer.
(b) Any taxpayer who is not required to make payments by
electronic funds transfer may make payments by electronic
funds transfer with the permission of the Department.
(c) All taxpayers required to make payments by
electronic funds transfer and any taxpayers who wish to
voluntarily make payments by electronic funds transfer shall
make those payments in the manner authorized by the
Department.
(d) The Department shall notify all taxpayers required
to make payments by electronic funds transfer. All
taxpayers notified by the Department shall make payments by
electronic funds transfer for a minimum of one year beginning
on October 1. In determining the threshold amounts under
subsection (a), the Department shall calculate the averages
as follows:
(1) the total liability under Article 7 for the
preceding tax year (and, prior to October 1, 2000,
divided by 12); or
(2) for purposes of estimated payments under
Article 8, the total tax obligation of the taxpayer for
the previous tax year divided by 4.
(e) The Department shall adopt such rules as are
necessary to effectuate a program of electronic funds
transfer and the requirements of this Section.
(Source: P.A. 91-541, eff. 8-13-99; 92-492, eff. 1-1-02.)
(35 ILCS 5/701) (from Ch. 120, par. 7-701)
Sec. 701. Requirement and Amount of Withholding.
(a) In General. Every employer maintaining an office or
transacting business within this State and required under the
provisions of the Internal Revenue Code to withhold a tax on:
(1) compensation paid in this State (as determined
under Section 304 (a) (2) (B) to an individual; or
(2) payments described in subsection (b) shall
deduct and withhold from such compensation for each
payroll period (as defined in Section 3401 of the
Internal Revenue Code) an amount equal to the amount by
which such individual's compensation exceeds the
proportionate part of this withholding exemption
(computed as provided in Section 702) attributable to the
payroll period for which such compensation is payable
multiplied by a percentage equal to the percentage tax
rate for individuals provided in subsection (b) of
Section 201.
(b) Payment to Residents.
Any payment (including compensation) to a resident by a
payor maintaining an office or transacting business within
this State (including any agency, officer, or employee of
this State or of any political subdivision of this State) and
on which withholding of tax is required under the provisions
of the Internal Revenue Code shall be deemed to be
compensation paid in this State by an employer to an employee
for the purposes of Article 7 and Section 601 (b) (1) to the
extent such payment is included in the recipient's base
income and not subjected to withholding by another state.
(c) Special Definitions.
Withholding shall be considered required under the
provisions of the Internal Revenue Code to the extent the
Internal Revenue Code either requires withholding or allows
for voluntary withholding the payor and recipient have
entered into such a voluntary withholding agreement. For the
purposes of Article 7 and Section 1002 (c) the term
"employer" includes any payor who is required to withhold tax
pursuant to this Section.
(d) Reciprocal Exemption.
The Director may enter into an agreement with the taxing
authorities of any state which imposes a tax on or measured
by income to provide that compensation paid in such state to
residents of this State shall be exempt from withholding of
such tax; in such case, any compensation paid in this State
to residents of such state shall be exempt from withholding.
All reciprocal agreements shall be subject to the
requirements of Section 2505-575 of the Department of Revenue
Law (20 ILCS 2505/2505-575).
(e) Notwithstanding subsection (a) (2) of this Section,
no withholding is required on payments for which withholding
is required under Section 3405 or 3406 of the Internal
Revenue Code of 1954.
(Source: P.A. 90-491, eff. 1-1-98; 91-239, eff. 1-1-00.)
(35 ILCS 5/905) (from Ch. 120, par. 9-905)
Sec. 905. Limitations on Notices of Deficiency.
(a) In general. Except as otherwise provided in this
Act:
(1) A notice of deficiency shall be issued not
later than 3 years after the date the return was filed,
and
(2) No deficiency shall be assessed or collected
with respect to the year for which the return was filed
unless such notice is issued within such period.
(b) Omission of more than 25% of income. If the taxpayer
omits from base income an amount properly includible therein
which is in excess of 25% of the amount of base income stated
in the return, a notice of deficiency may be issued not later
than 6 years after the return was filed. For purposes of this
paragraph, there shall not be taken into account any amount
which is omitted in the return if such amount is disclosed in
the return, or in a statement attached to the return, in a
manner adequate to apprise the Department of the nature and
the amount of such item.
(c) No return or fraudulent return. If no return is
filed or a false and fraudulent return is filed with intent
to evade the tax imposed by this Act, a notice of deficiency
may be issued at any time.
(d) Failure to report federal change. If a taxpayer
fails to notify the Department in any case where notification
is required by Section 304(c) or 506(b), or fails to report a
change or correction which is treated in the same manner as
if it were a deficiency for federal income tax purposes, a
notice of deficiency may be issued (i) at any time or (ii) on
or after August 13, 1999 the effective date of this
amendatory Act of the 91st General Assembly, at any time for
the taxable year for which the notification is required or
for any taxable year to which the taxpayer may carry an
Article 2 credit, or a Section 207 loss, earned, incurred, or
used in the year for which the notification is required;
provided, however, that the amount of any proposed assessment
set forth in the notice shall be limited to the amount of any
deficiency resulting under this Act from the recomputation of
the taxpayer's net income, Article 2 credits, or Section 207
loss earned, incurred, or used in the taxable year for which
the notification is required after giving effect to the item
or items required to be reported.
(e) Report of federal change.
(1) Before August 13, 1999 the effective date of
this amendatory Act of the 91st General Assembly, in any
case where notification of an alteration is given as
required by Section 506(b), a notice of deficiency may be
issued at any time within 2 years after the date such
notification is given, provided, however, that the amount
of any proposed assessment set forth in such notice shall
be limited to the amount of any deficiency resulting
under this Act from recomputation of the taxpayer's net
income, net loss, or Article 2 credits for the taxable
year after giving effect to the item or items reflected
in the reported alteration.
(2) On and after August 13, 1999 the effective date
of this amendatory Act of the 91st General Assembly, in
any case where notification of an alteration is given as
required by Section 506(b), a notice of deficiency may be
issued at any time within 2 years after the date such
notification is given for the taxable year for which the
notification is given or for any taxable year to which
the taxpayer may carry an Article 2 credit, or a Section
207 loss, earned, incurred, or used in the year for which
the notification is given, provided, however, that the
amount of any proposed assessment set forth in such
notice shall be limited to the amount of any deficiency
resulting under this Act from recomputation of the
taxpayer's net income, Article 2 credits, or Section 207
loss earned, incurred, or used in the taxable year for
which the notification is given after giving effect to
the item or items reflected in the reported alteration.
(f) Extension by agreement. Where, before the expiration
of the time prescribed in this section for the issuance of a
notice of deficiency, both the Department and the taxpayer
shall have consented in writing to its issuance after such
time, such notice may be issued at any time prior to the
expiration of the period agreed upon. In the case of a
taxpayer who is a partnership, Subchapter S corporation, or
trust and who enters into an agreement with the Department
pursuant to this subsection on or after January 1, 2003, a
notice of deficiency may be issued to the partners,
shareholders, or beneficiaries of the taxpayer at any time
prior to the expiration of the period agreed upon. Any
proposed assessment set forth in the notice, however, shall
be limited to the amount of any deficiency resulting under
this Act from recomputation of items of income, deduction,
credits, or other amounts of the taxpayer that are taken into
account by the partner, shareholder, or beneficiary in
computing its liability under this Act. The period so agreed
upon may be extended by subsequent agreements in writing made
before the expiration of the period previously agreed upon.
(g) Erroneous refunds. In any case in which there has
been an erroneous refund of tax payable under this Act, a
notice of deficiency may be issued at any time within 2 years
from the making of such refund, or within 5 years from the
making of such refund if it appears that any part of the
refund was induced by fraud or the misrepresentation of a
material fact, provided, however, that the amount of any
proposed assessment set forth in such notice shall be limited
to the amount of such erroneous refund.
Beginning July 1, 1993, in any case in which there has
been a refund of tax payable under this Act attributable to a
net loss carryback as provided for in Section 207, and that
refund is subsequently determined to be an erroneous refund
due to a reduction in the amount of the net loss which was
originally carried back, a notice of deficiency for the
erroneous refund amount may be issued at any time during the
same time period in which a notice of deficiency can be
issued on the loss year creating the carryback amount and
subsequent erroneous refund. The amount of any proposed
assessment set forth in the notice shall be limited to the
amount of such erroneous refund.
(h) Time return deemed filed. For purposes of this
Section a tax return filed before the last day prescribed by
law (including any extension thereof) shall be deemed to have
been filed on such last day.
(i) Request for prompt determination of liability. For
purposes of Subsection (a)(1), in the case of a tax return
required under this Act in respect of a decedent, or by his
estate during the period of administration, or by a
corporation, the period referred to in such Subsection shall
be 18 months after a written request for prompt determination
of liability is filed with the Department (at such time and
in such form and manner as the Department shall by
regulations prescribe) by the executor, administrator, or
other fiduciary representing the estate of such decedent, or
by such corporation, but not more than 3 years after the date
the return was filed. This Subsection shall not apply in the
case of a corporation unless:
(1) (A) Such written request notifies the
Department that the corporation contemplates dissolution
at or before the expiration of such 18-month period, (B)
the dissolution is begun in good faith before the
expiration of such 18-month period, and (C) the
dissolution is completed;
(2) (A) Such written request notifies the
Department that a dissolution has in good faith been
begun, and (B) the dissolution is completed; or
(3) A dissolution has been completed at the time
such written request is made.
(j) Withholding tax. In the case of returns required
under Article 7 of this Act (with respect to any amounts
withheld as tax or any amounts required to have been withheld
as tax) a notice of deficiency shall be issued not later than
3 years after the 15th day of the 4th month following the
close of the calendar year in which such withholding was
required.
(k) Penalties for failure to make information reports.
A notice of deficiency for the penalties provided by
Subsection 1405.1(c) of this Act may not be issued more than
3 years after the due date of the reports with respect to
which the penalties are asserted.
(l) Penalty for failure to file withholding returns. A
notice of deficiency for penalties provided by Section 1004
of this Act for taxpayer's failure to file withholding
returns may not be issued more than three years after the
15th day of the 4th month following the close of the calendar
year in which the withholding giving rise to taxpayer's
obligation to file those returns occurred.
(m) Transferee liability. A notice of deficiency may be
issued to a transferee relative to a liability asserted under
Section 1405 during time periods defined as follows:
1) Initial Transferee. In the case of the
liability of an initial transferee, up to 2 years after
the expiration of the period of limitation for assessment
against the transferor, except that if a court proceeding
for review of the assessment against the transferor has
begun, then up to 2 years after the return of the
certified copy of the judgment in the court proceeding.
2) Transferee of Transferee. In the case of the
liability of a transferee, up to 2 years after the
expiration of the period of limitation for assessment
against the preceding transferee, but not more than 3
years after the expiration of the period of limitation
for assessment against the initial transferor; except
that if, before the expiration of the period of
limitation for the assessment of the liability of the
transferee, a court proceeding for the collection of the
tax or liability in respect thereof has been begun
against the initial transferor or the last preceding
transferee, as the case may be, then the period of
limitation for assessment of the liability of the
transferee shall expire 2 years after the return of the
certified copy of the judgment in the court proceeding.
(n) Notice of decrease in net loss. On and after the
effective date of this amendatory Act of the 92nd General
Assembly, no notice of deficiency shall be issued as the
result of a decrease determined by the Department in the net
loss incurred by a taxpayer under Section 207 of this Act
unless the Department has notified the taxpayer of the
proposed decrease within 3 years after the return reporting
the loss was filed or within one year after an amended return
reporting an increase in the loss was filed, provided that in
the case of an amended return, a decrease proposed by the
Department more than 3 years after the original return was
filed may not exceed the increase claimed by the taxpayer on
the original return.
(Source: P.A. 90-491, eff. 1-1-98; 91-541, eff. 8-13-99.)
(35 ILCS 5/911) (from Ch. 120, par. 9-911)
Sec. 911. Limitations on Claims for Refund.
(a) In general. Except as otherwise provided in this
Act:
(1) A claim for refund shall be filed not later
than 3 years after the date the return was filed (in the
case of returns required under Article 7 of this Act
respecting any amounts withheld as tax, not later than 3
years after the 15th day of the 4th month following the
close of the calendar year in which such withholding was
made), or one year after the date the tax was paid,
whichever is the later; and
(2) No credit or refund shall be allowed or made
with respect to the year for which the claim was filed
unless such claim is filed within such period.
(b) Federal changes.
(1) In general. In any case where notification of
an alteration is required by Section 506 (b), a claim for
refund may be filed within 2 years after the date on
which such notification was due (regardless of whether
such notice was given), but the amount recoverable
pursuant to a claim filed under this Section shall be
limited to the amount of any overpayment resulting under
this Act from recomputation of the taxpayer's net income,
net loss, or Article 2 credits for the taxable year after
giving effect to the item or items reflected in the
alteration required to be reported.
(2) Tentative carryback adjustments paid before
January 1, 1974. If, as the result of the payment before
January 1, 1974 of a federal tentative carryback
adjustment, a notification of an alteration is required
under Section 506 (b), a claim for refund may be filed at
any time before January 1, 1976, but the amount
recoverable pursuant to a claim filed under this Section
shall be limited to the amount of any overpayment
resulting under this Act from recomputation of the
taxpayer's base income for the taxable year after giving
effect to the federal alteration resulting from the
tentative carryback adjustment irrespective of any
limitation imposed in paragraph (l) of this subsection.
(c) Extension by agreement. Where, before the
expiration of the time prescribed in this section for the
filing of a claim for refund, both the Department and the
claimant shall have consented in writing to its filing after
such time, such claim may be filed at any time prior to the
expiration of the period agreed upon. The period so agreed
upon may be extended by subsequent agreements in writing made
before the expiration of the period previously agreed upon.
In the case of a taxpayer who is a partnership, Subchapter S
corporation, or trust and who enters into an agreement with
the Department pursuant to this subsection on or after
January 1, 2003, a claim for refund may be issued to the
partners, shareholders, or beneficiaries of the taxpayer at
any time prior to the expiration of the period agreed upon.
Any refund allowed pursuant to the claim, however, shall be
limited to the amount of any overpayment of tax due under
this Act that results from recomputation of items of income,
deduction, credits, or other amounts of the taxpayer that are
taken into account by the partner, shareholder, or
beneficiary in computing its liability under this Act.
(d) Limit on amount of credit or refund.
(1) Limit where claim filed within 3-year period.
If the claim was filed by the claimant during the 3-year
period prescribed in subsection (a), the amount of the
credit or refund shall not exceed the portion of the tax
paid within the period, immediately preceding the filing
of the claim, equal to 3 years plus the period of any
extension of time for filing the return.
(2) Limit where claim not filed within 3-year
period. If the claim was not filed within such 3-year
period, the amount of the credit or refund shall not
exceed the portion of the tax paid during the one year
immediately preceding the filing of the claim.
(e) Time return deemed filed. For purposes of this
section a tax return filed before the last day prescribed by
law for the filing of such return (including any extensions
thereof) shall be deemed to have been filed on such last day.
(f) No claim for refund based on the taxpayer's taking a
credit for estimated tax payments as provided by Section 601
(b) (2) or for any amount paid by a taxpayer pursuant to
Section 602(a) or for any amount of credit for tax withheld
pursuant to Section 701 may be filed more than 3 years after
the due date, as provided by Section 505, of the return which
was required to be filed relative to the taxable year for
which the payments were made or for which the tax was
withheld. The changes in this subsection (f) made by this
amendatory Act of 1987 shall apply to all taxable years
ending on or after December 31, 1969.
(g) Special Period of Limitation with Respect to Net
Loss Carrybacks. If the claim for refund relates to an
overpayment attributable to a net loss carryback as provided
by Section 207, in lieu of the 3 year period of limitation
prescribed in subsection (a), the period shall be that period
which ends 3 years after the time prescribed by law for
filing the return (including extensions thereof) for the
taxable year of the net loss which results in such carryback
(or, on and after August 13, 1999 the effective date of this
amendatory Act of the 91st General Assembly, with respect to
a change in the carryover of an Article 2 credit to a taxable
year resulting from the carryback of a Section 207 loss
incurred in a taxable year beginning on or after January 1,
2000, the period shall be that period that ends 3 years after
the time prescribed by law for filing the return (including
extensions of that time) for that subsequent taxable year),
or the period prescribed in subsection (c) in respect of such
taxable year, whichever expires later. In the case of such a
claim, the amount of the refund may exceed the portion of the
tax paid within the period provided in subsection (d) to the
extent of the amount of the overpayment attributable to such
carryback. On and after August 13, 1999 the effective date of
this amendatory Act of the 91st General Assembly, if the
claim for refund relates to an overpayment attributable to
the carryover of an Article 2 credit, or of a Section 207
loss, earned, incurred (in a taxable year beginning on or
after January 1, 2000), or used in a year for which a
notification of a change affecting federal taxable income
must be filed under subsection (b) of Section 506, the claim
may be filed within the period prescribed in paragraph (1) of
subsection (b) in respect of the year for which the
notification is required. In the case of such a claim, the
amount of the refund may exceed the portion of the tax paid
within the period provided in subsection (d) to the extent of
the amount of the overpayment attributable to the
recomputation of the taxpayer's Article 2 credits, or Section
207 loss, earned, incurred, or used in the taxable year for
which the notification is given.
(h) Claim for refund based on net loss. On and after
the effective date of this amendatory Act of the 92nd General
Assembly, no claim for refund shall be allowed to the extent
the refund is the result of an amount of net loss incurred
under Section 207 of this Act that was not reported to the
Department within 3 years of the due date (including
extensions) of the return for the loss year on either the
original return filed by the taxpayer or on amended return.
(Source: P.A. 90-491, eff. 1-1-98; 91-541, eff. 8-13-99.)
(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. For
each taxable year beginning on or after January 1, 2003,
a taxpayer may elect to treat all income other than
compensation as business income. This election shall be
made in accordance with rules adopted by the Department
and, once made, shall be irrevocable.
(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" has the
meaning provided in the following item (i) or (ii):
(i) A person primarily engaged in one or
more of the following businesses: the business
of purchasing customer receivables, the
business of making loans upon the security of
customer receivables, the business of making
loans for the express purpose of funding
purchases of tangible personal property or
services by the borrower, or the business of
finance leasing. For purposes of this item
(i), "customer receivable" means:
(a) a retail installment contract or
retail charge agreement within the meaning of
the Sales Finance Agency Act, the Retail
Installment Sales Act, or the Motor Vehicle
Retail Installment Sales Act;
(b) an installment, charge, credit, or
similar contract or agreement arising from the
sale of tangible personal property or services
in a transaction involving a deferred payment
price payable in one or more installments
subsequent to the sale; or
(c) the outstanding balance of a contract
or agreement described in provisions (a) or (b)
of this item (i).
A customer receivable need not provide for
payment of interest on deferred payments. A sales
finance company may purchase a customer receivable
from, or make a loan secured by a customer
receivable to, the seller in the original
transaction or to a person who purchased the
customer receivable directly or indirectly from that
seller.
(ii) A corporation meeting each of the
following criteria:
(a) the corporation must be a member of
an "affiliated group" within the meaning of
Section 1504(a) of the Internal Revenue Code,
determined without regard to Section 1504(b) of
the Internal Revenue Code;
(b) more than 50% of the gross income of
the corporation for the taxable year must be
interest income derived from qualifying loans.
A "qualifying loan" is a loan made to a member
of the corporation's affiliated group that
originates customer receivables (within the
meaning of item (i)) or to whom customer
receivables originated by a member of the
affiliated group have been transferred, to the
extent the average outstanding balance of loans
from that corporation to members of its
affiliated group during the taxable year do not
exceed the limitation amount for that
corporation. The "limitation amount" for a
corporation is the average outstanding balances
during the taxable year of customer receivables
(within the meaning of item (i)) originated by
all members of the affiliated group. If the
average outstanding balances of the loans made
by a corporation to members of its affiliated
group exceed the limitation amount, the
interest income of that corporation from
qualifying loans shall be equal to its interest
income from loans to members of its affiliated
groups times a fraction equal to the limitation
amount divided by the average outstanding
balances of the loans made by that corporation
to members of its affiliated group;
(c) the total of all shareholder's equity
(including, without limitation, paid-in capital
on common and preferred stock and retained
earnings) of the corporation plus the total of
all of its loans, advances, and other
obligations payable or owed to members of its
affiliated group may not exceed 20% of the
total assets of the corporation at any time
during the tax year; and
(d) more than 50% of all interest-bearing
obligations of the affiliated group payable to
persons outside the group determined in
accordance with generally accepted accounting
principles must be obligations of the
corporation.
This amendatory Act of the 91st General Assembly is
declaratory of existing law.
(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.
(F) Finance Leases. For purposes of this
subsection, a finance lease shall be treated as a
loan or other extension of credit, rather than as a
lease, regardless of how the transaction is
characterized for any other purpose, including the
purposes of any regulatory agency to which the
lessor is subject. A finance lease is any
transaction in the form of a lease in which the
lessee is treated as the owner of the leased asset
entitled to any deduction for depreciation allowed
under Section 167 of the Internal Revenue Code.
(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.
The term "partnership" includes any entity,
including a limited liability company formed under the
Illinois Limited Liability Company Act, classified as a
partnership for federal income tax purposes.
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), (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. 90-613, eff. 7-9-98; 91-535, eff. 1-1-00;
91-913, eff. 1-1-01.)
Section 7. The Property Tax Code is amended by changing
Sections 9-195 and 15-60 as follows:
(35 ILCS 200/9-195)
Sec. 9-195. Leasing of exempt property.
(a) Except as provided in Sections 15-35, 15-55, 15-60,
15-100, and 15-103, when property which is exempt from
taxation is leased to another whose property is not exempt,
and the leasing of which does not make the property taxable,
the leasehold estate and the appurtenances shall be listed as
the property of the lessee thereof, or his or her assignee.
Taxes on that property shall be collected in the same manner
as on property that is not exempt, and the lessee shall be
liable for those taxes. However, no tax lien shall attach to
the exempt real estate. The changes made by this amendatory
Act of 1997 and by this amendatory Act of the 91st General
Assembly are declaratory of existing law and shall not be
construed as a new enactment. The changes made by Public
Acts 88-221 and 88-420 that are incorporated into this
Section by this amendatory Act of 1993 are declarative of
existing law and are not a new enactment.
(b) The provisions of this Section regarding taxation of
leasehold interests in exempt property do not apply to any
leasehold interest created pursuant to any transaction
described in subsection (e) of Section 15-35, subsection
(c-5) of Section 15-60, subsection (b) of Section 15-100, or
Section 15-103.
(Source: P.A. 90-562, eff. 12-16-97; 91-513, eff. 8-13-99.)
(35 ILCS 200/15-60)
Sec. 15-60. Taxing district property. All property
belonging to any county or municipality used exclusively for
the maintenance of the poor is exempt, as is all property
owned by a taxing district that is being held for future
expansion or development, except if leased by the taxing
district to lessees for use for other than public purposes.
Also exempt are:
(a) all swamp or overflowed lands belonging to any
county;
(b) all public buildings belonging to any county,
township, or municipality, with the ground on which the
buildings are erected;
(c) all property owned by any municipality located
within its incorporated limits. Any such property leased by
a municipality shall remain exempt, and the leasehold
interest of the lessee shall be assessed under Section 9-195
of this Act, (i) for a lease entered into on or after January
1, 1994, unless the lease expressly provides that this
exemption shall not apply; (ii) for a lease entered into on
or after the effective date of Public Act 87-1280 and before
January 1, 1994, unless the lease expressly provides that
this exemption shall not apply or unless evidence other than
the lease itself substantiates the intent of the parties to
the lease that this exemption shall not apply; and (iii) for
a lease entered into before the effective date of Public Act
87-1280, if the terms of the lease do not bind the lessee to
pay the taxes on the leased property or if, notwithstanding
the terms of the lease, the municipality has filed or
hereafter files a timely exemption petition or complaint with
respect to property consisting of or including the leased
property for an assessment year which includes part or all of
the first 12 months of the lease period. The foregoing
clause (iii) added by Public Act 87-1280 shall not operate to
exempt property for any assessment year as to which no timely
exemption petition or complaint has been filed by the
municipality or as to which an administrative or court
decision denying exemption has become final and
nonappealable. For each assessment year or portion thereof
that property is made exempt by operation of the foregoing
clause (iii), whether such year or portion is before or after
the effective date of Public Act 87-1280, the leasehold
interest of the lessee shall, if necessary, be considered
omitted property for purposes of this Act;
(c-5) Notwithstanding clause (i) of subsection (c), all
property owned by a municipality with a population over
500,000 that is used for toll road or toll bridge purposes
and that is leased for those purposes to another entity whose
property is not exempt shall remain exempt, and any leasehold
interest in the property shall not be subject to taxation
under Section 9-195 of this Act;
(d) all property owned by any municipality located
outside its incorporated limits but within the same county
when used as a tuberculosis sanitarium, farm colony in
connection with a house of correction, or nursery, garden, or
farm, or for the growing of shrubs, trees, flowers,
vegetables, and plants for use in beautifying, maintaining,
and operating playgrounds, parks, parkways, public grounds,
buildings, and institutions owned or controlled by the
municipality; and
(e) all property owned by a township and operated as
senior citizen housing under Sections 35-50 through 35-50.6
of the Township Code.
All property owned by any municipality outside of its
corporate limits is exempt if used exclusively for municipal
or public purposes.
For purposes of this Section, "municipality" means a
municipality, as defined in Section 1-1-2 of the Illinois
Municipal Code.
(Source: P.A. 89-165, eff. 1-1-96; 90-176, eff. 1-1-98.)
Section 10. The Illinois Municipal Code is amended by
changing Section 8-11-6 as follows:
(65 ILCS 5/8-11-6) (from Ch. 24, par. 8-11-6)
Sec. 8-11-6. Home Rule Municipal Use Tax Act.
(a) The corporate authorities of a home rule
municipality may impose a tax upon the privilege of using, in
such municipality, any item of tangible personal property
which is purchased at retail from a retailer, and which is
titled or registered at a location within the corporate
limits of such home rule municipality with an agency of this
State's government, at a rate which is an increment of 1/4%
and based on the selling price of such tangible personal
property, as "selling price" is defined in the Use Tax Act.
In home rule municipalities with less than 2,000,000
inhabitants, the tax shall be collected by the municipality
imposing the tax from persons whose Illinois address for
titling or registration purposes is given as being in such
municipality.
(b) In home rule municipalities with 2,000,000 or more
inhabitants, the corporate authorities of the municipality
may additionally impose a tax beginning July 1, 1991 upon the
privilege of using in the municipality, any item of tangible
personal property, other than tangible personal property
titled or registered with an agency of the State's
government, that is purchased at retail from a retailer
located outside the corporate limits of the municipality, at
a rate that is an increment of 1/4% not to exceed 1% and
based on the selling price of the tangible personal property,
as "selling price" is defined in the Use Tax Act. Such tax
shall be collected from the purchaser or the retailer either
by the municipality imposing such tax or by the Department of
Revenue pursuant to an agreement between the Department and
the municipality.
To prevent multiple home rule taxation, the use in a home
rule municipality of tangible personal property that is
acquired outside the municipality and caused to be brought
into the municipality by a person who has already paid a home
rule municipal tax in another municipality in respect to the
sale, purchase, or use of that property, shall be exempt to
the extent of the amount of the tax properly due and paid in
the other home rule municipality.
(c) If a municipality having 2,000,000 or more
inhabitants imposes the tax authorized by subsection (a),
then the tax shall be collected by the Illinois Department of
Revenue when the property is purchased at retail from a
retailer in the county in which the home rule municipality
imposing the tax is located, and in all contiguous counties.
The tax shall be remitted to the State, or an exemption
determination must be obtained from the Department before the
title or certificate of registration for the property may be
issued. The tax or proof of exemption may be transmitted to
the Department by way of the State agency with which, or
State officer with whom, the tangible personal property must
be titled or registered if the Department and that agency or
State officer determine that this procedure will expedite the
processing of applications for title or registration.
The Department shall have full power to administer and
enforce this Section to collect all taxes, penalties and
interest due hereunder, to dispose of taxes, penalties and
interest so collected in the manner hereinafter provided, and
determine all rights to credit memoranda or refunds arising
on account of the erroneous payment of tax, penalty or
interest hereunder. In the administration of and compliance
with this Section the Department and persons who are subject
to this Section shall have the same rights, remedies,
privileges, immunities, powers and duties, and be subject to
the same conditions, restrictions, limitations, penalties and
definitions of terms, and employ the same modes of procedure
as are prescribed in Sections 2 (except the definition of
"retailer maintaining a place of business in this State"), 3
(except provisions pertaining to the State rate of tax, and
except provisions concerning collection or refunding of the
tax by retailers), 4, 11, 12, 12a, 14, 15, 19, 20, 21 and 22
of the Use Tax Act, which are not inconsistent with this
Section, as fully as if provisions contained in those
Sections of the Use Tax Act were set forth herein.
Whenever the Department determines that a refund shall be
made under this Section to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the order to be drawn for the
amount specified, and to the person named, in such
notification from the Department. Such refund shall be paid
by the State Treasurer out of the home rule municipal
retailers' occupation tax fund.
The Department shall forthwith pay over to the State
Treasurer, ex officio, as trustee, all taxes, penalties and
interest collected hereunder. On or before the 25th day of
each calendar month, the Department shall prepare and certify
to the State Comptroller the disbursement of stated sums of
money to named municipalities, the municipality in each
instance to be that municipality from which the Department
during the second preceding calendar month, collected
municipal use tax from any person whose Illinois address for
titling or registration purposes is given as being in such
municipality. The amount to be paid to each municipality
shall be the amount (not including credit memoranda)
collected hereunder during the second preceding calendar
month by the Department, and not including an amount equal to
the amount of refunds made during the second preceding
calendar month by the Department on behalf of such
municipality, less the amount expended during the second
preceding month by the Department to be paid from the
appropriation to the Department from the Home Rule Municipal
Retailers' Occupation Tax Trust Fund. The appropriation to
cover the costs incurred by the Department in administering
and enforcing this Section shall not exceed 2% of the amount
estimated to be deposited into the Home Rule Municipal
Retailers' Occupation Tax Trust Fund during the fiscal year
for which the appropriation is made. Within 10 days after
receipt by the State Comptroller of the disbursement
certification to the municipalities provided for in this
Section to be given to the State Comptroller by the
Department, the State Comptroller shall cause the orders to
be drawn for the respective amounts in accordance with the
directions contained in that certification.
Any ordinance imposing or discontinuing any tax to be
collected and enforced by the Department under this Section
shall be adopted and a certified copy thereof filed with the
Department on or before October 1, whereupon the Department
of Revenue shall proceed to administer and enforce this
Section on behalf of the municipalities as of January 1 next
following such adoption and filing. Beginning April 1, 1998,
any ordinance imposing or discontinuing any tax to be
collected and enforced by the Department under this Section
shall either (i) be adopted and a certified copy thereof
filed with the Department on or before April 1, whereupon the
Department of Revenue shall proceed to administer and enforce
this Section on behalf of the municipalities as of July 1
next following the adoption and filing; or (ii) be adopted
and a certified copy thereof filed with the Department on or
before October 1, whereupon the Department of Revenue shall
proceed to administer and enforce this Section on behalf of
the municipalities as of January 1 next following the
adoption and filing.
Nothing in this subsection (c) shall prevent a home rule
municipality from collecting the tax pursuant to subsection
(a) in any situation where such tax is not collected by the
Department of Revenue under this subsection (c).
(d) Any unobligated balance remaining in the Municipal
Retailers' Occupation Tax Fund on December 31, 1989, which
fund was abolished by Public Act 85-1135, and all receipts of
municipal tax as a result of audits of liability periods
prior to January 1, 1990, shall be paid into the Local
Government Tax Fund, for distribution as provided by this
Section prior to the enactment of Public Act 85-1135. All
receipts of municipal tax as a result of an assessment not
arising from an audit, for liability periods prior to January
1, 1990, shall be paid into the Local Government Tax Fund for
distribution before July 1, 1990, as provided by this Section
prior to the enactment of Public Act 85-1135, and on and
after July 1, 1990, all such receipts shall be distributed as
provided in Section 6z-18 of the State Finance Act.
(e) As used in this Section, "Municipal" and
"Municipality" means a city, village or incorporated town,
including an incorporated town which has superseded a civil
township.
(f) This Section shall be known and may be cited as the
Home Rule Municipal Use Tax Act.
(Source: P.A. 91-51, eff. 6-30-99; 92-221, eff. 8-2-01.)
Section 90. The State Mandates Act is amended by adding
Section 8.26 as follows:
(30 ILCS 805/8.26 new)
Sec. 8.26. Exempt mandate. Notwithstanding Sections 6
and 8 of this Act, no reimbursement by the State is required
for the implementation of any mandate created by this
amendatory Act of the 92nd General Assembly.
Section 99. Effective date. This Act takes effect upon
becoming law.
INDEX
Statutes amended in order of appearance
35 ILCS 5/201 from Ch. 120, par. 2-201
35 ILCS 5/202 from Ch. 120, par. 2-202
35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 5/209
35 ILCS 5/502 from Ch. 120, par. 5-502
35 ILCS 5/506 from Ch. 120, par. 5-506
35 ILCS 5/601.1 Ch. 120, par. 6-601.1
35 ILCS 5/701 from Ch. 120, par. 7-701
35 ILCS 5/905 from Ch. 120, par. 9-905
35 ILCS 5/911 from Ch. 120, par. 9-911
35 ILCS 5/1501 from Ch. 120, par. 15-1501
Passed in the General Assembly June 02, 2002.
Approved August 23, 2002.
Effective August 23, 2002.
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