Bill Text: IL SB0689 | 2019-2020 | 101st General Assembly | Chaptered


Bill Title: Amends the State Tax Preparer Oversight Act. Makes a technical change in a Section concerning the short title.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Passed) 2019-06-05 - Public Act . . . . . . . . . 101-0009 [SB0689 Detail]

Download: Illinois-2019-SB0689-Chaptered.html



Public Act 101-0009
SB0689 EnrolledLRB101 04450 HLH 49458 b
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
ARTICLE 10. AMENDATORY PROVISIONS
Section 10-3. The State Finance Act is amended by changing
Section 6z-81 as follows:
(30 ILCS 105/6z-81)
Sec. 6z-81. Healthcare Provider Relief Fund.
(a) There is created in the State treasury a special fund
to be known as the Healthcare Provider Relief Fund.
(b) The Fund is created for the purpose of receiving and
disbursing moneys in accordance with this Section.
Disbursements from the Fund shall be made only as follows:
(1) Subject to appropriation, for payment by the
Department of Healthcare and Family Services or by the
Department of Human Services of medical bills and related
expenses, including administrative expenses, for which the
State is responsible under Titles XIX and XXI of the Social
Security Act, the Illinois Public Aid Code, the Children's
Health Insurance Program Act, the Covering ALL KIDS Health
Insurance Act, and the Long Term Acute Care Hospital
Quality Improvement Transfer Program Act.
(2) For repayment of funds borrowed from other State
funds or from outside sources, including interest thereon.
(3) For State fiscal years 2017, 2018, and 2019, for
making payments to the human poison control center pursuant
to Section 12-4.105 of the Illinois Public Aid Code.
(c) The Fund shall consist of the following:
(1) Moneys received by the State from short-term
borrowing pursuant to the Short Term Borrowing Act on or
after the effective date of Public Act 96-820.
(2) All federal matching funds received by the Illinois
Department of Healthcare and Family Services as a result of
expenditures made by the Department that are attributable
to moneys deposited in the Fund.
(3) All federal matching funds received by the Illinois
Department of Healthcare and Family Services as a result of
federal approval of Title XIX State plan amendment
transmittal number 07-09.
(3.5) Proceeds from the assessment authorized under
Article V-H of the Public Aid Code.
(4) All other moneys received for the Fund from any
other source, including interest earned thereon.
(5) All federal matching funds received by the Illinois
Department of Healthcare and Family Services as a result of
expenditures made by the Department for Medical Assistance
from the General Revenue Fund, the Tobacco Settlement
Recovery Fund, the Long-Term Care Provider Fund, and the
Drug Rebate Fund related to individuals eligible for
medical assistance pursuant to the Patient Protection and
Affordable Care Act (P.L. 111-148) and Section 5-2 of the
Illinois Public Aid Code.
(d) In addition to any other transfers that may be provided
for by law, on the effective date of Public Act 97-44, or as
soon thereafter as practical, the State Comptroller shall
direct and the State Treasurer shall transfer the sum of
$365,000,000 from the General Revenue Fund into the Healthcare
Provider Relief Fund.
(e) In addition to any other transfers that may be provided
for by law, on July 1, 2011, or as soon thereafter as
practical, the State Comptroller shall direct and the State
Treasurer shall transfer the sum of $160,000,000 from the
General Revenue Fund to the Healthcare Provider Relief Fund.
(f) Notwithstanding any other State law to the contrary,
and in addition to any other transfers that may be provided for
by law, the State Comptroller shall order transferred and the
State Treasurer shall transfer $500,000,000 to the Healthcare
Provider Relief Fund from the General Revenue Fund in equal
monthly installments of $100,000,000, with the first transfer
to be made on July 1, 2012, or as soon thereafter as practical,
and with each of the remaining transfers to be made on August
1, 2012, September 1, 2012, October 1, 2012, and November 1,
2012, or as soon thereafter as practical. This transfer may
assist the Department of Healthcare and Family Services in
improving Medical Assistance bill processing timeframes or in
meeting the possible requirements of Senate Bill 3397, or other
similar legislation, of the 97th General Assembly should it
become law.
(g) Notwithstanding any other State law to the contrary,
and in addition to any other transfers that may be provided for
by law, on July 1, 2013, or as soon thereafter as may be
practical, the State Comptroller shall direct and the State
Treasurer shall transfer the sum of $601,000,000 from the
General Revenue Fund to the Healthcare Provider Relief Fund.
(Source: P.A. 99-516, eff. 6-30-16; 100-587, eff. 6-4-18.)
Section 10-5. The Illinois Income Tax Act is amended by
changing Section 203 as follows:
(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;
(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;
(D-15) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of the
Internal Revenue Code;
(D-16) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-15), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (Z) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was allowed in any taxable year to make a subtraction
modification under subparagraph (Z), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(D-17) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact that foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income under Sections 951 through 964
of the Internal Revenue Code and amounts included in
gross income under Section 78 of the Internal Revenue
Code) with respect to the stock of the same person to
whom the interest was paid, accrued, or incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract or
agreement entered into at arm's-length rates and
terms and the principal purpose for the payment is
not federal or Illinois tax avoidance; or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(D-18) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income under Sections 951 through 964 of the Internal
Revenue Code and amounts included in gross income under
Section 78 of the Internal Revenue Code) with respect
to the stock of the same person to whom the intangible
expenses and costs were directly or indirectly paid,
incurred, or accrued. The preceding sentence does not
apply to the extent that the same dividends caused a
reduction to the addition modification required under
Section 203(a)(2)(D-17) of this Act. As used in this
subparagraph, the term "intangible expenses and costs"
includes (1) expenses, losses, and costs for, or
related to, the direct or indirect acquisition, use,
maintenance or management, ownership, sale, exchange,
or any other disposition of intangible property; (2)
losses incurred, directly or indirectly, from
factoring transactions or discounting transactions;
(3) royalty, patent, technical, and copyright fees;
(4) licensing fees; and (5) other similar expenses and
costs. For purposes of this subparagraph, "intangible
property" includes patents, patent applications, trade
names, trademarks, service marks, copyrights, mask
works, trade secrets, and similar types of intangible
assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who is
subject in a foreign country or state, other than a
state which requires mandatory unitary reporting,
to a tax on or measured by net income with respect
to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if the
taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an alternative
method of apportionment under Section 304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(D-19) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the stock
of the same person to whom the premiums and costs were
directly or indirectly paid, incurred, or accrued. The
preceding sentence does not apply to the extent that
the same dividends caused a reduction to the addition
modification required under Section 203(a)(2)(D-17) or
Section 203(a)(2)(D-18) of this Act.
(D-20) For taxable years beginning on or after
January 1, 2002 and ending on or before December 31,
2006, in the case of a distribution from a qualified
tuition program under Section 529 of the Internal
Revenue Code, other than (i) a distribution from a
College Savings Pool created under Section 16.5 of the
State Treasurer Act or (ii) a distribution from the
Illinois Prepaid Tuition Trust Fund, an amount equal to
the amount excluded from gross income under Section
529(c)(3)(B). For taxable years beginning on or after
January 1, 2007, in the case of a distribution from a
qualified tuition program under Section 529 of the
Internal Revenue Code, other than (i) a distribution
from a College Savings Pool created under Section 16.5
of the State Treasurer Act, (ii) a distribution from
the Illinois Prepaid Tuition Trust Fund, or (iii) a
distribution from a qualified tuition program under
Section 529 of the Internal Revenue Code that (I)
adopts and determines that its offering materials
comply with the College Savings Plans Network's
disclosure principles and (II) has made reasonable
efforts to inform in-state residents of the existence
of in-state qualified tuition programs by informing
Illinois residents directly and, where applicable, to
inform financial intermediaries distributing the
program to inform in-state residents of the existence
of in-state qualified tuition programs at least
annually, an amount equal to the amount excluded from
gross income under Section 529(c)(3)(B).
For the purposes of this subparagraph (D-20), a
qualified tuition program has made reasonable efforts
if it makes disclosures (which may use the term
"in-state program" or "in-state plan" and need not
specifically refer to Illinois or its qualified
programs by name) (i) directly to prospective
participants in its offering materials or makes a
public disclosure, such as a website posting; and (ii)
where applicable, to intermediaries selling the
out-of-state program in the same manner that the
out-of-state program distributes its offering
materials;
(D-20.5) For taxable years beginning on or after
January 1, 2018, in the case of a distribution from a
qualified ABLE program under Section 529A of the
Internal Revenue Code, other than a distribution from a
qualified ABLE program created under Section 16.6 of
the State Treasurer Act, an amount equal to the amount
excluded from gross income under Section 529A(c)(1)(B)
of the Internal Revenue Code;
(D-21) For taxable years beginning on or after
January 1, 2007, in the case of transfer of moneys from
a qualified tuition program under Section 529 of the
Internal Revenue Code that is administered by the State
to an out-of-state program, an amount equal to the
amount of moneys previously deducted from base income
under subsection (a)(2)(Y) of this Section;
(D-21.5) For taxable years beginning on or after
January 1, 2018, in the case of the transfer of moneys
from a qualified tuition program under Section 529 or a
qualified ABLE program under Section 529A of the
Internal Revenue Code that is administered by this
State to an ABLE account established under an
out-of-state ABLE account program, an amount equal to
the contribution component of the transferred amount
that was previously deducted from base income under
subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
Section;
(D-22) For taxable years beginning on or after
January 1, 2009, and prior to January 1, 2018, in the
case of a nonqualified withdrawal or refund of moneys
from a qualified tuition program under Section 529 of
the Internal Revenue Code administered by the State
that is not used for qualified expenses at an eligible
education institution, an amount equal to the
contribution component of the nonqualified withdrawal
or refund that was previously deducted from base income
under subsection (a)(2)(y) of this Section, provided
that the withdrawal or refund did not result from the
beneficiary's death or disability. For taxable years
beginning on or after January 1, 2018: (1) in the case
of a nonqualified withdrawal or refund, as defined
under Section 16.5 of the State Treasurer Act, of
moneys from a qualified tuition program under Section
529 of the Internal Revenue Code administered by the
State, an amount equal to the contribution component of
the nonqualified withdrawal or refund that was
previously deducted from base income under subsection
(a)(2)(Y) of this Section, and (2) in the case of a
nonqualified withdrawal or refund from a qualified
ABLE program under Section 529A of the Internal Revenue
Code administered by the State that is not used for
qualified disability expenses, an amount equal to the
contribution component of the nonqualified withdrawal
or refund that was previously deducted from base income
under subsection (a)(2)(HH) of this Section;
(D-23) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(D-24) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
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 or, beginning with taxable years ending on or
after December 31, 2007, the National Guard of any
other state. 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 or,
beginning with taxable years ending on or after
December 31, 2007, the National Guard of any other
state. The provisions of this subparagraph (E) 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 a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act, and conducts
substantially all of its operations in a River Edge
Redevelopment Zone or zones. This subparagraph (J) is
exempt from the provisions of Section 250;
(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(a)(2) 265(2) of the Internal
Revenue Code, and all amounts of expenses allocable to
interest and disallowed as deductions by Section
265(a)(1) 265(1) of the Internal Revenue Code; 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, plus, for taxable years
ending on or after December 31, 2011, Section 45G(e)(3)
of the Internal Revenue Code and, for taxable years
ending on or after December 31, 2008, any amount
included in gross income under Section 87 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 or of any itemized deduction
taken from adjusted gross income in the computation of
taxable income for restoration of substantial amounts
held under claim of right for the taxable year;
(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, 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;
(Y) For taxable years beginning on or after January
1, 2002 and ending on or before December 31, 2004,
moneys contributed in the taxable year to a College
Savings Pool account under Section 16.5 of the State
Treasurer Act, except that amounts excluded from gross
income under Section 529(c)(3)(C)(i) of the Internal
Revenue Code shall not be considered moneys
contributed under this subparagraph (Y). For taxable
years beginning on or after January 1, 2005, a maximum
of $10,000 contributed in the taxable year to (i) a
College Savings Pool account under Section 16.5 of the
State Treasurer Act or (ii) the Illinois Prepaid
Tuition Trust Fund, except that amounts excluded from
gross income under Section 529(c)(3)(C)(i) of the
Internal Revenue Code shall not be considered moneys
contributed under this subparagraph (Y). For purposes
of this subparagraph, contributions made by an
employer on behalf of an employee, or matching
contributions made by an employee, shall be treated as
made by the employee. This subparagraph (Y) is exempt
from the provisions of Section 250;
(Z) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not including
the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied by
0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0.
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (Z) is exempt from the provisions of
Section 250;
(AA) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-15), then
an amount equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (D-15), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction under
this subparagraph only once with respect to any one
piece of property.
This subparagraph (AA) is exempt from the
provisions of Section 250;
(BB) Any amount included in adjusted gross income,
other than salary, received by a driver in a
ridesharing arrangement using a motor vehicle;
(CC) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction with
a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of that addition modification, and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer that
is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of that
addition modification. This subparagraph (CC) is
exempt from the provisions of Section 250;
(DD) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(a)(2)(D-17) for
interest paid, accrued, or incurred, directly or
indirectly, to the same person. This subparagraph (DD)
is exempt from the provisions of Section 250;
(EE) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(a)(2)(D-18) for
intangible expenses and costs paid, accrued, or
incurred, directly or indirectly, to the same foreign
person. This subparagraph (EE) is exempt from the
provisions of Section 250;
(FF) An amount equal to any amount awarded to the
taxpayer during the taxable year by the Court of Claims
under subsection (c) of Section 8 of the Court of
Claims Act for time unjustly served in a State prison.
This subparagraph (FF) is exempt from the provisions of
Section 250;
(GG) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(a)(2)(D-19), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense or
loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer makes
the election provided for by this subparagraph (GG),
the insurer to which the premiums were paid must add
back to income the amount subtracted by the taxpayer
pursuant to this subparagraph (GG). This subparagraph
(GG) is exempt from the provisions of Section 250; and
(HH) For taxable years beginning on or after
January 1, 2018 and prior to January 1, 2023, a maximum
of $10,000 contributed in the taxable year to a
qualified ABLE account under Section 16.6 of the State
Treasurer Act, except that amounts excluded from gross
income under Section 529(c)(3)(C)(i) or Section
529A(c)(1)(C) of the Internal Revenue Code shall not be
considered moneys contributed under this subparagraph
(HH). For purposes of this subparagraph (HH),
contributions made by an employer on behalf of an
employee, or matching contributions made by an
employee, shall be treated as made by the employee.
(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;
(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;
(E-10) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of the
Internal Revenue Code;
(E-11) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (E-10), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (T) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was allowed in any taxable year to make a subtraction
modification under subparagraph (T), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(E-12) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact the foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of the
same person to whom the interest was paid, accrued, or
incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract or
agreement entered into at arm's-length rates and
terms and the principal purpose for the payment is
not federal or Illinois tax avoidance; or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(E-13) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(b)(2)(E-12) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who is
subject in a foreign country or state, other than a
state which requires mandatory unitary reporting,
to a tax on or measured by net income with respect
to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if the
taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an alternative
method of apportionment under Section 304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(E-14) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the stock
of the same person to whom the premiums and costs were
directly or indirectly paid, incurred, or accrued. The
preceding sentence does not apply to the extent that
the same dividends caused a reduction to the addition
modification required under Section 203(b)(2)(E-12) or
Section 203(b)(2)(E-13) of this Act;
(E-15) For taxable years beginning after December
31, 2008, any deduction for dividends paid by a captive
real estate investment trust that is allowed to a real
estate investment trust under Section 857(b)(2)(B) of
the Internal Revenue Code for dividends paid;
(E-16) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(E-17) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
(E-18) for taxable years beginning after December
31, 2018, an amount equal to the deduction allowed
under Section 250(a)(1)(A) of the Internal Revenue
Code for the taxable year.
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, and all amounts of expenses allocable to
interest and disallowed as deductions by Section
265(a)(1) of the Internal Revenue Code; 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, plus,
for tax years ending on or after December 31, 2011,
amounts disallowed as deductions by Section 45G(e)(3)
of the Internal Revenue Code and, for taxable years
ending on or after December 31, 2008, any amount
included in gross income under Section 87 of the
Internal Revenue Code and the policyholders' share of
tax-exempt interest of a life insurance company under
Section 807(a)(2)(B) of the Internal Revenue Code (in
the case of a life insurance company with gross income
from a decrease in reserves for the tax year) or
Section 807(b)(1)(B) of the Internal Revenue Code (in
the case of a life insurance company allowed a
deduction for an increase in reserves for the tax
year); 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 a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations in a River Edge Redevelopment
Zone or zones. This subparagraph (K) is exempt from the
provisions of Section 250;
(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 River Edge
Redevelopment 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 River
Edge Redevelopment Zone. The subtraction modification
available to the 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. This subparagraph (M) is
exempt from the provisions of Section 250;
(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 Economic Opportunity under
Section 11 of the Illinois Enterprise Zone Act or under
Section 10-10 of the River Edge Redevelopment Zone Act.
This subparagraph (N) is exempt from the provisions of
Section 250;
(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 965 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,
and including, for taxable years ending on or after
December 31, 2008, dividends received from a captive
real estate investment trust; 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 and including,
for taxable years ending on or after December 31, 2008,
dividends received from a captive real estate
investment trust, 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. This subparagraph (O) is exempt from
the provisions of Section 250 of this Act;
(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;
(R) On and after July 20, 1999, 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; the provisions of
this subparagraph are exempt from the provisions of
Section 250;
(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;
(T) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not including
the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied by
0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0.
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (T) is exempt from the provisions of
Section 250;
(U) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (E-10), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (E-10), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction under
this subparagraph only once with respect to any one
piece of property.
This subparagraph (U) is exempt from the
provisions of Section 250;
(V) The amount of: (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction with
a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification, (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer that
is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification, and (iii) any insurance premium
income (net of deductions allocable thereto) taken
into account for the taxable year with respect to a
transaction with a taxpayer that is required to make an
addition modification with respect to such transaction
under Section 203(a)(2)(D-19), Section
203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
203(d)(2)(D-9), but not to exceed the amount of that
addition modification. This subparagraph (V) is exempt
from the provisions of Section 250;
(W) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(b)(2)(E-12) for
interest paid, accrued, or incurred, directly or
indirectly, to the same person. This subparagraph (W)
is exempt from the provisions of Section 250;
(X) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(b)(2)(E-13) for
intangible expenses and costs paid, accrued, or
incurred, directly or indirectly, to the same foreign
person. This subparagraph (X) is exempt from the
provisions of Section 250;
(Y) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(b)(2)(E-14), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense or
loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer makes
the election provided for by this subparagraph (Y), the
insurer to which the premiums were paid must add back
to income the amount subtracted by the taxpayer
pursuant to this subparagraph (Y). This subparagraph
(Y) is exempt from the provisions of Section 250; and
(Z) The difference between the nondeductible
controlled foreign corporation dividends under Section
965(e)(3) of the Internal Revenue Code over the taxable
income of the taxpayer, computed without regard to
Section 965(e)(2)(A) of the Internal Revenue Code, and
without regard to any net operating loss deduction.
This subparagraph (Z) 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, and prior
to December 31, 2011, shall mean the gross investment
income for the taxable year and, for tax years ending on or
after December 31, 2011, shall mean all amounts included in
life insurance gross income under Section 803(a)(3) of the
Internal Revenue Code.
(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;
(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;
(G-10) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of the
Internal Revenue Code; and
(G-11) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (G-10), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (R) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was allowed in any taxable year to make a subtraction
modification under subparagraph (R), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(G-12) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact that the foreign person's business activity
outside the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of the
same person to whom the interest was paid, accrued, or
incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract or
agreement entered into at arm's-length rates and
terms and the principal purpose for the payment is
not federal or Illinois tax avoidance; or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(G-13) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(c)(2)(G-12) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes: (1)
expenses, losses, and costs for or related to the
direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other
disposition of intangible property; (2) losses
incurred, directly or indirectly, from factoring
transactions or discounting transactions; (3) royalty,
patent, technical, and copyright fees; (4) licensing
fees; and (5) other similar expenses and costs. For
purposes of this subparagraph, "intangible property"
includes patents, patent applications, trade names,
trademarks, service marks, copyrights, mask works,
trade secrets, and similar types of intangible assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who is
subject in a foreign country or state, other than a
state which requires mandatory unitary reporting,
to a tax on or measured by net income with respect
to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if the
taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an alternative
method of apportionment under Section 304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(G-14) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the stock
of the same person to whom the premiums and costs were
directly or indirectly paid, incurred, or accrued. The
preceding sentence does not apply to the extent that
the same dividends caused a reduction to the addition
modification required under Section 203(c)(2)(G-12) or
Section 203(c)(2)(G-13) of this Act;
(G-15) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(G-16) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
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,
and all amounts of expenses allocable to interest and
disallowed as deductions by Section 265(a)(1) 265(1)
of the Internal Revenue Code; 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, plus, (iii) for taxable years
ending on or after December 31, 2011, Section 45G(e)(3)
of the Internal Revenue Code and, for taxable years
ending on or after December 31, 2008, any amount
included in gross income under Section 87 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 a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations in a River Edge Redevelopment
Zone or zones. This subparagraph (M) is exempt from the
provisions of Section 250;
(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;
(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;
(R) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not including
the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied by
0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0.
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (R) is exempt from the provisions of
Section 250;
(S) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (G-10), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (G-10), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction under
this subparagraph only once with respect to any one
piece of property.
This subparagraph (S) is exempt from the
provisions of Section 250;
(T) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction with
a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer that
is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification. This subparagraph (T) is exempt
from the provisions of Section 250;
(U) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(c)(2)(G-12) for
interest paid, accrued, or incurred, directly or
indirectly, to the same person. This subparagraph (U)
is exempt from the provisions of Section 250;
(V) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(c)(2)(G-13) for
intangible expenses and costs paid, accrued, or
incurred, directly or indirectly, to the same foreign
person. This subparagraph (V) is exempt from the
provisions of Section 250;
(W) in the case of an estate, 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 by the
decedent from adjusted gross income in the computation
of taxable income. This subparagraph (W) is exempt from
Section 250;
(X) an amount equal to the refund included in such
total of any tax deducted for federal income tax
purposes, to the extent that deduction was added back
under subparagraph (F). This subparagraph (X) is
exempt from the provisions of Section 250; and
(Y) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(c)(2)(G-14), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense or
loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer makes
the election provided for by this subparagraph (Y), the
insurer to which the premiums were paid must add back
to income the amount subtracted by the taxpayer
pursuant to this subparagraph (Y). This subparagraph
(Y) is exempt from the provisions of Section 250; and .
(Z) For taxable years beginning after December 31,
2018 and before January 1, 2026, the amount of excess
business loss of the taxpayer disallowed as a deduction
by Section 461(l)(1)(B) of the Internal Revenue Code.
(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;
(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;
(D-5) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of the
Internal Revenue Code;
(D-6) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-5), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (O) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was allowed in any taxable year to make a subtraction
modification under subparagraph (O), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(D-7) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact the foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of the
same person to whom the interest was paid, accrued, or
incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract or
agreement entered into at arm's-length rates and
terms and the principal purpose for the payment is
not federal or Illinois tax avoidance; or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act; and
(D-8) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(d)(2)(D-7) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets;
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who is
subject in a foreign country or state, other than a
state which requires mandatory unitary reporting,
to a tax on or measured by net income with respect
to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if the
taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an alternative
method of apportionment under Section 304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(D-9) For taxable years ending on or after December
31, 2008, an amount equal to the amount of insurance
premium expenses and costs otherwise allowed as a
deduction in computing base income, and that were paid,
accrued, or incurred, directly or indirectly, to a
person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the stock
of the same person to whom the premiums and costs were
directly or indirectly paid, incurred, or accrued. The
preceding sentence does not apply to the extent that
the same dividends caused a reduction to the addition
modification required under Section 203(d)(2)(D-7) or
Section 203(d)(2)(D-8) of this Act;
(D-10) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(D-11) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
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;
this subparagraph (H) is exempt from the provisions of
Section 250;
(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; this subparagraph
(I) is exempt from the provisions of Section 250;
(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(a)(2) 265(2) of the Internal
Revenue Code, and all amounts of expenses allocable to
interest and disallowed as deductions by Section
265(a)(1) 265(1) of the Internal Revenue Code; 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, plus, (iii) for taxable
years ending on or after December 31, 2011, Section
45G(e)(3) of the Internal Revenue Code and, for taxable
years ending on or after December 31, 2008, any amount
included in gross income under Section 87 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 a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations from a River Edge Redevelopment
Zone or zones. This subparagraph (K) is exempt from the
provisions of Section 250;
(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);
(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;
(O) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not including
the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied by
0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0.
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (O) is exempt from the provisions of
Section 250;
(P) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (D-5), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (D-5), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction under
this subparagraph only once with respect to any one
piece of property.
This subparagraph (P) is exempt from the
provisions of Section 250;
(Q) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction with
a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer that
is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification. This subparagraph (Q) is exempt
from Section 250;
(R) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(d)(2)(D-7) for interest
paid, accrued, or incurred, directly or indirectly, to
the same person. This subparagraph (R) is exempt from
Section 250;
(S) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(d)(2)(D-8) for
intangible expenses and costs paid, accrued, or
incurred, directly or indirectly, to the same person.
This subparagraph (S) is exempt from Section 250; and
(T) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(d)(2)(D-9), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense or
loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer makes
the election provided for by this subparagraph (T), the
insurer to which the premiums were paid must add back
to income the amount subtracted by the taxpayer
pursuant to this subparagraph (T). This subparagraph
(T) is exempt from the provisions of Section 250.
(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, but without regard to the prohibition
against offsetting losses from patronage activities
against income from nonpatronage activities; except
that a cooperative corporation or association may make
an election to follow its federal income tax treatment
of patronage losses and nonpatronage losses. In the
event such election is made, such losses shall be
computed and carried over in a manner consistent with
subsection (a) of Section 207 of this Act and
apportioned by the apportionment factor reported by
the cooperative on its Illinois income tax return filed
for the taxable year in which the losses are incurred.
The election shall be effective for all taxable years
with original returns due on or after the date of the
election. In addition, the cooperative may file an
amended return or returns, as allowed under this Act,
to provide that the election shall be effective for
losses incurred or carried forward for taxable years
occurring prior to the date of the election. Once made,
the election may only be revoked upon approval of the
Director. The Department shall adopt rules setting
forth requirements for documenting the elections and
any resulting Illinois net loss and the standards to be
used by the Director in evaluating requests to revoke
elections. Public Act 96-932 is declaratory of
existing law;
(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.
(3) Recapture of business expenses on disposition of
asset or business. Notwithstanding any other law to the
contrary, if in prior years income from an asset or
business has been classified as business income and in a
later year is demonstrated to be non-business income, then
all expenses, without limitation, deducted in such later
year and in the 2 immediately preceding taxable years
related to that asset or business that generated the
non-business income shall be added back and recaptured as
business income in the year of the disposition of the asset
or business. Such amount shall be apportioned to Illinois
using the greater of the apportionment fraction computed
for the business under Section 304 of this Act for the
taxable year or the average of the apportionment fractions
computed for the business under Section 304 of this Act for
the taxable year and for the 2 immediately preceding
taxable years.
(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. 100-22, eff. 7-6-17; 100-905, eff. 8-17-18;
revised 10-29-18.)
Section 10-10. The Use Tax Act is amended by changing
Section 2 and by adding Section 2d as follows:
(35 ILCS 105/2) (from Ch. 120, par. 439.2)
Sec. 2. Definitions.
"Use" means the exercise by any person of any right or
power over tangible personal property incident to the ownership
of that property, except that it does not include the sale of
such property in any form as tangible personal property in the
regular course of business to the extent that such property is
not first subjected to a use for which it was purchased, and
does not include the use of such property by its owner for
demonstration purposes: Provided that the property purchased
is deemed to be purchased for the purpose of resale, despite
first being used, to the extent to which it is resold as an
ingredient of an intentionally produced product or by-product
of manufacturing. "Use" does not mean the demonstration use or
interim use of tangible personal property by a retailer before
he sells that tangible personal property. For watercraft or
aircraft, if the period of demonstration use or interim use by
the retailer exceeds 18 months, the retailer shall pay on the
retailers' original cost price the tax imposed by this Act, and
no credit for that tax is permitted if the watercraft or
aircraft is subsequently sold by the retailer. "Use" does not
mean the physical incorporation of tangible personal property,
to the extent not first subjected to a use for which it was
purchased, as an ingredient or constituent, into other tangible
personal property (a) which is sold in the regular course of
business or (b) which the person incorporating such ingredient
or constituent therein has undertaken at the time of such
purchase to cause to be transported in interstate commerce to
destinations outside the State of Illinois: Provided that the
property purchased is deemed to be purchased for the purpose of
resale, despite first being used, to the extent to which it is
resold as an ingredient of an intentionally produced product or
by-product of manufacturing.
"Watercraft" means a Class 2, Class 3, or Class 4
watercraft as defined in Section 3-2 of the Boat Registration
and Safety Act, a personal watercraft, or any boat equipped
with an inboard motor.
"Purchase at retail" means the acquisition of the ownership
of or title to tangible personal property through a sale at
retail.
"Purchaser" means anyone who, through a sale at retail,
acquires the ownership of tangible personal property for a
valuable consideration.
"Sale at retail" means any transfer of the ownership of or
title to tangible personal property to a purchaser, for the
purpose of use, and not for the purpose of resale in any form
as tangible personal property to the extent not first subjected
to a use for which it was purchased, for a valuable
consideration: Provided that the property purchased is deemed
to be purchased for the purpose of resale, despite first being
used, to the extent to which it is resold as an ingredient of
an intentionally produced product or by-product of
manufacturing. For this purpose, slag produced as an incident
to manufacturing pig iron or steel and sold is considered to be
an intentionally produced by-product of manufacturing. "Sale
at retail" includes any such transfer made for resale unless
made in compliance with Section 2c of the Retailers' Occupation
Tax Act, as incorporated by reference into Section 12 of this
Act. Transactions whereby the possession of the property is
transferred but the seller retains the title as security for
payment of the selling price are sales.
"Sale at retail" shall also be construed to include any
Illinois florist's sales transaction in which the purchase
order is received in Illinois by a florist and the sale is for
use or consumption, but the Illinois florist has a florist in
another state deliver the property to the purchaser or the
purchaser's donee in such other state.
Nonreusable tangible personal property that is used by
persons engaged in the business of operating a restaurant,
cafeteria, or drive-in is a sale for resale when it is
transferred to customers in the ordinary course of business as
part of the sale of food or beverages and is used to deliver,
package, or consume food or beverages, regardless of where
consumption of the food or beverages occurs. Examples of those
items include, but are not limited to nonreusable, paper and
plastic cups, plates, baskets, boxes, sleeves, buckets or other
containers, utensils, straws, placemats, napkins, doggie bags,
and wrapping or packaging materials that are transferred to
customers as part of the sale of food or beverages in the
ordinary course of business.
The purchase, employment and transfer of such tangible
personal property as newsprint and ink for the primary purpose
of conveying news (with or without other information) is not a
purchase, use or sale of tangible personal property.
"Selling price" means the consideration for a sale valued
in money whether received in money or otherwise, including
cash, credits, property other than as hereinafter provided, and
services, but not including the value of or credit given for
traded-in tangible personal property where the item that is
traded-in is of like kind and character as that which is being
sold, and shall be determined without any deduction on account
of the cost of the property sold, the cost of materials used,
labor or service cost or any other expense whatsoever, but does
not include interest or finance charges which appear as
separate items on the bill of sale or sales contract nor
charges that are added to prices by sellers on account of the
seller's tax liability under the "Retailers' Occupation Tax
Act", or on account of the seller's duty to collect, from the
purchaser, the tax that is imposed by this Act, or, except as
otherwise provided with respect to any cigarette tax imposed by
a home rule unit, on account of the seller's tax liability
under any local occupation tax administered by the Department,
or, except as otherwise provided with respect to any cigarette
tax imposed by a home rule unit on account of the seller's duty
to collect, from the purchasers, the tax that is imposed under
any local use tax administered by the Department. Effective
December 1, 1985, "selling price" shall include charges that
are added to prices by sellers on account of the seller's tax
liability under the Cigarette Tax Act, on account of the
seller's duty to collect, from the purchaser, the tax imposed
under the Cigarette Use Tax Act, and on account of the seller's
duty to collect, from the purchaser, any cigarette tax imposed
by a home rule unit.
Notwithstanding any law to the contrary, for any motor
vehicle, as defined in Section 1-146 of the Vehicle Code, that
is sold on or after January 1, 2015 for the purpose of leasing
the vehicle for a defined period that is longer than one year
and (1) is a motor vehicle of the second division that: (A) is
a self-contained motor vehicle designed or permanently
converted to provide living quarters for recreational,
camping, or travel use, with direct walk through access to the
living quarters from the driver's seat; (B) is of the van
configuration designed for the transportation of not less than
7 nor more than 16 passengers; or (C) has a gross vehicle
weight rating of 8,000 pounds or less or (2) is a motor vehicle
of the first division, "selling price" or "amount of sale"
means the consideration received by the lessor pursuant to the
lease contract, including amounts due at lease signing and all
monthly or other regular payments charged over the term of the
lease. Also included in the selling price is any amount
received by the lessor from the lessee for the leased vehicle
that is not calculated at the time the lease is executed,
including, but not limited to, excess mileage charges and
charges for excess wear and tear. For sales that occur in
Illinois, with respect to any amount received by the lessor
from the lessee for the leased vehicle that is not calculated
at the time the lease is executed, the lessor who purchased the
motor vehicle does not incur the tax imposed by the Use Tax Act
on those amounts, and the retailer who makes the retail sale of
the motor vehicle to the lessor is not required to collect the
tax imposed by this Act or to pay the tax imposed by the
Retailers' Occupation Tax Act on those amounts. However, the
lessor who purchased the motor vehicle assumes the liability
for reporting and paying the tax on those amounts directly to
the Department in the same form (Illinois Retailers' Occupation
Tax, and local retailers' occupation taxes, if applicable) in
which the retailer would have reported and paid such tax if the
retailer had accounted for the tax to the Department. For
amounts received by the lessor from the lessee that are not
calculated at the time the lease is executed, the lessor must
file the return and pay the tax to the Department by the due
date otherwise required by this Act for returns other than
transaction returns. If the retailer is entitled under this Act
to a discount for collecting and remitting the tax imposed
under this Act to the Department with respect to the sale of
the motor vehicle to the lessor, then the right to the discount
provided in this Act shall be transferred to the lessor with
respect to the tax paid by the lessor for any amount received
by the lessor from the lessee for the leased vehicle that is
not calculated at the time the lease is executed; provided that
the discount is only allowed if the return is timely filed and
for amounts timely paid. The "selling price" of a motor vehicle
that is sold on or after January 1, 2015 for the purpose of
leasing for a defined period of longer than one year shall not
be reduced by the value of or credit given for traded-in
tangible personal property owned by the lessor, nor shall it be
reduced by the value of or credit given for traded-in tangible
personal property owned by the lessee, regardless of whether
the trade-in value thereof is assigned by the lessee to the
lessor. In the case of a motor vehicle that is sold for the
purpose of leasing for a defined period of longer than one
year, the sale occurs at the time of the delivery of the
vehicle, regardless of the due date of any lease payments. A
lessor who incurs a Retailers' Occupation Tax liability on the
sale of a motor vehicle coming off lease may not take a credit
against that liability for the Use Tax the lessor paid upon the
purchase of the motor vehicle (or for any tax the lessor paid
with respect to any amount received by the lessor from the
lessee for the leased vehicle that was not calculated at the
time the lease was executed) if the selling price of the motor
vehicle at the time of purchase was calculated using the
definition of "selling price" as defined in this paragraph.
Notwithstanding any other provision of this Act to the
contrary, lessors shall file all returns and make all payments
required under this paragraph to the Department by electronic
means in the manner and form as required by the Department.
This paragraph does not apply to leases of motor vehicles for
which, at the time the lease is entered into, the term of the
lease is not a defined period, including leases with a defined
initial period with the option to continue the lease on a
month-to-month or other basis beyond the initial defined
period.
The phrase "like kind and character" shall be liberally
construed (including but not limited to any form of motor
vehicle for any form of motor vehicle, or any kind of farm or
agricultural implement for any other kind of farm or
agricultural implement), while not including a kind of item
which, if sold at retail by that retailer, would be exempt from
retailers' occupation tax and use tax as an isolated or
occasional sale.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint adventure, public or
private corporation, limited liability company, or a receiver,
executor, trustee, guardian or other representative appointed
by order of any court.
"Retailer" means and includes every person engaged in the
business of making sales at retail as defined in this Section.
A person who holds himself or herself out as being engaged
(or who habitually engages) in selling tangible personal
property at retail is a retailer hereunder with respect to such
sales (and not primarily in a service occupation)
notwithstanding the fact that such person designs and produces
such tangible personal property on special order for the
purchaser and in such a way as to render the property of value
only to such purchaser, if such tangible personal property so
produced on special order serves substantially the same
function as stock or standard items of tangible personal
property that are sold at retail.
A person whose activities are organized and conducted
primarily as a not-for-profit service enterprise, and who
engages in selling tangible personal property at retail
(whether to the public or merely to members and their guests)
is a retailer with respect to such transactions, excepting only
a person organized and operated exclusively for charitable,
religious or educational purposes either (1), to the extent of
sales by such person to its members, students, patients or
inmates of tangible personal property to be used primarily for
the purposes of such person, or (2), to the extent of sales by
such person of tangible personal property which is not sold or
offered for sale by persons organized for profit. The selling
of school books and school supplies by schools at retail to
students is not "primarily for the purposes of" the school
which does such selling. This paragraph does not apply to nor
subject to taxation occasional dinners, social or similar
activities of a person organized and operated exclusively for
charitable, religious or educational purposes, whether or not
such activities are open to the public.
A person who is the recipient of a grant or contract under
Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
serves meals to participants in the federal Nutrition Program
for the Elderly in return for contributions established in
amount by the individual participant pursuant to a schedule of
suggested fees as provided for in the federal Act is not a
retailer under this Act with respect to such transactions.
Persons who engage in the business of transferring tangible
personal property upon the redemption of trading stamps are
retailers hereunder when engaged in such business.
The isolated or occasional sale of tangible personal
property at retail by a person who does not hold himself out as
being engaged (or who does not habitually engage) in selling
such tangible personal property at retail or a sale through a
bulk vending machine does not make such person a retailer
hereunder. However, any person who is engaged in a business
which is not subject to the tax imposed by the "Retailers'
Occupation Tax Act" because of involving the sale of or a
contract to sell real estate or a construction contract to
improve real estate, but who, in the course of conducting such
business, transfers tangible personal property to users or
consumers in the finished form in which it was purchased, and
which does not become real estate, under any provision of a
construction contract or real estate sale or real estate sales
agreement entered into with some other person arising out of or
because of such nontaxable business, is a retailer to the
extent of the value of the tangible personal property so
transferred. If, in such transaction, a separate charge is made
for the tangible personal property so transferred, the value of
such property, for the purposes of this Act, is the amount so
separately charged, but not less than the cost of such property
to the transferor; if no separate charge is made, the value of
such property, for the purposes of this Act, is the cost to the
transferor of such tangible personal property.
"Retailer maintaining a place of business in this State",
or any like term, means and includes any of the following
retailers:
(1) A retailer having or maintaining within this State,
directly or by a subsidiary, an office, distribution house,
sales house, warehouse or other place of business, or any
agent or other representative operating within this State
under the authority of the retailer or its subsidiary,
irrespective of whether such place of business or agent or
other representative is located here permanently or
temporarily, or whether such retailer or subsidiary is
licensed to do business in this State. However, the
ownership of property that is located at the premises of a
printer with which the retailer has contracted for printing
and that consists of the final printed product, property
that becomes a part of the final printed product, or copy
from which the printed product is produced shall not result
in the retailer being deemed to have or maintain an office,
distribution house, sales house, warehouse, or other place
of business within this State.
(1.1) A retailer having a contract with a person
located in this State under which the person, for a
commission or other consideration based upon the sale of
tangible personal property by the retailer, directly or
indirectly refers potential customers to the retailer by
providing to the potential customers a promotional code or
other mechanism that allows the retailer to track purchases
referred by such persons. Examples of mechanisms that allow
the retailer to track purchases referred by such persons
include but are not limited to the use of a link on the
person's Internet website, promotional codes distributed
through the person's hand-delivered or mailed material,
and promotional codes distributed by the person through
radio or other broadcast media. The provisions of this
paragraph (1.1) shall apply only if the cumulative gross
receipts from sales of tangible personal property by the
retailer to customers who are referred to the retailer by
all persons in this State under such contracts exceed
$10,000 during the preceding 4 quarterly periods ending on
the last day of March, June, September, and December. A
retailer meeting the requirements of this paragraph (1.1)
shall be presumed to be maintaining a place of business in
this State but may rebut this presumption by submitting
proof that the referrals or other activities pursued within
this State by such persons were not sufficient to meet the
nexus standards of the United States Constitution during
the preceding 4 quarterly periods.
(1.2) Beginning July 1, 2011, a retailer having a
contract with a person located in this State under which:
(A) the retailer sells the same or substantially
similar line of products as the person located in this
State and does so using an identical or substantially
similar name, trade name, or trademark as the person
located in this State; and
(B) the retailer provides a commission or other
consideration to the person located in this State based
upon the sale of tangible personal property by the
retailer.
The provisions of this paragraph (1.2) shall apply only if
the cumulative gross receipts from sales of tangible
personal property by the retailer to customers in this
State under all such contracts exceed $10,000 during the
preceding 4 quarterly periods ending on the last day of
March, June, September, and December.
(2) A retailer soliciting orders for tangible personal
property by means of a telecommunication or television
shopping system (which utilizes toll free numbers) which is
intended by the retailer to be broadcast by cable
television or other means of broadcasting, to consumers
located in this State.
(3) A retailer, pursuant to a contract with a
broadcaster or publisher located in this State, soliciting
orders for tangible personal property by means of
advertising which is disseminated primarily to consumers
located in this State and only secondarily to bordering
jurisdictions.
(4) A retailer soliciting orders for tangible personal
property by mail if the solicitations are substantial and
recurring and if the retailer benefits from any banking,
financing, debt collection, telecommunication, or
marketing activities occurring in this State or benefits
from the location in this State of authorized installation,
servicing, or repair facilities.
(5) A retailer that is owned or controlled by the same
interests that own or control any retailer engaging in
business in the same or similar line of business in this
State.
(6) A retailer having a franchisee or licensee
operating under its trade name if the franchisee or
licensee is required to collect the tax under this Section.
(7) A retailer, pursuant to a contract with a cable
television operator located in this State, soliciting
orders for tangible personal property by means of
advertising which is transmitted or distributed over a
cable television system in this State.
(8) A retailer engaging in activities in Illinois,
which activities in the state in which the retail business
engaging in such activities is located would constitute
maintaining a place of business in that state.
(9) Beginning October 1, 2018, a retailer making sales
of tangible personal property to purchasers in Illinois
from outside of Illinois if:
(A) the cumulative gross receipts from sales of
tangible personal property to purchasers in Illinois
are $100,000 or more; or
(B) the retailer enters into 200 or more separate
transactions for the sale of tangible personal
property to purchasers in Illinois.
The retailer shall determine on a quarterly basis,
ending on the last day of March, June, September, and
December, whether he or she meets the criteria of either
subparagraph (A) or (B) of this paragraph (9) for the
preceding 12-month period. If the retailer meets the
criteria of either subparagraph (A) or (B) for a 12-month
period, he or she is considered a retailer maintaining a
place of business in this State and is required to collect
and remit the tax imposed under this Act and file returns
for one year. At the end of that one-year period, the
retailer shall determine whether the retailer met the
criteria of either subparagraph (A) or (B) during the
preceding 12-month period. If the retailer met the criteria
in either subparagraph (A) or (B) for the preceding
12-month period, he or she is considered a retailer
maintaining a place of business in this State and is
required to collect and remit the tax imposed under this
Act and file returns for the subsequent year. If at the end
of a one-year period a retailer that was required to
collect and remit the tax imposed under this Act determines
that he or she did not meet the criteria in either
subparagraph (A) or (B) during the preceding 12-month
period, the retailer shall subsequently determine on a
quarterly basis, ending on the last day of March, June,
September, and December, whether he or she meets the
criteria of either subparagraph (A) or (B) for the
preceding 12-month period.
Beginning January 1, 2020, neither the gross receipts
from nor the number of separate transactions for sales of
tangible personal property to purchasers in Illinois that a
retailer makes through a marketplace facilitator and for
which the retailer has received a certification from the
marketplace facilitator pursuant to Section 2d of this Act
shall be included for purposes of determining whether he or
she has met the thresholds of this paragraph (9).
(10) Beginning January 1, 2020, a marketplace
facilitator, as defined in Section 2d of this Act.
"Bulk vending machine" means a vending machine, containing
unsorted confections, nuts, toys, or other items designed
primarily to be used or played with by children which, when a
coin or coins of a denomination not larger than $0.50 are
inserted, are dispensed in equal portions, at random and
without selection by the customer.
(Source: P.A. 99-78, eff. 7-20-15; 100-587, eff. 6-4-18.)
(35 ILCS 105/2d new)
Sec. 2d. Marketplace facilitators and marketplace sellers.
(a) As used in this Section:
"Affiliate" means a person that, with respect to another
person: (i) has a direct or indirect ownership interest of more
than 5 percent in the other person; or (ii) is related to the
other person because a third person, or a group of third
persons who are affiliated with each other as defined in this
subsection, holds a direct or indirect ownership interest of
more than 5% in the related person.
"Marketplace" means a physical or electronic place, forum,
platform, application, or other method by which a marketplace
seller sells or offers to sell items.
"Marketplace facilitator" means a person who, pursuant to
an agreement with a marketplace seller, facilitates sales of
tangible personal property by that marketplace seller. A person
facilitates a sale of tangible personal property by, directly
or indirectly through one or more affiliates, doing both of the
following: (i) listing or otherwise making available for sale
the tangible personal property of the marketplace seller
through a marketplace owned or operated by the marketplace
facilitator; and (ii) processing sales or payments for
marketplace sellers.
"Marketplace seller" means a person that sells or offers to
sell tangible personal property through a marketplace.
(b) Beginning on January 1, 2020, a marketplace facilitator
who meets either of the following criteria is considered the
retailer of each sale of tangible personal property made on the
marketplace:
(1) the cumulative gross receipts from sales of
tangible personal property to purchasers in Illinois by the
marketplace facilitator and by marketplace sellers are
$100,000 or more; or
(2) the marketplace facilitator and marketplace
sellers cumulatively enter into 200 or more separate
transactions for the sale of tangible personal property to
purchasers in Illinois.
A marketplace facilitator shall determine on a quarterly
basis, ending on the last day of March, June, September, and
December, whether he or she meets the criteria of either
paragraph (1) or (2) of this subsection (b) for the preceding
12-month period. If the marketplace facilitator meets the
criteria of either paragraph (1) or (2) for a 12-month period,
he or she is considered a retailer maintaining a place of
business in this State and is required to collect and remit the
tax imposed under this Act and file returns for one year. At
the end of that one-year period, the marketplace facilitator
shall determine whether the marketplace facilitator met the
criteria of either paragraph (1) or (2) during the preceding
12-month period. If the marketplace facilitator met the
criteria in either paragraph (1) or (2) for the preceding
12-month period, he or she is considered a retailer maintaining
a place of business in this State and is required to collect
and remit the tax imposed under this Act and file returns for
the subsequent year. If at the end of a one-year period a
marketplace facilitator that was required to collect and remit
the tax imposed under this Act determines that he or she did
not meet the criteria in either paragraph (1) or (2) during the
preceding 12-month period, the marketplace facilitator shall
subsequently determine on a quarterly basis, ending on the last
day of March, June, September, and December, whether he or she
meets the criteria of either paragraph (1) or (2) for the
preceding 12-month period.
(c) A marketplace facilitator that meets either of the
thresholds in subsection (b) of this Section is considered the
retailer of each sale made through its marketplace and is
liable for collecting and remitting the tax under this Act on
all such sales. The marketplace facilitator has all the rights
and duties, and is required to comply with the same
requirements and procedures, as all other retailers
maintaining a place of business in this State who are
registered or who are required to be registered to collect and
remit the tax imposed by this Act.
(d) A marketplace facilitator shall:
(1) certify to each marketplace seller that the
marketplace facilitator assumes the rights and duties of a
retailer under this Act with respect to sales made by the
marketplace seller through the marketplace; and
(2) collect taxes imposed by this Act as required by
Section 3-45 of this Act for sales made through the
marketplace.
(e) A marketplace seller shall retain books and records for
all sales made through a marketplace in accordance with the
requirements of Section 11.
(f) A marketplace seller shall furnish to the marketplace
facilitator information that is necessary for the marketplace
facilitator to correctly collect and remit taxes for a retail
sale. The information may include a certification that an item
being sold is taxable, not taxable, exempt from taxation, or
taxable at a specified rate. A marketplace seller shall be held
harmless for liability for the tax imposed under this Act when
a marketplace facilitator fails to correctly collect and remit
tax after having been provided with information by a
marketplace seller to correctly collect and remit taxes imposed
under this Act.
(g) Except as provided in subsection (h), if the
marketplace facilitator demonstrates to the satisfaction of
the Department that its failure to correctly collect and remit
tax on a retail sale resulted from the marketplace
facilitator's good faith reliance on incorrect or insufficient
information provided by a marketplace seller, it shall be
relieved of liability for the tax on that retail sale. In this
case, a marketplace seller is liable for any resulting tax due.
(h) A marketplace facilitator and marketplace seller that
are affiliates, as defined by subsection (a), are jointly and
severally liable for tax liability resulting from a sale made
by the affiliated marketplace seller through the marketplace.
(i) This Section does not affect the tax liability of a
purchaser under this Act.
(j) The Department may adopt rules for the administration
and enforcement of the provisions of this Section.
Section 10-15. The Service Use Tax Act is amended by
changing Section 2 and by adding Section 2d as follows:
(35 ILCS 110/2) (from Ch. 120, par. 439.32)
Sec. 2. Definitions. In this Act:
"Use" means the exercise by any person of any right or
power over tangible personal property incident to the ownership
of that property, but does not include the sale or use for
demonstration by him of that property in any form as tangible
personal property in the regular course of business. "Use" does
not mean the interim use of tangible personal property nor the
physical incorporation of tangible personal property, as an
ingredient or constituent, into other tangible personal
property, (a) which is sold in the regular course of business
or (b) which the person incorporating such ingredient or
constituent therein has undertaken at the time of such purchase
to cause to be transported in interstate commerce to
destinations outside the State of Illinois.
"Purchased from a serviceman" means the acquisition of the
ownership of, or title to, tangible personal property through a
sale of service.
"Purchaser" means any person who, through a sale of
service, acquires the ownership of, or title to, any tangible
personal property.
"Cost price" means the consideration paid by the serviceman
for a purchase valued in money, whether paid in money or
otherwise, including cash, credits and services, and shall be
determined without any deduction on account of the supplier's
cost of the property sold or on account of any other expense
incurred by the supplier. When a serviceman contracts out part
or all of the services required in his sale of service, it
shall be presumed that the cost price to the serviceman of the
property transferred to him or her by his or her subcontractor
is equal to 50% of the subcontractor's charges to the
serviceman in the absence of proof of the consideration paid by
the subcontractor for the purchase of such property.
"Selling price" means the consideration for a sale valued
in money whether received in money or otherwise, including
cash, credits and service, and shall be determined without any
deduction on account of the serviceman's cost of the property
sold, the cost of materials used, labor or service cost or any
other expense whatsoever, but does not include interest or
finance charges which appear as separate items on the bill of
sale or sales contract nor charges that are added to prices by
sellers on account of the seller's duty to collect, from the
purchaser, the tax that is imposed by this Act.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, public or
private corporation, limited liability company, and any
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Sale of service" means any transaction except:
(1) a retail sale of tangible personal property taxable
under the Retailers' Occupation Tax Act or under the Use
Tax Act.
(2) a sale of tangible personal property for the
purpose of resale made in compliance with Section 2c of the
Retailers' Occupation Tax Act.
(3) except as hereinafter provided, a sale or transfer
of tangible personal property as an incident to the
rendering of service for or by any governmental body, or
for or by any corporation, society, association,
foundation or institution organized and operated
exclusively for charitable, religious or educational
purposes or any not-for-profit corporation, society,
association, foundation, institution or organization which
has no compensated officers or employees and which is
organized and operated primarily for the recreation of
persons 55 years of age or older. A limited liability
company may qualify for the exemption under this paragraph
only if the limited liability company is organized and
operated exclusively for educational purposes.
(4) (blank).
(4a) a sale or transfer of tangible personal property
as an incident to the rendering of service for owners,
lessors, or shippers of tangible personal property which is
utilized by interstate carriers for hire for use as rolling
stock moving in interstate commerce so long as so used by
interstate carriers for hire, and equipment operated by a
telecommunications provider, licensed as a common carrier
by the Federal Communications Commission, which is
permanently installed in or affixed to aircraft moving in
interstate commerce.
(4a-5) on and after July 1, 2003 and through June 30,
2004, a sale or transfer of a motor vehicle of the second
division with a gross vehicle weight in excess of 8,000
pounds as an incident to the rendering of service if that
motor vehicle is subject to the commercial distribution fee
imposed under Section 3-815.1 of the Illinois Vehicle Code.
Beginning on July 1, 2004 and through June 30, 2005, the
use in this State of motor vehicles of the second division:
(i) with a gross vehicle weight rating in excess of 8,000
pounds; (ii) that are subject to the commercial
distribution fee imposed under Section 3-815.1 of the
Illinois Vehicle Code; and (iii) that are primarily used
for commercial purposes. Through June 30, 2005, this
exemption applies to repair and replacement parts added
after the initial purchase of such a motor vehicle if that
motor vehicle is used in a manner that would qualify for
the rolling stock exemption otherwise provided for in this
Act. For purposes of this paragraph, "used for commercial
purposes" means the transportation of persons or property
in furtherance of any commercial or industrial enterprise
whether for-hire or not.
(5) a sale or transfer of machinery and equipment used
primarily in the process of the manufacturing or
assembling, either in an existing, an expanded or a new
manufacturing facility, of tangible personal property for
wholesale or retail sale or lease, whether such sale or
lease is made directly by the manufacturer or by some other
person, whether the materials used in the process are owned
by the manufacturer or some other person, or whether such
sale or lease is made apart from or as an incident to the
seller's engaging in a service occupation and the
applicable tax is a Service Use Tax or Service Occupation
Tax, rather than Use Tax or Retailers' Occupation Tax. The
exemption provided by this paragraph (5) does not include
machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the
generation or treatment of natural or artificial gas for
wholesale or retail sale that is delivered to customers
through pipes, pipelines, or mains; or (iii) the treatment
of water for wholesale or retail sale that is delivered to
customers through pipes, pipelines, or mains. The
provisions of Public Act 98-583 are declaratory of existing
law as to the meaning and scope of this exemption. The
exemption under this paragraph (5) is exempt from the
provisions of Section 3-75.
(5a) the repairing, reconditioning or remodeling, for
a common carrier by rail, of tangible personal property
which belongs to such carrier for hire, and as to which
such carrier receives the physical possession of the
repaired, reconditioned or remodeled item of tangible
personal property in Illinois, and which such carrier
transports, or shares with another common carrier in the
transportation of such property, out of Illinois on a
standard uniform bill of lading showing the person who
repaired, reconditioned or remodeled the property to a
destination outside Illinois, for use outside Illinois.
(5b) a sale or transfer of tangible personal property
which is produced by the seller thereof on special order in
such a way as to have made the applicable tax the Service
Occupation Tax or the Service Use Tax, rather than the
Retailers' Occupation Tax or the Use Tax, for an interstate
carrier by rail which receives the physical possession of
such property in Illinois, and which transports such
property, or shares with another common carrier in the
transportation of such property, out of Illinois on a
standard uniform bill of lading showing the seller of the
property as the shipper or consignor of such property to a
destination outside Illinois, for use outside Illinois.
(6) until July 1, 2003, a sale or transfer of
distillation machinery and equipment, sold as a unit or kit
and assembled or installed by the retailer, which machinery
and equipment is certified by the user to be used only for
the production of ethyl alcohol that will be used for
consumption as motor fuel or as a component of motor fuel
for the personal use of such user and not subject to sale
or resale.
(7) at the election of any serviceman not required to
be otherwise registered as a retailer under Section 2a of
the Retailers' Occupation Tax Act, made for each fiscal
year sales of service in which the aggregate annual cost
price of tangible personal property transferred as an
incident to the sales of service is less than 35%, or 75%
in the case of servicemen transferring prescription drugs
or servicemen engaged in graphic arts production, of the
aggregate annual total gross receipts from all sales of
service. The purchase of such tangible personal property by
the serviceman shall be subject to tax under the Retailers'
Occupation Tax Act and the Use Tax Act. However, if a
primary serviceman who has made the election described in
this paragraph subcontracts service work to a secondary
serviceman who has also made the election described in this
paragraph, the primary serviceman does not incur a Use Tax
liability if the secondary serviceman (i) has paid or will
pay Use Tax on his or her cost price of any tangible
personal property transferred to the primary serviceman
and (ii) certifies that fact in writing to the primary
serviceman.
Tangible personal property transferred incident to the
completion of a maintenance agreement is exempt from the tax
imposed pursuant to this Act.
Exemption (5) also includes machinery and equipment used in
the general maintenance or repair of such exempt machinery and
equipment or for in-house manufacture of exempt machinery and
equipment. On and after July 1, 2017, exemption (5) also
includes graphic arts machinery and equipment, as defined in
paragraph (5) of Section 3-5. The machinery and equipment
exemption does not include machinery and equipment used in (i)
the generation of electricity for wholesale or retail sale;
(ii) the generation or treatment of natural or artificial gas
for wholesale or retail sale that is delivered to customers
through pipes, pipelines, or mains; or (iii) the treatment of
water for wholesale or retail sale that is delivered to
customers through pipes, pipelines, or mains. The provisions of
Public Act 98-583 are declaratory of existing law as to the
meaning and scope of this exemption. For the purposes of
exemption (5), each of these terms shall have the following
meanings: (1) "manufacturing process" shall mean the
production of any article of tangible personal property,
whether such article is a finished product or an article for
use in the process of manufacturing or assembling a different
article of tangible personal property, by procedures commonly
regarded as manufacturing, processing, fabricating, or
refining which changes some existing material or materials into
a material with a different form, use or name. In relation to a
recognized integrated business composed of a series of
operations which collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process shall be deemed to commence with the
first operation or stage of production in the series, and shall
not be deemed to end until the completion of the final product
in the last operation or stage of production in the series; and
further, for purposes of exemption (5), photoprocessing is
deemed to be a manufacturing process of tangible personal
property for wholesale or retail sale; (2) "assembling process"
shall mean the production of any article of tangible personal
property, whether such article is a finished product or an
article for use in the process of manufacturing or assembling a
different article of tangible personal property, by the
combination of existing materials in a manner commonly regarded
as assembling which results in a material of a different form,
use or name; (3) "machinery" shall mean major mechanical
machines or major components of such machines contributing to a
manufacturing or assembling process; and (4) "equipment" shall
include any independent device or tool separate from any
machinery but essential to an integrated manufacturing or
assembly process; including computers used primarily in a
manufacturer's computer assisted design, computer assisted
manufacturing (CAD/CAM) system; or any subunit or assembly
comprising a component of any machinery or auxiliary, adjunct
or attachment parts of machinery, such as tools, dies, jigs,
fixtures, patterns and molds; or any parts which require
periodic replacement in the course of normal operation; but
shall not include hand tools. Equipment includes chemicals or
chemicals acting as catalysts but only if the chemicals or
chemicals acting as catalysts effect a direct and immediate
change upon a product being manufactured or assembled for
wholesale or retail sale or lease. The purchaser of such
machinery and equipment who has an active resale registration
number shall furnish such number to the seller at the time of
purchase. The user of such machinery and equipment and tools
without an active resale registration number shall prepare a
certificate of exemption for each transaction stating facts
establishing the exemption for that transaction, which
certificate shall be available to the Department for inspection
or audit. The Department shall prescribe the form of the
certificate.
Any informal rulings, opinions or letters issued by the
Department in response to an inquiry or request for any opinion
from any person regarding the coverage and applicability of
exemption (5) to specific devices shall be published,
maintained as a public record, and made available for public
inspection and copying. If the informal ruling, opinion or
letter contains trade secrets or other confidential
information, where possible the Department shall delete such
information prior to publication. Whenever such informal
rulings, opinions, or letters contain any policy of general
applicability, the Department shall formulate and adopt such
policy as a rule in accordance with the provisions of the
Illinois Administrative Procedure Act.
On and after July 1, 1987, no entity otherwise eligible
under exemption (3) of this Section shall make tax-free
purchases unless it has an active exemption identification
number issued by the Department.
The purchase, employment and transfer of such tangible
personal property as newsprint and ink for the primary purpose
of conveying news (with or without other information) is not a
purchase, use or sale of service or of tangible personal
property within the meaning of this Act.
"Serviceman" means any person who is engaged in the
occupation of making sales of service.
"Sale at retail" means "sale at retail" as defined in the
Retailers' Occupation Tax Act.
"Supplier" means any person who makes sales of tangible
personal property to servicemen for the purpose of resale as an
incident to a sale of service.
"Serviceman maintaining a place of business in this State",
or any like term, means and includes any serviceman:
(1) having or maintaining within this State, directly
or by a subsidiary, an office, distribution house, sales
house, warehouse or other place of business, or any agent
or other representative operating within this State under
the authority of the serviceman or its subsidiary,
irrespective of whether such place of business or agent or
other representative is located here permanently or
temporarily, or whether such serviceman or subsidiary is
licensed to do business in this State;
(1.1) having a contract with a person located in this
State under which the person, for a commission or other
consideration based on the sale of service by the
serviceman, directly or indirectly refers potential
customers to the serviceman by providing to the potential
customers a promotional code or other mechanism that allows
the serviceman to track purchases referred by such persons.
Examples of mechanisms that allow the serviceman to track
purchases referred by such persons include but are not
limited to the use of a link on the person's Internet
website, promotional codes distributed through the
person's hand-delivered or mailed material, and
promotional codes distributed by the person through radio
or other broadcast media. The provisions of this paragraph
(1.1) shall apply only if the cumulative gross receipts
from sales of service by the serviceman to customers who
are referred to the serviceman by all persons in this State
under such contracts exceed $10,000 during the preceding 4
quarterly periods ending on the last day of March, June,
September, and December; a serviceman meeting the
requirements of this paragraph (1.1) shall be presumed to
be maintaining a place of business in this State but may
rebut this presumption by submitting proof that the
referrals or other activities pursued within this State by
such persons were not sufficient to meet the nexus
standards of the United States Constitution during the
preceding 4 quarterly periods;
(1.2) beginning July 1, 2011, having a contract with a
person located in this State under which:
(A) the serviceman sells the same or substantially
similar line of services as the person located in this
State and does so using an identical or substantially
similar name, trade name, or trademark as the person
located in this State; and
(B) the serviceman provides a commission or other
consideration to the person located in this State based
upon the sale of services by the serviceman.
The provisions of this paragraph (1.2) shall apply only if
the cumulative gross receipts from sales of service by the
serviceman to customers in this State under all such
contracts exceed $10,000 during the preceding 4 quarterly
periods ending on the last day of March, June, September,
and December;
(2) soliciting orders for tangible personal property
by means of a telecommunication or television shopping
system (which utilizes toll free numbers) which is intended
by the retailer to be broadcast by cable television or
other means of broadcasting, to consumers located in this
State;
(3) pursuant to a contract with a broadcaster or
publisher located in this State, soliciting orders for
tangible personal property by means of advertising which is
disseminated primarily to consumers located in this State
and only secondarily to bordering jurisdictions;
(4) soliciting orders for tangible personal property
by mail if the solicitations are substantial and recurring
and if the retailer benefits from any banking, financing,
debt collection, telecommunication, or marketing
activities occurring in this State or benefits from the
location in this State of authorized installation,
servicing, or repair facilities;
(5) being owned or controlled by the same interests
which own or control any retailer engaging in business in
the same or similar line of business in this State;
(6) having a franchisee or licensee operating under its
trade name if the franchisee or licensee is required to
collect the tax under this Section;
(7) pursuant to a contract with a cable television
operator located in this State, soliciting orders for
tangible personal property by means of advertising which is
transmitted or distributed over a cable television system
in this State;
(8) engaging in activities in Illinois, which
activities in the state in which the supply business
engaging in such activities is located would constitute
maintaining a place of business in that state; or
(9) beginning October 1, 2018, making sales of service
to purchasers in Illinois from outside of Illinois if:
(A) the cumulative gross receipts from sales of
service to purchasers in Illinois are $100,000 or more;
or
(B) the serviceman enters into 200 or more separate
transactions for sales of service to purchasers in
Illinois.
The serviceman shall determine on a quarterly basis,
ending on the last day of March, June, September, and
December, whether he or she meets the criteria of either
subparagraph (A) or (B) of this paragraph (9) for the
preceding 12-month period. If the serviceman meets the
criteria of either subparagraph (A) or (B) for a 12-month
period, he or she is considered a serviceman maintaining a
place of business in this State and is required to collect
and remit the tax imposed under this Act and file returns
for one year. At the end of that one-year period, the
serviceman shall determine whether the serviceman met the
criteria of either subparagraph (A) or (B) during the
preceding 12-month period. If the serviceman met the
criteria in either subparagraph (A) or (B) for the
preceding 12-month period, he or she is considered a
serviceman maintaining a place of business in this State
and is required to collect and remit the tax imposed under
this Act and file returns for the subsequent year. If at
the end of a one-year period a serviceman that was required
to collect and remit the tax imposed under this Act
determines that he or she did not meet the criteria in
either subparagraph (A) or (B) during the preceding
12-month period, the serviceman subsequently shall
determine on a quarterly basis, ending on the last day of
March, June, September, and December, whether he or she
meets the criteria of either subparagraph (A) or (B) for
the preceding 12-month period.
Beginning January 1, 2020, neither the gross receipts
from nor the number of separate transactions for sales of
service to purchasers in Illinois that a serviceman makes
through a marketplace facilitator and for which the
serviceman has received a certification from the
marketplace facilitator pursuant to Section 2d of this Act
shall be included for purposes of determining whether he or
she has met the thresholds of this paragraph (9).
(10) Beginning January 1, 2020, a marketplace
facilitator, as defined in Section 2d of this Act.
(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
100-587, eff. 6-4-18; 100-863, eff. 8-14-18.)
(35 ILCS 110/2d new)
Sec. 2d. Marketplace facilitators and marketplace
servicemen.
(a) Definitions. For purposes of this Section:
"Affiliate" means a person that, with respect to another
person: (i) has a direct or indirect ownership interest of more
than 5% in the other person; or (ii) is related to the other
person because a third person, or group of third persons who
are affiliated with each other as defined in this subsection,
holds a direct or indirect ownership interest of more than 5%
in the related person.
"Marketplace" means a physical or electronic place, forum,
platform, application or other method by which a marketplace
serviceman makes or offers to make sales of service.
"Marketplace facilitator" means a person who, pursuant to
an agreement with a marketplace serviceman, facilitates sales
of service by that marketplace serviceman. A person facilitates
a sale of service by, directly or indirectly through one or
more affiliates, doing both of the following: (i) listing or
otherwise making available a sale of service of the marketplace
serviceman through a marketplace owned or operated by the
marketplace facilitator; and (ii) processing sales of service
for, or payments for sales of service by, marketplace
servicemen.
"Marketplace serviceman" means a person that makes or
offers to make a sale of service through a marketplace.
(b) Beginning January 1, 2020, a marketplace facilitator
who meets either of the following criteria is considered the
serviceman for each sale of service made on the marketplace:
(1) the cumulative gross receipts from sales of service
to purchasers in Illinois by the marketplace facilitator
and by marketplace servicemen are $100,000 or more; or
(2) the marketplace facilitator and marketplace
servicemen cumulatively enter into 200 or more separate
transactions for the sale of service to purchasers in
Illinois.
A marketplace facilitator shall determine on a quarterly
basis, ending on the last day of March, June, September, and
December, whether he or she meets the criteria of either
paragraph (1) or (2) of this subsection (b) for the preceding
12-month period. If the marketplace facilitator meets the
criteria of either paragraph (1) or (2) for a 12-month period,
he or she is considered a serviceman maintaining a place of
business in this State and is required to collect and remit the
tax imposed under this Act and file returns for one year. At
the end of that one-year period, the marketplace facilitator
shall determine whether the marketplace facilitator met the
criteria of either paragraph (1) or (2) during the preceding
12-month period. If the marketplace facilitator met the
criteria in either paragraph (1) or (2) for the preceding
12-month period, he or she is considered a serviceman
maintaining a place of business in this State and is required
to collect and remit the tax imposed under this Act and file
returns for the subsequent year. If, at the end of a one-year
period, a marketplace facilitator that was required to collect
and remit the tax imposed under this Act determines that he or
she did not meet the criteria in either paragraph (1) or (2)
during the preceding 12-month period, the marketplace
facilitator shall subsequently determine on a quarterly basis,
ending on the last day of March, June, September, and December,
whether he or she meets the criteria of either paragraph (1) or
(2) for the preceding 12-month period.
(c) A marketplace facilitator that meets either of the
thresholds in subsection (b) of this Section is considered the
serviceman for each sale of service made through its
marketplace and is liable for collecting and remitting the tax
under this Act on all such sales. The marketplace facilitator
has all the rights and duties, and is required to comply with
the same requirements and procedures, as all other servicemen
maintaining a place of business in this State who are
registered or who are required to be registered to collect and
remit the tax imposed by this Act.
(d) A marketplace facilitator shall:
(1) certify to each marketplace serviceman that the
marketplace facilitator assumes the rights and duties of a
serviceman under this Act with respect to sales of service
made by the marketplace serviceman through the
marketplace; and
(2) collect taxes imposed by this Act as required by
Section 3-40 of this Act for sales of service made through
the marketplace.
(e) A marketplace serviceman shall retain books and records
for all sales of service made through a marketplace in
accordance with the requirements of Section 11.
(f) A marketplace serviceman shall furnish to the
marketplace facilitator information that is necessary for the
marketplace facilitator to correctly collect and remit taxes
for a sale of service. The information may include a
certification that an item transferred incident to a sale of
service under this Act is taxable, not taxable, exempt from
taxation, or taxable at a specified rate. A marketplace
serviceman shall be held harmless for liability for the tax
imposed under this Act when a marketplace facilitator fails to
correctly collect and remit tax after having been provided with
information by a marketplace serviceman to correctly collect
and remit taxes imposed under this Act.
(g) Except as provided in subsection (h), if the
marketplace facilitator demonstrates to the satisfaction of
the Department that its failure to correctly collect and remit
tax on a sale of service resulted from the marketplace
facilitator's good faith reliance on incorrect or insufficient
information provided by a marketplace serviceman, it shall be
relieved of liability for the tax on that sale of service. In
this case, a marketplace serviceman is liable for any resulting
tax due.
(h) A marketplace facilitator and marketplace serviceman
that are affiliates, as defined by subsection (a), are jointly
and severally liable for tax liability resulting from a sale of
service made by the affiliated marketplace serviceman through
the marketplace.
(i) This Section does not affect the tax liability of a
purchaser under this Act.
(j) The Department may adopt rules for the administration
and enforcement of the provisions of this Section.
Section 10-35. The Tax Delinquency Amnesty Act is amended
by changing Section 10 as follows:
(35 ILCS 745/10)
Sec. 10. Amnesty program. The Department shall establish an
amnesty program for all taxpayers owing any tax imposed by
reason of or pursuant to authorization by any law of the State
of Illinois and collected by the Department.
The amnesty program shall be for a period from October 1,
2003 through November 15, 2003 and for a period beginning on
October 1, 2010 and ending November 8, 2010 and for a period
beginning on October 1, 2019 and ending on November 15, 2019.
The amnesty program shall provide that, upon payment by a
taxpayer of all taxes due from that taxpayer to the State of
Illinois for any taxable period ending (i) after June 30, 1983
and prior to July 1, 2002 for the tax amnesty period occurring
from October 1, 2003 through November 15, 2003, and (ii) after
June 30, 2002 and prior to July 1, 2009 for the tax amnesty
period beginning on October 1, 2010 through November 8, 2010,
and (iii) after June 30, 2011 and prior to July 1, 2018 for the
tax amnesty period beginning on October 1, 2019 through
November 15, 2019, the Department shall abate and not seek to
collect any interest or penalties that may be applicable and
the Department shall not seek civil or criminal prosecution for
any taxpayer for the period of time for which amnesty has been
granted to the taxpayer. Failure to pay all taxes due to the
State for a taxable period shall invalidate any amnesty granted
under this Act. Amnesty shall be granted only if all amnesty
conditions are satisfied by the taxpayer.
Amnesty shall not be granted to taxpayers who are a party
to any criminal investigation or to any civil or criminal
litigation that is pending in any circuit court or appellate
court or the Supreme Court of this State for nonpayment,
delinquency, or fraud in relation to any State tax imposed by
any law of the State of Illinois.
Participation in an amnesty program shall not preclude a
taxpayer from claiming a refund for an overpayment of tax on an
issue unrelated to the issues for which the taxpayer claimed
amnesty or for an overpayment of tax by taxpayers estimating a
non-final liability for the amnesty program pursuant to Section
506(b) of the Illinois Income Tax Act (35 ILCS 5/506(b)).
Voluntary payments made under this Act shall be made by
cash, check, guaranteed remittance, or ACH debit.
The Department shall adopt rules as necessary to implement
the provisions of this Act.
Except as otherwise provided in this Section, all money
collected under this Act that would otherwise be deposited into
the General Revenue Fund shall be deposited as follows: (i)
one-half into the Common School Fund; (ii) one-half into the
General Revenue Fund. Two percent of all money collected under
this Act shall be deposited by the State Treasurer into the Tax
Compliance and Administration Fund and, subject to
appropriation, shall be used by the Department to cover costs
associated with the administration of this Act.
(Source: P.A. 96-1435, eff. 8-16-10.)
Section 10-40. The Health Maintenance Organization Act is
amended by changing Section 5-5 and by adding Section 5-10 as
follows:
(215 ILCS 125/5-5) (from Ch. 111 1/2, par. 1413)
Sec. 5-5. Suspension, revocation or denial of
certification of authority. The Director may suspend or revoke
any certificate of authority issued to a health maintenance
organization under this Act or deny an application for a
certificate of authority if he finds any of the following:
(a) The health maintenance organization is operating
significantly in contravention of its basic organizational
document, its health care plan, or in a manner contrary to that
described in any information submitted under Section 2-1 or
4-12.
(b) The health maintenance organization issues contracts
or evidences of coverage or uses a schedule of charges for
health care services that do not comply with the requirement of
Section 2-1 or 4-12.
(c) The health care plan does not provide or arrange for
basic health care services, except as provided in Section 4-13
concerning mental health services for clients of the Department
of Children and Family Services.
(d) The Director of Public Health certifies to the Director
that (1) the health maintenance organization does not meet the
requirements of Section 2-2 or (2) the health maintenance
organization is unable to fulfill its obligations to furnish
health care services as required under its health care plan.
The Department of Public Health shall promulgate by rule,
pursuant to the Illinois Administrative Procedure Act, the
precise standards used for determining what constitutes a
material misrepresentation, what constitutes a material
violation of a contract or evidence of coverage, or what
constitutes good faith with regard to certification under this
paragraph.
(e) The health maintenance organization is no longer
financially responsible and may reasonably be expected to be
unable to meet its obligations to enrollees or prospective
enrollees.
(f) The health maintenance organization, or any person on
its behalf, has advertised or merchandised its services in an
untrue, misrepresentative, misleading, deceptive, or unfair
manner.
(g) The continued operation of the health maintenance
organization would be hazardous to its enrollees.
(h) The health maintenance organization has neglected to
correct, within the time prescribed by subsection (c) of
Section 2-4, any deficiency occurring due to the organization's
prescribed minimum net worth or special contingent reserve
being impaired.
(i) The health maintenance organization has otherwise
failed to substantially comply with this Act.
(j) The health maintenance organization has failed to meet
the requirements for issuance of a certificate of authority set
forth in Section 2-2.
When the certificate of authority of a health maintenance
organization is revoked, the organization shall proceed,
immediately following the effective date of the order of
revocation, to wind up its affairs and shall conduct no further
business except as may be essential to the orderly conclusion
of the affairs of the organization. The Director may permit
further operation of the organization that he finds to be in
the best interest of enrollees to the end that the enrollees
will be afforded the greatest practical opportunity to obtain
health care services.
(k) The health maintenance organization has failed to pay
any assessment due under Article V-H of the Public Aid Code for
60 days following the due date of the payment (as extended by
any grace period granted).
(Source: P.A. 88-487.)
(215 ILCS 125/5-10 new)
Sec. 5-10. Managed care organizations; revenue data.
(a) No managed care organization shall pass the cost of the
assessment imposed pursuant to Article V-H of the Public Aid
Code on to consumers as a discrete addition to their premiums.
(b) The Department shall provide the Department of
Healthcare and Family Services with member months and premium
revenue data needed for implementing the assessment imposed
under Article V-H of the Public Aid Code.
Section 10-45. The Illinois Public Aid Code is amended by
adding the Article V-H as follows:
(305 ILCS 5/Art. V-H heading new)
ARTICLE V-H. MANAGED CARE ORGANIZATION PROVIDER ASSESSMENT.
(305 ILCS 5/5H-1 new)
Sec. 5H-1. Definitions. As used in this Article:
"Base year" means the 12-month period from January 1, 2018
to December 31, 2018.
"Department" means the Department of Healthcare and Family
Services.
"Federal employee health benefit" means the program of
health benefits plans, as defined in 5 U.S.C. 8901, available
to federal employees under 5 U.S.C. 8901 to 8914.
"Fund" means the Healthcare Provider Relief Fund.
"Managed care organization" means an entity operating
under a certificate of authority issued pursuant to the Health
Maintenance Organization Act or as a Managed Care Community
Network pursuant to Section 5-11 of the Public Aid Code.
"Medicaid managed care organization" means a managed care
organization under contract with the Department to provide
services to recipients of benefits in the medical assistance
program pursuant to Article V of the Public Aid Code, the
Children's Health Insurance Program Act, or the Covering ALL
KIDS Health Insurance Act. It does not include contracts the
same entity or an affiliated entity has for other business.
"Medicare" means the federal Medicare program established
under Title XVIII of the federal Social Security Act.
"Member months" means the aggregate total number of months
all individuals are enrolled for coverage in a Managed Care
Organization during the base year. Member months are determined
by the Department for Medicaid Managed Care Organizations based
on enrollment data in its Medicaid Management Information
System and by the Department of Insurance for other Managed
Care Organizations based on required filings with the
Department of Insurance. Member months do not include months
individuals are enrolled in a Limited Health Services
Organization, including stand-alone dental or vision plans, a
Medicare Advantage Plan, a Medicare Supplement Plan, a Medicaid
Medicare Alignment Initiate Plan pursuant to a Memorandum of
Understanding between the Department and the Federal Centers
for Medicare and Medicaid Services or a Federal Employee Health
Benefits Plan.
(305 ILCS 5/5H-2 new)
Sec. 5H-2. Federal waivers. The Department shall request a
waiver from the federal Centers for Medicare and Medicaid
Services of the broad-based and uniformity provisions of
Section 1903(w)(3)(B) and (C) of Title XIX of the Social
Security Act, 42 U.S.C. 1396b, relating to the assessment
imposed under this Article. The assessment required pursuant to
Section 5H-3 shall not be due and payable until such waiver has
been approved and all other federal requirements necessary to
obtain federal financial participation have been approved by
the Centers for Medicare and Medicaid Services.
(305 ILCS 5/5H-3 new)
Sec. 5H-3. Managed care assessment.
(a) For State Fiscal year 2020 through State Fiscal Year
2025, there is imposed upon managed care organization member
months an assessment, calculated on base year data, as set
forth below for the appropriate tier:
(1) Tier 1: $60.20 per member month.
(2) Tier 2: $1.20 per member month.
(3) Tier 3: $2.40 per member month.
(b) The tiers are established as follows:
(1) Tier 1 includes the first 4,195,000 member months
in a Medicaid managed care organization for the base year;
(ii) Tier 2 includes member months over 4,195,000 in a
Medicaid managed care organization during the base year;
and
(iv) Tier 3 includes member months during the base year
in a managed care organization that is not a Medicaid
managed care organization.
(c) For State fiscal year 2020 through State fiscal year
2025, the Department may by rule adjust rates or tier
parameters or both in order to maximize the revenue generated
by the assessment consistent with federal regulations and to
meet federal statistical tests necessary for federal financial
participation. Any upward adjustment to the Tier 3 rate shall
be the minimum necessary to meet federal statistical tests.
(305 ILCS 5/5H-4 new)
Sec. 5H-4. Payment of assessment.
(a) The assessment payable pursuant to Section 5H-3 shall
be due and payable in monthly installments, each equaling
one-twelfth of the assessment for the year, on the first State
business day of each month.
(b) If the approval of the waivers required under Section
5H-2 is delayed beyond the start of State fiscal year 2020,
then the first installment shall be due on the first business
day of the first month that begins more than 15 days after the
date of such approval. In the event approval results in
installments beginning after July 1, 2019, the amount of each
installment for that fiscal year shall equal the full amount of
the annual assessment divided by the number of payments that
will be paid in fiscal year 2020.
(c) The Department shall notify each managed care
organization of its annual fiscal year 2020 assessment and the
installment due dates no later than 30 days prior to the first
installment due date and the annual assessment and due dates
for each subsequent year at least 30 days prior to the start of
each fiscal year.
(d) Proceeds from the assessment levied pursuant to Section
5H-3 shall be deposited into the Fund.
(305 ILCS 5/5H-5 new)
Sec. 5H-5. Liability or resultant entities. In the event of
a merger, acquisition, or any similar transaction involving
entities subject to the assessment under this Article, the
resultant entity shall be responsible for the full amount of
the assessment for all entities involved in the transaction
with the member months allotted to tiers as they were prior to
the transaction and no member months shall change tiers as a
result of any transaction. A managed care organization that
ceases doing business in the State during any fiscal year shall
be liable only for the monthly installments due in months that
they operated in the State. The Department shall by rule
establish a methodology to set the assessment base member
months for a managed care organization that begins operating in
the State at any time after 2018. Nothing in this Section shall
be construed to limit authority granted in subsection (c) of
Section 5H-3.
(305 ILCS 5/5H-6 new)
Sec. 5H-6. Recordkeeping; penalties.
(a) A managed care organization that is liable for the
assessment under this Article shall keep accurate and complete
records and pertinent documents as may be required by the
Department. Records required by the Department shall be
retained for a period of 4 years after the assessment imposed
under this Act to which the records apply is due or as
otherwise provided by law. The Department or the Department of
Insurance may audit all records necessary to ensure compliance
with this Article and make adjustments to assessment amounts
previously calculated based on the results of any such audit.
(b) If a managed care organization fails to make a payment
due under this Article in a timely fashion, they shall pay an
additional penalty of 5% of the amount of the installment not
paid on or before the due date, or any grace period granted,
plus 5% of the portion thereof remaining unpaid on the last day
of each 30-day period thereafter. The Department is authorized
to grant grace periods of up to 30 days upon request of a
managed care organization for good cause due to financial or
other difficulties, as determined by the Department. If a
managed care organization fails to make a payment within 60
days after the due date the Department shall additionally
impose a contractual sanction allowed against a Medicaid
managed care organization and may terminate any such contract.
The Department of Insurance shall take action against the
certificate of authority of a non-Medicaid managed care
organization that fails to pay an installment within 60 days
after the due date.
(305 ILCS 5/5H-7 new)
Sec. 5H-7. Rulemaking. The Department may by rule modify or
make adjustments to any methodology, assessment amount,
assessment tier, or other similar provision specified in this
Article, including broadening the tax base in subsection (a) of
Section 5H-3, to the extent necessary to meet the requirements
of federal law or regulations, obtain federal approval, or to
ensure federal financial participation is available. However,
upward adjustments to Tier 3 rates shall be the minimum
necessary to meet federal statistical tests to receive federal
financial participation. The Department shall adopt rules to
implement this Article under the Illinois Administrative
Procedure Act.
(305 ILCS 5/5H-8 new)
Sec. 5H-8. Duties of the Department.
(a) The Department shall ensure that rates to Medicaid
managed care organizations are actuarially sound including
appropriate incorporation of assessments under this Article,
other taxes and administrative expenses, including
standardization of processes, and cost of medical care.
(b) The Department shall pay to each Medicaid managed care
organization the amount required to be included in its rates
due to the assessment under this Article in order to ensure
actuarial soundness within 10 business days of receipt of each
assessment payment from the Medicaid managed care
organization. The Department shall extend the deadline for any
assessment payment due after the initial assessment payment if
the payment to the managed care organizations under this
subsection for the previous assessment payment has not been
paid. Such extension shall extend until 7 business days after
receipt by the managed care organization of the late payment
under this subsection.
(c) Reimbursement of assessments paid under this Article
shall not be required to count as revenue towards any
calculation of the managed care organization's medical loss
ratio, net worth, risk based capital or other deposit
requirements as may otherwise be required under the Insurance
Code. Such reimbursements will be considered revenue in
calculating the 6% limit under 42 U.S.C. 433.68(f)(3).
(d) The Department shall include in its annual report,
beginning with its fiscal year 2020 report, and every year
thereafter, information on the revenues collected from this
assessment, the federal funds drawn based on those revenues,
the rates set in Section 5H-3 or any alterations thereof by
administrative rule, and other impacts this gross revenue has
had on the Medicaid program.
Section 10-50. The Franchise Tax and License Fee Amnesty
Act of 2007 is amended by changing Section 5-10 as follows:
(805 ILCS 8/5-10)
Sec. 5-10. Amnesty program. The Secretary shall establish
an amnesty program for all taxpayers owing any franchise tax or
license fee imposed by Article XV of the Business Corporation
Act of 1983. The amnesty program shall be for a period from
February 1, 2008 through March 15, 2008. The amnesty program
shall also be for a period between October 1, 2019 and November
15, 2019, and shall apply to franchise tax or license fee
liabilities for any tax period ending after March 15, 2008 and
on or before June 30, 2019. The amnesty program shall provide
that, upon payment by a taxpayer of all franchise taxes and
license fees due from that taxpayer to the State of Illinois
for any taxable period, the Secretary shall abate and not seek
to collect any interest or penalties that may be applicable,
and the Secretary shall not seek civil or criminal prosecution
for any taxpayer for the period of time for which amnesty has
been granted to the taxpayer. Failure to pay all taxes due to
the State for a taxable period shall not invalidate any amnesty
granted under this Act with respect to the taxes paid pursuant
to the amnesty program. Amnesty shall be granted only if all
amnesty conditions are satisfied by the taxpayer. Amnesty shall
not be granted to taxpayers who are a party to any criminal
investigation or to any civil or criminal litigation that is
pending in any circuit court or appellate court or the Supreme
Court of this State for nonpayment, delinquency, or fraud in
relation to any franchise tax or license fee imposed by Article
XV of the Business Corporation Act of 1983. Voluntary payments
made under this Act shall be made by check, guaranteed
remittance, or ACH debit. The Secretary shall adopt rules as
necessary to implement the provisions of this Act. Except as
otherwise provided in this Section, all money collected under
this Act that would otherwise be deposited into the General
Revenue Fund shall be deposited into the General Revenue Fund.
Two percent of all money collected under this Act shall be
deposited by the State Treasurer into the Franchise Tax and
License Fee Amnesty Administration Fund and, subject to
appropriation, shall be used by the Secretary to cover costs
associated with the administration of this Act.
(Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08.)
ARTICLE 20. BLUE COLLAR JOBS ACT
Section 20-1. This Act may be referred to as the Blue
Collar Jobs Act.
Section 20-5. The Illinois Enterprise Zone Act is amended
by changing Section 5.5 and by adding Section 13 as follows:
(20 ILCS 655/5.5) (from Ch. 67 1/2, par. 609.1)
Sec. 5.5. High Impact Business.
(a) In order to respond to unique opportunities to assist
in the encouragement, development, growth and expansion of the
private sector through large scale investment and development
projects, the Department is authorized to receive and approve
applications for the designation of "High Impact Businesses" in
Illinois subject to the following conditions:
(1) such applications may be submitted at any time
during the year;
(2) such business is not located, at the time of
designation, in an enterprise zone designated pursuant to
this Act;
(3) the business intends to do one or more of the
following:
(A) the business intends to make a minimum
investment of $12,000,000 which will be placed in
service in qualified property and intends to create 500
full-time equivalent jobs at a designated location in
Illinois or intends to make a minimum investment of
$30,000,000 which will be placed in service in
qualified property and intends to retain 1,500
full-time retained jobs at a designated location in
Illinois. The business must certify in writing that the
investments would not be placed in service in qualified
property and the job creation or job retention would
not occur without the tax credits and exemptions set
forth in subsection (b) of this Section. The terms
"placed in service" and "qualified property" have the
same meanings as described in subsection (h) of Section
201 of the Illinois Income Tax Act; or
(B) the business intends to establish a new
electric generating facility at a designated location
in Illinois. "New electric generating facility", for
purposes of this Section, means a newly-constructed
electric generation plant or a newly-constructed
generation capacity expansion at an existing electric
generation plant, including the transmission lines and
associated equipment that transfers electricity from
points of supply to points of delivery, and for which
such new foundation construction commenced not sooner
than July 1, 2001. Such facility shall be designed to
provide baseload electric generation and shall operate
on a continuous basis throughout the year; and (i)
shall have an aggregate rated generating capacity of at
least 1,000 megawatts for all new units at one site if
it uses natural gas as its primary fuel and foundation
construction of the facility is commenced on or before
December 31, 2004, or shall have an aggregate rated
generating capacity of at least 400 megawatts for all
new units at one site if it uses coal or gases derived
from coal as its primary fuel and shall support the
creation of at least 150 new Illinois coal mining jobs,
or (ii) shall be funded through a federal Department of
Energy grant before December 31, 2010 and shall support
the creation of Illinois coal-mining jobs, or (iii)
shall use coal gasification or integrated
gasification-combined cycle units that generate
electricity or chemicals, or both, and shall support
the creation of Illinois coal-mining jobs. The
business must certify in writing that the investments
necessary to establish a new electric generating
facility would not be placed in service and the job
creation in the case of a coal-fueled plant would not
occur without the tax credits and exemptions set forth
in subsection (b-5) of this Section. The term "placed
in service" has the same meaning as described in
subsection (h) of Section 201 of the Illinois Income
Tax Act; or
(B-5) the business intends to establish a new
gasification facility at a designated location in
Illinois. As used in this Section, "new gasification
facility" means a newly constructed coal gasification
facility that generates chemical feedstocks or
transportation fuels derived from coal (which may
include, but are not limited to, methane, methanol, and
nitrogen fertilizer), that supports the creation or
retention of Illinois coal-mining jobs, and that
qualifies for financial assistance from the Department
before December 31, 2010. A new gasification facility
does not include a pilot project located within
Jefferson County or within a county adjacent to
Jefferson County for synthetic natural gas from coal;
or
(C) the business intends to establish production
operations at a new coal mine, re-establish production
operations at a closed coal mine, or expand production
at an existing coal mine at a designated location in
Illinois not sooner than July 1, 2001; provided that
the production operations result in the creation of 150
new Illinois coal mining jobs as described in
subdivision (a)(3)(B) of this Section, and further
provided that the coal extracted from such mine is
utilized as the predominant source for a new electric
generating facility. The business must certify in
writing that the investments necessary to establish a
new, expanded, or reopened coal mine would not be
placed in service and the job creation would not occur
without the tax credits and exemptions set forth in
subsection (b-5) of this Section. The term "placed in
service" has the same meaning as described in
subsection (h) of Section 201 of the Illinois Income
Tax Act; or
(D) the business intends to construct new
transmission facilities or upgrade existing
transmission facilities at designated locations in
Illinois, for which construction commenced not sooner
than July 1, 2001. For the purposes of this Section,
"transmission facilities" means transmission lines
with a voltage rating of 115 kilovolts or above,
including associated equipment, that transfer
electricity from points of supply to points of delivery
and that transmit a majority of the electricity
generated by a new electric generating facility
designated as a High Impact Business in accordance with
this Section. The business must certify in writing that
the investments necessary to construct new
transmission facilities or upgrade existing
transmission facilities would not be placed in service
without the tax credits and exemptions set forth in
subsection (b-5) of this Section. The term "placed in
service" has the same meaning as described in
subsection (h) of Section 201 of the Illinois Income
Tax Act; or
(E) the business intends to establish a new wind
power facility at a designated location in Illinois.
For purposes of this Section, "new wind power facility"
means a newly constructed electric generation
facility, or a newly constructed expansion of an
existing electric generation facility, placed in
service on or after July 1, 2009, that generates
electricity using wind energy devices, and such
facility shall be deemed to include all associated
transmission lines, substations, and other equipment
related to the generation of electricity from wind
energy devices. For purposes of this Section, "wind
energy device" means any device, with a nameplate
capacity of at least 0.5 megawatts, that is used in the
process of converting kinetic energy from the wind to
generate electricity; or
(F) the business commits to (i) make a minimum
investment of $500,000,000, which will be placed in
service in a qualified property, (ii) create 125
full-time equivalent jobs at a designated location in
Illinois, (iii) establish a fertilizer plant at a
designated location in Illinois that complies with the
set-back standards as described in Table 1: Initial
Isolation and Protective Action Distances in the 2012
Emergency Response Guidebook published by the United
States Department of Transportation, (iv) pay a
prevailing wage for employees at that location who are
engaged in construction activities, and (v) secure an
appropriate level of general liability insurance to
protect against catastrophic failure of the fertilizer
plant or any of its constituent systems; in addition,
the business must agree to enter into a construction
project labor agreement including provisions
establishing wages, benefits, and other compensation
for employees performing work under the project labor
agreement at that location; for the purposes of this
Section, "fertilizer plant" means a newly constructed
or upgraded plant utilizing gas used in the production
of anhydrous ammonia and downstream nitrogen
fertilizer products for resale; for the purposes of
this Section, "prevailing wage" means the hourly cash
wages plus fringe benefits for training and
apprenticeship programs approved by the U.S.
Department of Labor, Bureau of Apprenticeship and
Training, health and welfare, insurance, vacations and
pensions paid generally, in the locality in which the
work is being performed, to employees engaged in work
of a similar character on public works; this paragraph
(F) applies only to businesses that submit an
application to the Department within 60 days after the
effective date of this amendatory Act of the 98th
General Assembly; and
(4) no later than 90 days after an application is
submitted, the Department shall notify the applicant of the
Department's determination of the qualification of the
proposed High Impact Business under this Section.
(b) Businesses designated as High Impact Businesses
pursuant to subdivision (a)(3)(A) of this Section shall qualify
for the credits and exemptions described in the following Acts:
Section 9-222 and Section 9-222.1A of the Public Utilities Act,
subsection (h) of Section 201 of the Illinois Income Tax Act,
and Section 1d of the Retailers' Occupation Tax Act; provided
that these credits and exemptions described in these Acts shall
not be authorized until the minimum investments set forth in
subdivision (a)(3)(A) of this Section have been placed in
service in qualified properties and, in the case of the
exemptions described in the Public Utilities Act and Section 1d
of the Retailers' Occupation Tax Act, the minimum full-time
equivalent jobs or full-time retained jobs set forth in
subdivision (a)(3)(A) of this Section have been created or
retained. Businesses designated as High Impact Businesses
under this Section shall also qualify for the exemption
described in Section 5l of the Retailers' Occupation Tax Act.
The credit provided in subsection (h) of Section 201 of the
Illinois Income Tax Act shall be applicable to investments in
qualified property as set forth in subdivision (a)(3)(A) of
this Section.
(b-5) Businesses designated as High Impact Businesses
pursuant to subdivisions (a)(3)(B), (a)(3)(B-5), (a)(3)(C),
and (a)(3)(D) of this Section shall qualify for the credits and
exemptions described in the following Acts: Section 51 of the
Retailers' Occupation Tax Act, Section 9-222 and Section
9-222.1A of the Public Utilities Act, and subsection (h) of
Section 201 of the Illinois Income Tax Act; however, the
credits and exemptions authorized under Section 9-222 and
Section 9-222.1A of the Public Utilities Act, and subsection
(h) of Section 201 of the Illinois Income Tax Act shall not be
authorized until the new electric generating facility, the new
gasification facility, the new transmission facility, or the
new, expanded, or reopened coal mine is operational, except
that a new electric generating facility whose primary fuel
source is natural gas is eligible only for the exemption under
Section 5l of the Retailers' Occupation Tax Act.
(b-6) Businesses designated as High Impact Businesses
pursuant to subdivision (a)(3)(E) of this Section shall qualify
for the exemptions described in Section 5l of the Retailers'
Occupation Tax Act; any business so designated as a High Impact
Business being, for purposes of this Section, a "Wind Energy
Business".
(b-7) Beginning on January 1, 2021, businesses designated
as High Impact Businesses by the Department shall qualify for
the High Impact Business construction jobs credit under
subsection (h-5) of Section 201 of the Illinois Income Tax Act
if the business meets the criteria set forth in subsection (i)
of this Section. The total aggregate amount of credits awarded
under the Blue Collar Jobs Act (Article 20 of this amendatory
Act of the 101st General Assembly) shall not exceed $20,000,000
in any State fiscal year.
(c) High Impact Businesses located in federally designated
foreign trade zones or sub-zones are also eligible for
additional credits, exemptions and deductions as described in
the following Acts: Section 9-221 and Section 9-222.1 of the
Public Utilities Act; and subsection (g) of Section 201, and
Section 203 of the Illinois Income Tax Act.
(d) Except for businesses contemplated under subdivision
(a)(3)(E) of this Section, existing Illinois businesses which
apply for designation as a High Impact Business must provide
the Department with the prospective plan for which 1,500
full-time retained jobs would be eliminated in the event that
the business is not designated.
(e) Except for new wind power facilities contemplated under
subdivision (a)(3)(E) of this Section, new proposed facilities
which apply for designation as High Impact Business must
provide the Department with proof of alternative non-Illinois
sites which would receive the proposed investment and job
creation in the event that the business is not designated as a
High Impact Business.
(f) Except for businesses contemplated under subdivision
(a)(3)(E) of this Section, in the event that a business is
designated a High Impact Business and it is later determined
after reasonable notice and an opportunity for a hearing as
provided under the Illinois Administrative Procedure Act, that
the business would have placed in service in qualified property
the investments and created or retained the requisite number of
jobs without the benefits of the High Impact Business
designation, the Department shall be required to immediately
revoke the designation and notify the Director of the
Department of Revenue who shall begin proceedings to recover
all wrongfully exempted State taxes with interest. The business
shall also be ineligible for all State funded Department
programs for a period of 10 years.
(g) The Department shall revoke a High Impact Business
designation if the participating business fails to comply with
the terms and conditions of the designation. However, the
penalties for new wind power facilities or Wind Energy
Businesses for failure to comply with any of the terms or
conditions of the Illinois Prevailing Wage Act shall be only
those penalties identified in the Illinois Prevailing Wage Act,
and the Department shall not revoke a High Impact Business
designation as a result of the failure to comply with any of
the terms or conditions of the Illinois Prevailing Wage Act in
relation to a new wind power facility or a Wind Energy
Business.
(h) Prior to designating a business, the Department shall
provide the members of the General Assembly and Commission on
Government Forecasting and Accountability with a report
setting forth the terms and conditions of the designation and
guarantees that have been received by the Department in
relation to the proposed business being designated.
(i) High Impact Business construction jobs credit.
Beginning on January 1, 2021, a High Impact Business may
receive a tax credit against the tax imposed under subsections
(a) and (b) of Section 201 of the Illinois Income Tax Act in an
amount equal to 50% of the amount of the incremental income tax
attributable to High Impact Business construction jobs credit
employees employed in the course of completing a High Impact
Business construction jobs project. However, the High Impact
Business construction jobs credit may equal 75% of the amount
of the incremental income tax attributable to High Impact
Business construction jobs credit employees if the High Impact
Business construction jobs credit project is located in an
underserved area.
The Department shall certify to the Department of Revenue:
(1) the identity of taxpayers that are eligible for the High
Impact Business construction jobs credit; and (2) the amount of
High Impact Business construction jobs credits that are claimed
pursuant to subsection (h-5) of Section 201 of the Illinois
Income Tax Act in each taxable year. Any business entity that
receives a High Impact Business construction jobs credit shall
maintain a certified payroll pursuant to subsection (j) of this
Section.
As used in this subsection (i):
"High Impact Business construction jobs credit" means an
amount equal to 50% (or 75% if the High Impact Business
construction project is located in an underserved area) of the
incremental income tax attributable to High Impact Business
construction job employees. The total aggregate amount of
credits awarded under the Blue Collar Jobs Act (Article 20 of
this amendatory Act of the 101st General Assembly) shall not
exceed $20,000,000 in any State fiscal year
"High Impact Business construction job employee" means a
laborer or worker who is employed by an Illinois contractor or
subcontractor in the actual construction work on the site of a
High Impact Business construction job project.
"High Impact Business construction jobs project" means
building a structure or building or making improvements of any
kind to real property, undertaken and commissioned by a
business that was designated as a High Impact Business by the
Department. The term "High Impact Business construction jobs
project" does not include the routine operation, routine
repair, or routine maintenance of existing structures,
buildings, or real property.
"Incremental income tax" means the total amount withheld
during the taxable year from the compensation of High Impact
Business construction job employees.
"Underserved area" means a geographic area that meets one
or more of the following conditions:
(1) the area has a poverty rate of at least 20%
according to the latest federal decennial census;
(2) 75% or more of the children in the area participate
in the federal free lunch program according to reported
statistics from the State Board of Education;
(3) at least 20% of the households in the area receive
assistance under the Supplemental Nutrition Assistance
Program (SNAP); or
(4) the area has an average unemployment rate, as
determined by the Illinois Department of Employment
Security, that is more than 120% of the national
unemployment average, as determined by the U.S. Department
of Labor, for a period of at least 2 consecutive calendar
years preceding the date of the application.
(j) Each contractor and subcontractor who is engaged in and
executing a High Impact Business Construction jobs project, as
defined under subsection (i) of this Section, for a business
that is entitled to a credit pursuant to subsection (i) of this
Section shall:
(1) make and keep, for a period of 5 years from the
date of the last payment made on or after the effective
date of this amendatory Act of the 101st General Assembly
on a contract or subcontract for a High Impact Business
Construction Jobs Project, records for all laborers and
other workers employed by the contractor or subcontractor
on the project; the records shall include:
(A) the worker's name;
(B) the worker's address;
(C) the worker's telephone number, if available;
(D) the worker's social security number;
(E) the worker's classification or
classifications;
(F) the worker's gross and net wages paid in each
pay period;
(G) the worker's number of hours worked each day;
(H) the worker's starting and ending times of work
each day;
(I) the worker's hourly wage rate; and
(J) the worker's hourly overtime wage rate;
(2) no later than the 15th day of each calendar month,
provide a certified payroll for the immediately preceding
month to the taxpayer in charge of the High Impact Business
construction jobs project; within 5 business days after
receiving the certified payroll, the taxpayer shall file
the certified payroll with the Department of Labor and the
Department of Commerce and Economic Opportunity; a
certified payroll must be filed for only those calendar
months during which construction on a High Impact Business
construction jobs project has occurred; the certified
payroll shall consist of a complete copy of the records
identified in paragraph (1) of this subsection (j), but may
exclude the starting and ending times of work each day; the
certified payroll shall be accompanied by a statement
signed by the contractor or subcontractor or an officer,
employee, or agent of the contractor or subcontractor which
avers that:
(A) he or she has examined the certified payroll
records required to be submitted by the Act and such
records are true and accurate; and
(B) the contractor or subcontractor is aware that
filing a certified payroll that he or she knows to be
false is a Class A misdemeanor.
A general contractor is not prohibited from relying on a
certified payroll of a lower-tier subcontractor, provided the
general contractor does not knowingly rely upon a
subcontractor's false certification.
Any contractor or subcontractor subject to this
subsection, and any officer, employee, or agent of such
contractor or subcontractor whose duty as an officer, employee,
or agent it is to file a certified payroll under this
subsection, who willfully fails to file such a certified
payroll on or before the date such certified payroll is
required by this paragraph to be filed and any person who
willfully files a false certified payroll that is false as to
any material fact is in violation of this Act and guilty of a
Class A misdemeanor.
The taxpayer in charge of the project shall keep the
records submitted in accordance with this subsection on or
after the effective date of this amendatory Act of the 101st
General Assembly for a period of 5 years from the date of the
last payment for work on a contract or subcontract for the High
Impact Business construction jobs project.
The records submitted in accordance with this subsection
shall be considered public records, except an employee's
address, telephone number, and social security number, and made
available in accordance with the Freedom of Information Act.
The Department of Labor shall accept any reasonable submissions
by the contractor that meet the requirements of this subsection
(j) and shall share the information with the Department in
order to comply with the awarding of a High Impact Business
construction jobs credit. A contractor, subcontractor, or
public body may retain records required under this Section in
paper or electronic format.
(k) Upon 7 business days' notice, each contractor and
subcontractor shall make available for inspection and copying
at a location within this State during reasonable hours, the
records identified in this subsection (j) to the taxpayer in
charge of the High Impact Business construction jobs project,
its officers and agents, the Director of the Department of
Labor and his deputies and agents, and to federal, State, or
local law enforcement agencies and prosecutors.
(Source: P.A. 97-905, eff. 8-7-12; 98-109, eff. 7-25-13.)
(20 ILCS 655/13 new)
Sec. 13. Enterprise Zone construction jobs credit.
(a) Beginning on January 1, 2021, a business entity in a
certified Enterprise Zone that makes a capital investment of at
least $10,000,000 in an Enterprise Zone construction jobs
project may receive an Enterprise Zone construction jobs credit
against the tax imposed under subsections (a) and (b) of
Section 201 of the Illinois Income Tax Act in an amount equal
to 50% of the amount of the incremental income tax attributable
to Enterprise Zone construction jobs credit employees employed
in the course of completing an Enterprise Zone construction
jobs project. However, the Enterprise Zone construction jobs
credit may equal 75% of the amount of the incremental income
tax attributable to Enterprise Zone construction jobs credit
employees if the project is located in an underserved area.
(b) A business entity seeking a credit under this Section
must submit an application to the Department and must receive
approval from the designating municipality or county and the
Department for the Enterprise Zone construction jobs credit
project. The application must describe the nature and benefit
of the project to the certified Enterprise Zone and its
potential contributors. The total aggregate amount of credits
awarded under the Blue Collar Jobs Act (Article 20 of this
amendatory Act of the 101st General Assembly) shall not exceed
$20,000,000 in any State fiscal year.
Within 45 days after receipt of an application, the
Department shall give notice to the applicant as to whether the
application has been approved or disapproved. If the Department
disapproves the application, it shall specify the reasons for
this decision and allow 60 days for the applicant to amend and
resubmit its application. The Department shall provide
assistance upon request to applicants. Resubmitted
applications shall receive the Department's approval or
disapproval within 30 days after the application is
resubmitted. Those resubmitted applications satisfying initial
Department objectives shall be approved unless reasonable
circumstances warrant disapproval.
On an annual basis, the designated zone organization shall
furnish a statement to the Department on the programmatic and
financial status of any approved project and an audited
financial statement of the project.
The Department shall certify to the Department of Revenue
the identity of taxpayers who are eligible for the credits and
the amount of credits that are claimed pursuant to subparagraph
(8) of subsection (f) of Section 201 the Illinois Income Tax
Act.
The Enterprise Zone construction jobs credit project must
be undertaken by the business entity in the course of
completing a project that complies with the criteria contained
in Section 4 of this Act and is undertaken in a certified
Enterprise Zone. The Department shall adopt any necessary rules
for the implementation of this subsection (b).
(c) Any business entity that receives an Enterprise Zone
construction jobs credit shall maintain a certified payroll
pursuant to subsection (d) of this Section.
(d) Each contractor and subcontractor who is engaged in and
is executing an Enterprise Zone Construction jobs credit
project for a business that is entitled to a credit pursuant to
this Section shall:
(1) make and keep, for a period of 5 years from the
date of the last payment made on or after the effective
date of this amendatory Act of the 101st General Assembly
on a contract or subcontract for an Enterprise Zone
construction jobs credit project, records for all laborers
and other workers employed by them on the project; the
records shall include:
(A) the worker's name;
(B) the worker's address;
(C) the worker's telephone number, if available;
(D) the worker's social security number;
(E) the worker's classification or
classifications;
(F) the worker's gross and net wages paid in each
pay period;
(G) the worker's number of hours worked each day;
(H) the worker's starting and ending times of work
each day;
(I) the worker's hourly wage rate; and
(J) the worker's hourly overtime wage rate;
(2) no later than the 15th day of each calendar month,
provide a certified payroll for the immediately preceding
month to the taxpayer in charge of the project; within 5
business days after receiving the certified payroll, the
taxpayer shall file the certified payroll with the
Department of Labor and the Department of Commerce and
Economic Opportunity; a certified payroll must be filed for
only those calendar months during which construction on an
Enterprise Zone construction jobs project has occurred;
the certified payroll shall consist of a complete copy of
the records identified in paragraph (1) of this subsection
(d), but may exclude the starting and ending times of work
each day; the certified payroll shall be accompanied by a
statement signed by the contractor or subcontractor or an
officer, employee, or agent of the contractor or
subcontractor which avers that:
(A) he or she has examined the certified payroll
records required to be submitted by the Act and such
records are true and accurate; and
(B) the contractor or subcontractor is aware that
filing a certified payroll that he or she knows to be
false is a Class A misdemeanor.
A general contractor is not prohibited from relying on a
certified payroll of a lower-tier subcontractor, provided the
general contractor does not knowingly rely upon a
subcontractor's false certification.
Any contractor or subcontractor subject to this
subsection, and any officer, employee, or agent of such
contractor or subcontractor whose duty as an officer, employee,
or agent it is to file a certified payroll under this
subsection, who willfully fails to file such a certified
payroll on or before the date such certified payroll is
required by this paragraph to be filed and any person who
willfully files a false certified payroll that is false as to
any material fact is in violation of this Act and guilty of a
Class A misdemeanor.
The taxpayer in charge of the project shall keep the
records submitted in accordance with this subsection on or
after the effective date of this amendatory Act of the 101st
General Assembly for a period of 5 years from the date of the
last payment for work on a contract or subcontract for the
project.
The records submitted in accordance with this subsection
shall be considered public records, except an employee's
address, telephone number, and social security number, and made
available in accordance with the Freedom of Information Act.
The Department of Labor shall accept any reasonable submissions
by the contractor that meet the requirements of this subsection
and shall share the information with the Department in order to
comply with the awarding of Enterprise Zone construction jobs
credits. A contractor, subcontractor, or public body may retain
records required under this Section in paper or electronic
format.
Upon 7 business days' notice, the contractor and each
subcontractor shall make available for inspection and copying
at a location within this State during reasonable hours, the
records identified in paragraph (1) of this subsection to the
taxpayer in charge of the project, its officers and agents, the
Director of Labor and his deputies and agents, and to federal,
State, or local law enforcement agencies and prosecutors.
(e) As used in this Section:
"Enterprise Zone construction jobs credit" means an amount
equal to 50% (or 75% if the project is located in an
underserved area) of the incremental income tax attributable to
Enterprise Zone construction jobs credit employees.
"Enterprise Zone construction jobs credit employee" means
a laborer or worker who is employed by an Illinois contractor
or subcontractor in the actual construction work on the site of
an Enterprise Zone construction jobs credit project.
"Enterprise Zone construction jobs credit project" means
building a structure or building or making improvements of any
kind to real property commissioned and paid for by a business
that has applied and been approved for an Enterprise Zone
construction jobs credit pursuant to this Section. "Enterprise
Zone construction jobs credit project" does not include the
routine operation, routine repair, or routine maintenance of
existing structures, buildings, or real property.
"Incremental income tax" means the total amount withheld
during the taxable year from the compensation of Enterprise
Zone construction jobs credit employees.
"Underserved area" means a geographic area that meets one
or more of the following conditions:
(1) the area has a poverty rate of at least 20%
according to the latest federal decennial census;
(2) 75% or more of the children in the area participate
in the federal free lunch program according to reported
statistics from the State Board of Education;
(3) at least 20% of the households in the area receive
assistance under the Supplemental Nutrition Assistance
Program (SNAP); or
(4) the area has an average unemployment rate, as
determined by the Illinois Department of Employment
Security, that is more than 120% of the national
unemployment average, as determined by the U.S. Department
of Labor, for a period of at least 2 consecutive calendar
years preceding the date of the application.
Section 20-10. The Illinois Income Tax Act is amended by
changing Sections 201, 211, and 221 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, and ending
prior to January 1, 2011, an amount equal to 3% of the
taxpayer's net income for the taxable year.
(4) In the case of an individual, trust, or estate, for
taxable years beginning prior to January 1, 2011, and
ending after December 31, 2010, an amount equal to the sum
of (i) 3% of the taxpayer's net income for the period prior
to January 1, 2011, as calculated under Section 202.5, and
(ii) 5% of the taxpayer's net income for the period after
December 31, 2010, as calculated under Section 202.5.
(5) In the case of an individual, trust, or estate, for
taxable years beginning on or after January 1, 2011, and
ending prior to January 1, 2015, an amount equal to 5% of
the taxpayer's net income for the taxable year.
(5.1) In the case of an individual, trust, or estate,
for taxable years beginning prior to January 1, 2015, and
ending after December 31, 2014, an amount equal to the sum
of (i) 5% of the taxpayer's net income for the period prior
to January 1, 2015, as calculated under Section 202.5, and
(ii) 3.75% of the taxpayer's net income for the period
after December 31, 2014, as calculated under Section 202.5.
(5.2) In the case of an individual, trust, or estate,
for taxable years beginning on or after January 1, 2015,
and ending prior to July 1, 2017, an amount equal to 3.75%
of the taxpayer's net income for the taxable year.
(5.3) In the case of an individual, trust, or estate,
for taxable years beginning prior to July 1, 2017, and
ending after June 30, 2017, an amount equal to the sum of
(i) 3.75% of the taxpayer's net income for the period prior
to July 1, 2017, as calculated under Section 202.5, and
(ii) 4.95% of the taxpayer's net income for the period
after June 30, 2017, as calculated under Section 202.5.
(5.4) In the case of an individual, trust, or estate,
for taxable years beginning on or after July 1, 2017, an
amount equal to 4.95% of the taxpayer's net income for the
taxable year.
(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, and ending prior to January
1, 2011, an amount equal to 4.8% of the taxpayer's net
income for the taxable year.
(9) In the case of a corporation, for taxable years
beginning prior to January 1, 2011, and ending after
December 31, 2010, an amount equal to the sum of (i) 4.8%
of the taxpayer's net income for the period prior to
January 1, 2011, as calculated under Section 202.5, and
(ii) 7% of the taxpayer's net income for the period after
December 31, 2010, as calculated under Section 202.5.
(10) In the case of a corporation, for taxable years
beginning on or after January 1, 2011, and ending prior to
January 1, 2015, an amount equal to 7% of the taxpayer's
net income for the taxable year.
(11) In the case of a corporation, for taxable years
beginning prior to January 1, 2015, and ending after
December 31, 2014, an amount equal to the sum of (i) 7% of
the taxpayer's net income for the period prior to January
1, 2015, as calculated under Section 202.5, and (ii) 5.25%
of the taxpayer's net income for the period after December
31, 2014, as calculated under Section 202.5.
(12) In the case of a corporation, for taxable years
beginning on or after January 1, 2015, and ending prior to
July 1, 2017, an amount equal to 5.25% of the taxpayer's
net income for the taxable year.
(13) In the case of a corporation, for taxable years
beginning prior to July 1, 2017, and ending after June 30,
2017, an amount equal to the sum of (i) 5.25% of the
taxpayer's net income for the period prior to July 1, 2017,
as calculated under Section 202.5, and (ii) 7% of the
taxpayer's net income for the period after June 30, 2017,
as calculated under Section 202.5.
(14) In the case of a corporation, for taxable years
beginning on or after July 1, 2017, an amount equal to 7%
of the taxpayer's net income for the taxable year.
The rates under this subsection (b) are subject to the
provisions of Section 201.5.
(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% for taxable years ending prior to December 31,
2003, or 1.75% for taxable years ending on or after
December 31, 2003, 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 (now
Department of Commerce and Economic Opportunity) as
complying with the requirements specified in clause (i) and
(ii) by July 1, 1986. The Department of Commerce and
Community Affairs (now Department of Commerce and Economic
Opportunity) 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, or was placed in service
on or after July 1, 2006 in a River Edge Redevelopment
Zone established pursuant to the River Edge
Redevelopment Zone Act; 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 for use or consumption and not for resale, or
services rendered in conjunction with the sale of tangible
personal property for use or consumption and not for
resale. For purposes of this subsection (e), "tangible
personal property" has the same meaning as when that term
is used in the Retailers' Occupation Tax Act, and, for
taxable years ending after December 31, 2008, does not
include the generation, transmission, or distribution of
electricity.
(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, 2018, except for costs incurred
pursuant to a binding contract entered into on or before
December 31, 2018.
(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; River Edge
Redevelopment 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 or, for property placed in service on
or after July 1, 2006, a River Edge Redevelopment Zone
established pursuant to the River Edge Redevelopment 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 or
River Edge Redevelopment 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 or River Edge
Redevelopment 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 or River Edge
Redevelopment 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
or River Edge Redevelopment 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.
(7) There shall be allowed an additional credit equal
to 0.5% of the basis of qualified property placed in
service during the taxable year in a River Edge
Redevelopment Zone, provided such property is placed in
service on or after July 1, 2006, 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. 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 0.5% and the
denominator of which is 1%, but shall not exceed 0.5%.
(8) For taxable years beginning on or after January 1,
2021, there shall be allowed an Enterprise Zone
construction jobs credit against the taxes imposed under
subsections (a) and (b) of this Section as provided in
Section 13 of the Illinois Enterprise Zone Act.
The credit or credits may not reduce the taxpayer's
liability to less than zero. If the amount of the credit or
credits exceeds the taxpayer's liability, the excess may be
carried forward and applied against the taxpayer's
liability in succeeding calendar years in the same manner
provided under paragraph (4) of Section 211 of this Act.
The credit or credits shall be applied to the earliest year
for which there is a tax liability. If there are credits
from more than one taxable year that are available to
offset a liability, the earlier credit shall be applied
first.
For partners, shareholders of Subchapter S
corporations, and owners of limited liability companies,
if the liability company is treated as a partnership for
the purposes of federal and State income taxation, there
shall be allowed a credit under this Section 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 total aggregate amount of credits awarded under the
Blue Collar Jobs Act (Article 20 of this amendatory Act of
the 101st General Assembly) shall not exceed $20,000,000 in
any State fiscal year
This paragraph (8) is exempt from the provisions of
Section 250.
(g) (Blank).
(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 Economic Opportunity 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).
(h-5) High Impact Business constructions jobs credit. For
taxable years beginning on or after January 1, 2021, there
shall also be allowed a High Impact Business construction jobs
credit against the tax imposed under subsections (a) and (b) of
this Section as provided in subsections (i) and (j) of Section
5.5 of the Illinois Enterprise Zone Act.
The credit or credits may not reduce the taxpayer's
liability to less than zero. If the amount of the credit or
credits exceeds the taxpayer's liability, the excess may be
carried forward and applied against the taxpayer's liability in
succeeding calendar years in the manner provided under
paragraph (4) of Section 211 of this Act. The credit or credits
shall be applied to the earliest year for which there is a tax
liability. If there are credits from more than one taxable year
that are available to offset a liability, the earlier credit
shall be applied first.
For partners, shareholders of Subchapter S corporations,
and owners of limited liability companies, if the liability
company is treated as a partnership for the purposes of federal
and State income taxation, there shall be allowed a credit
under this Section 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 total aggregate amount of credits awarded under the
Blue Collar Jobs Act (Article 20 of this amendatory Act of the
101st General Assembly) shall not exceed $20,000,000 in any
State fiscal year
This subsection (h-5) is exempt from the provisions of
Section 250.
(i) Credit for Personal Property Tax Replacement Income
Tax. For tax years ending prior to December 31, 2003, 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, provided that no credit may be carried forward to any
year ending on or after December 31, 2003. 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 (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 and prior to December 31,
2003, a taxpayer shall be allowed a credit against the tax
imposed by subsections (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. No
carryforward credit may be claimed in any tax year ending on or
after December 31, 2003.
(k) Research and development credit. For tax years ending
after July 1, 1990 and prior to December 31, 2003, and
beginning again for tax years ending on or after December 31,
2004, and ending prior to January 1, 2022, 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; provided that no credit earned in a tax year ending
prior to December 31, 2003 may be carried forward to any year
ending on or after December 31, 2003.
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.
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.
It is the intent of the General Assembly that the research
and development credit under this subsection (k) shall apply
continuously for all tax years ending on or after December 31,
2004 and ending prior to January 1, 2022, including, but not
limited to, the period beginning on January 1, 2016 and ending
on the effective date of this amendatory Act of the 100th
General Assembly. All actions taken in reliance on the
continuation of the credit under this subsection (k) by any
taxpayer are hereby validated.
(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 (now
Department of Commerce and Economic Opportunity). 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 claimed by a family that is the
custodian of qualifying pupils exceed (i) $500 for tax years
ending prior to December 31, 2017, and (ii) $750 for tax years
ending on or after December 31, 2017. In no event shall a
credit under this subsection reduce the taxpayer's liability
under this Act to less than zero. Notwithstanding any other
provision of law, for taxable years beginning on or after
January 1, 2017, no taxpayer may claim a credit under this
subsection (m) if the taxpayer's adjusted gross income for the
taxable year exceeds (i) $500,000, in the case of spouses
filing a joint federal tax return or (ii) $250,000, in the case
of all other taxpayers. 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.
(n) River Edge Redevelopment Zone site remediation tax
credit.
(i) For tax years ending on or after December 31, 2006,
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 58.14a of the
Environmental Protection Act that were paid in performing
environmental remediation at a site within a River Edge
Redevelopment Zone 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. Determinations as to credit
availability for purposes of this Section shall be made
consistent with rules adopted by the Pollution Control
Board pursuant to the Illinois Administrative Procedure
Act for the administration and enforcement of Section 58.9
of the Environmental Protection Act. 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.
(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. 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.
(o) For each of taxable years during the Compassionate Use
of Medical Cannabis Pilot Program, a surcharge is imposed on
all taxpayers on income arising from the sale or exchange of
capital assets, depreciable business property, real property
used in the trade or business, and Section 197 intangibles of
an organization registrant under the Compassionate Use of
Medical Cannabis Pilot Program Act. The amount of the surcharge
is equal to the amount of federal income tax liability for the
taxable year attributable to those sales and exchanges. The
surcharge imposed does not apply if:
(1) the medical cannabis cultivation center
registration, medical cannabis dispensary registration, or
the property of a registration is transferred as a result
of any of the following:
(A) bankruptcy, a receivership, or a debt
adjustment initiated by or against the initial
registration or the substantial owners of the initial
registration;
(B) cancellation, revocation, or termination of
any registration by the Illinois Department of Public
Health;
(C) a determination by the Illinois Department of
Public Health that transfer of the registration is in
the best interests of Illinois qualifying patients as
defined by the Compassionate Use of Medical Cannabis
Pilot Program Act;
(D) the death of an owner of the equity interest in
a registrant;
(E) the acquisition of a controlling interest in
the stock or substantially all of the assets of a
publicly traded company;
(F) a transfer by a parent company to a wholly
owned subsidiary; or
(G) the transfer or sale to or by one person to
another person where both persons were initial owners
of the registration when the registration was issued;
or
(2) the cannabis cultivation center registration,
medical cannabis dispensary registration, or the
controlling interest in a registrant's property is
transferred in a transaction to lineal descendants in which
no gain or loss is recognized or as a result of a
transaction in accordance with Section 351 of the Internal
Revenue Code in which no gain or loss is recognized.
(Source: P.A. 100-22, eff. 7-6-17.)
(35 ILCS 5/211)
Sec. 211. Economic Development for a Growing Economy Tax
Credit. For tax years beginning on or after January 1, 1999, a
Taxpayer who has entered into an Agreement (including a New
Construction EDGE Agreement) under the Economic Development
for a Growing Economy Tax Credit Act is entitled to a credit
against the taxes imposed under subsections (a) and (b) of
Section 201 of this Act in an amount to be determined in the
Agreement. If the Taxpayer is a partnership or Subchapter S
corporation, the credit shall be allowed to the partners or
shareholders 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 Department, in
cooperation with the Department of Commerce and Economic
Opportunity, shall prescribe rules to enforce and administer
the provisions of this Section. This Section is exempt from the
provisions of Section 250 of this Act.
The credit shall be subject to the conditions set forth in
the Agreement and the following limitations:
(1) The tax credit shall not exceed the Incremental
Income Tax (as defined in Section 5-5 of the Economic
Development for a Growing Economy Tax Credit Act) with
respect to the project; additionally, the New Construction
EDGE Credit shall not exceed the New Construction EDGE
Incremental Income Tax (as defined in Section 5-5 of the
Economic Development for a Growing Economy Tax Credit Act).
(2) The amount of the credit allowed during the tax
year plus the sum of all amounts allowed in prior years
shall not exceed 100% of the aggregate amount expended by
the Taxpayer during all prior tax years on approved costs
defined by Agreement.
(3) The amount of the credit shall be determined on an
annual basis. Except as applied in a carryover year
pursuant to Section 211(4) of this Act, the credit may not
be applied against any State income tax liability in more
than 10 taxable years; provided, however, that (i) an
eligible business certified by the Department of Commerce
and Economic Opportunity under the Corporate Headquarters
Relocation Act may not apply the credit against any of its
State income tax liability in more than 15 taxable years
and (ii) credits allowed to that eligible business are
subject to the conditions and requirements set forth in
Sections 5-35 and 5-45 of the Economic Development for a
Growing Economy Tax Credit Act and Section 5-51 as
applicable to New Construction EDGE Credits.
(4) The credit may not exceed the amount of taxes
imposed pursuant to subsections (a) and (b) of Section 201
of this Act. Any credit that is unused in the year the
credit is computed 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 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.
(5) No credit shall be allowed with respect to any
Agreement for any taxable year ending after the
Noncompliance Date. Upon receiving notification by the
Department of Commerce and Economic Opportunity of the
noncompliance of a Taxpayer with an Agreement, the
Department shall notify the Taxpayer that no credit is
allowed with respect to that Agreement for any taxable year
ending after the Noncompliance Date, as stated in such
notification. If any credit has been allowed with respect
to an Agreement for a taxable year ending after the
Noncompliance Date for that Agreement, any refund paid to
the Taxpayer for that taxable year shall, to the extent of
that credit allowed, be an erroneous refund within the
meaning of Section 912 of this Act.
(6) For purposes of this Section, the terms
"Agreement", "Incremental Income Tax", "New Construction
EDGE Agreement", "New Construction EDGE Credit", "New
Construction EDGE Incremental Income Tax", and
"Noncompliance Date" have the same meaning as when used in
the Economic Development for a Growing Economy Tax Credit
Act.
(Source: P.A. 94-793, eff. 5-19-06.)
(35 ILCS 5/221)
Sec. 221. Rehabilitation costs; qualified historic
properties; River Edge Redevelopment Zone.
(a) For taxable years that begin on or after January 1,
2012 and begin prior to January 1, 2018, there shall be allowed
a tax credit against the tax imposed by subsections (a) and (b)
of Section 201 of this Act in an amount equal to 25% of
qualified expenditures incurred by a qualified taxpayer during
the taxable year in the restoration and preservation of a
qualified historic structure located in a River Edge
Redevelopment Zone pursuant to a qualified rehabilitation
plan, provided that the total amount of such expenditures (i)
must equal $5,000 or more and (ii) must exceed 50% of the
purchase price of the property.
(a-1) For taxable years that begin on or after January 1,
2018 and end prior to January 1, 2022, there shall be allowed a
tax credit against the tax imposed by subsections (a) and (b)
of Section 201 of this Act in an aggregate amount equal to 25%
of qualified expenditures incurred by a qualified taxpayer in
the restoration and preservation of a qualified historic
structure located in a River Edge Redevelopment Zone pursuant
to a qualified rehabilitation plan, provided that the total
amount of such expenditures must (i) equal $5,000 or more and
(ii) exceed the adjusted basis of the qualified historic
structure on the first day the qualified rehabilitation plan
begins. For any rehabilitation project, regardless of duration
or number of phases, the project's compliance with the
foregoing provisions (i) and (ii) shall be determined based on
the aggregate amount of qualified expenditures for the entire
project and may include expenditures incurred under subsection
(a), this subsection, or both subsection (a) and this
subsection. If the qualified rehabilitation plan spans
multiple years, the aggregate credit for the entire project
shall be allowed in the last taxable year, except for phased
rehabilitation projects, which may receive credits upon
completion of each phase. Before obtaining the first phased
credit: (A) the total amount of such expenditures must meet the
requirements of provisions (i) and (ii) of this subsection; (B)
the rehabilitated portion of the qualified historic structure
must be placed in service; and (C) the requirements of
subsection (b) must be met.
(a-2) For taxable years beginning on or after January 1,
2021 and ending prior to January 1, 2022, there shall be
allowed a tax credit against the tax imposed by subsections (a)
and (b) of Section 201 as provided in Section 10-10.3 of the
River Edge Redevelopment Zone Act. The credit allowed under
this subsection (a-2) shall apply only to taxpayers that make a
capital investment of at least $1,000,000 in a qualified
rehabilitation plan.
The credit or credits may not reduce the taxpayer's
liability to less than zero. If the amount of the credit or
credits exceeds the taxpayer's liability, the excess may be
carried forward and applied against the taxpayer's liability in
succeeding calendar years in the manner provided under
paragraph (4) of Section 211 of this Act. The credit or credits
shall be applied to the earliest year for which there is a tax
liability. If there are credits from more than one taxable year
that are available to offset a liability, the earlier credit
shall be applied first.
For partners, shareholders of Subchapter S corporations,
and owners of limited liability companies, if the liability
company is treated as a partnership for the purposes of federal
and State income taxation, there shall be allowed a credit
under this Section 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 total aggregate amount of credits awarded under the
Blue Collar Jobs Act (Article 20 of this amendatory Act of the
101st General Assembly) shall not exceed $20,000,000 in any
State fiscal year.
(b) To obtain a tax credit pursuant to this Section, the
taxpayer must apply with the Department of Natural Resources.
The Department of Natural Resources shall determine the amount
of eligible rehabilitation costs and expenses in addition to
the amount of the River Edge construction jobs credit within 45
days of receipt of a complete application. The taxpayer must
submit a certification of costs prepared by an independent
certified public accountant that certifies (i) the project
expenses, (ii) whether those expenses are qualified
expenditures, and (iii) that the qualified expenditures exceed
the adjusted basis of the qualified historic structure on the
first day the qualified rehabilitation plan commenced. The
Department of Natural Resources is authorized, but not
required, to accept this certification of costs to determine
the amount of qualified expenditures and the amount of the
credit. The Department of Natural Resources shall provide
guidance as to the minimum standards to be followed in the
preparation of such certification. The Department of Natural
Resources and the National Park Service shall determine whether
the rehabilitation is consistent with the United States
Secretary of the Interior's Standards for Rehabilitation.
(b-1) Upon completion of the project and approval of the
complete application, the Department of Natural Resources
shall issue a single certificate in the amount of the eligible
credits equal to 25% of qualified expenditures incurred during
the eligible taxable years, as defined in subsections (a) and
(a-1), excepting any credits awarded under subsection (a) prior
to January 1, 2019 (the effective date of Public Act 100-629)
this amendatory Act of the 100th General Assembly and any
phased credits issued prior to the eligible taxable year under
subsection (a-1). At the time the certificate is issued, an
issuance fee up to the maximum amount of 2% of the amount of
the credits issued by the certificate may be collected from the
applicant to administer the provisions of this Section. If
collected, this issuance fee shall be deposited into the
Historic Property Administrative Fund, a special fund created
in the State treasury. Subject to appropriation, moneys in the
Historic Property Administrative Fund shall be provided to the
Department of Natural Resources as reimbursement Department of
Natural Resources for the costs associated with administering
this Section.
(c) The taxpayer must attach the certificate to the tax
return on which the credits are to be claimed. The tax credit
under this Section may not reduce the taxpayer's liability to
less than zero. If the amount of the credit exceeds the tax
liability for the year, the excess credit may be carried
forward and applied to the tax liability of the 5 taxable years
following the excess credit year.
(c-1) Subject to appropriation, moneys in the Historic
Property Administrative Fund shall be used, on a biennial basis
beginning at the end of the second fiscal year after January 1,
2019 (the effective date of Public Act 100-629) this amendatory
Act of the 100th General Assembly, to hire a qualified third
party to prepare a biennial report to assess the overall
economic impact to the State from the qualified rehabilitation
projects under this Section completed in that year and in
previous years. The overall economic impact shall include at
least: (1) the direct and indirect or induced economic impacts
of completed projects; (2) temporary, permanent, and
construction jobs created; (3) sales, income, and property tax
generation before, during construction, and after completion;
and (4) indirect neighborhood impact after completion. The
report shall be submitted to the Governor and the General
Assembly. The report to the General Assembly shall be filed
with the Clerk of the House of Representatives and the
Secretary of the Senate in electronic form only, in the manner
that the Clerk and the Secretary shall direct.
(c-2) The Department of Natural Resources may adopt rules
to implement this Section in addition to the rules expressly
authorized in this Section.
(d) As used in this Section, the following terms have the
following meanings.
"Phased rehabilitation" means a project that is completed
in phases, as defined under Section 47 of the federal Internal
Revenue Code and pursuant to National Park Service regulations
at 36 C.F.R. 67.
"Placed in service" means the date when the property is
placed in a condition or state of readiness and availability
for a specifically assigned function as defined under Section
47 of the federal Internal Revenue Code and federal Treasury
Regulation Sections 1.46 and 1.48.
"Qualified expenditure" means all the costs and expenses
defined as qualified rehabilitation expenditures under Section
47 of the federal Internal Revenue Code that were incurred in
connection with a qualified historic structure.
"Qualified historic structure" means a certified historic
structure as defined under Section 47(c)(3) of the federal
Internal Revenue Code.
"Qualified rehabilitation plan" means a project that is
approved by the Department of Natural Resources and the
National Park Service as being consistent with the United
States Secretary of the Interior's Standards for
Rehabilitation.
"Qualified taxpayer" means the owner of the qualified
historic structure or any other person who qualifies for the
federal rehabilitation credit allowed by Section 47 of the
federal Internal Revenue Code with respect to that qualified
historic structure. Partners, shareholders of subchapter S
corporations, and owners of limited liability companies (if the
limited liability company is treated as a partnership for
purposes of federal and State income taxation) are entitled to
a credit under this Section to be determined in accordance with
the determination of income and distributive share of income
under Sections 702 and 703 and subchapter S of the Internal
Revenue Code, provided that credits granted to a partnership, a
limited liability company taxed as a partnership, or other
multiple owners of property shall be passed through to the
partners, members, or owners respectively on a pro rata basis
or pursuant to an executed agreement among the partners,
members, or owners documenting any alternate distribution
method.
(Source: P.A. 99-914, eff. 12-20-16; 100-236, eff. 8-18-17;
100-629, eff. 1-1-19; 100-695, eff. 8-3-18; revised 10-18-18.)
Section 20-15. The Economic Development for a Growing
Economy Tax Credit Act is amended by changing Section 5-5 and
by adding Sections 5-51 and 5-56 as follows:
(35 ILCS 10/5-5)
Sec. 5-5. Definitions. As used in this Act:
"Agreement" means the Agreement between a Taxpayer and the
Department under the provisions of Section 5-50 of this Act.
"Applicant" means a Taxpayer that is operating a business
located or that the Taxpayer plans to locate within the State
of Illinois and that is engaged in interstate or intrastate
commerce for the purpose of manufacturing, processing,
assembling, warehousing, or distributing products, conducting
research and development, providing tourism services, or
providing services in interstate commerce, office industries,
or agricultural processing, but excluding retail, retail food,
health, or professional services. "Applicant" does not include
a Taxpayer who closes or substantially reduces an operation at
one location in the State and relocates substantially the same
operation to another location in the State. This does not
prohibit a Taxpayer from expanding its operations at another
location in the State, provided that existing operations of a
similar nature located within the State are not closed or
substantially reduced. This also does not prohibit a Taxpayer
from moving its operations from one location in the State to
another location in the State for the purpose of expanding the
operation provided that the Department determines that
expansion cannot reasonably be accommodated within the
municipality in which the business is located, or in the case
of a business located in an incorporated area of the county,
within the county in which the business is located, after
conferring with the chief elected official of the municipality
or county and taking into consideration any evidence offered by
the municipality or county regarding the ability to accommodate
expansion within the municipality or county.
"Committee" means the Illinois Business Investment
Committee created under Section 5-25 of this Act within the
Illinois Economic Development Board.
"Credit" means the amount agreed to between the Department
and Applicant under this Act, but not to exceed the lesser of:
(1) the sum of (i) 50% of the Incremental Income Tax
attributable to New Employees at the Applicant's project and
(ii) 10% of the training costs of New Employees; or (2) 100% of
the Incremental Income Tax attributable to New Employees at the
Applicant's project. However, if the project is located in an
underserved area, then the amount of the Credit may not exceed
the lesser of: (1) the sum of (i) 75% of the Incremental Income
Tax attributable to New Employees at the Applicant's project
and (ii) 10% of the training costs of New Employees; or (2)
100% of the Incremental Income Tax attributable to New
Employees at the Applicant's project. If an Applicant agrees to
hire the required number of New Employees, then the maximum
amount of the Credit for that Applicant may be increased by an
amount not to exceed 25% of the Incremental Income Tax
attributable to retained employees at the Applicant's project;
provided that, in order to receive the increase for retained
employees, the Applicant must provide the additional evidence
required under paragraph (3) of subsection (b) of Section 5-25.
"Department" means the Department of Commerce and Economic
Opportunity.
"Director" means the Director of Commerce and Economic
Opportunity.
"Full-time Employee" means an individual who is employed
for consideration for at least 35 hours each week or who
renders any other standard of service generally accepted by
industry custom or practice as full-time employment. An
individual for whom a W-2 is issued by a Professional Employer
Organization (PEO) is a full-time employee if employed in the
service of the Applicant for consideration for at least 35
hours each week or who renders any other standard of service
generally accepted by industry custom or practice as full-time
employment to Applicant.
"Incremental Income Tax" means the total amount withheld
during the taxable year from the compensation of New Employees
and, if applicable, retained employees under Article 7 of the
Illinois Income Tax Act arising from employment at a project
that is the subject of an Agreement.
"New Construction EDGE Agreement" means the Agreement
between a Taxpayer and the Department under the provisions of
Section 5-51 of this Act.
"New Construction EDGE Credit" means an amount agreed to
between the Department and the Applicant under this Act as part
of a New Construction EDGE Agreement that does not exceed 50%
of the Incremental Income Tax attributable to New Construction
EDGE Employees at the Applicant's project; however, if the New
Construction EDGE Project is located in an underserved area,
then the amount of the New Construction EDGE Credit may not
exceed 75% of the Incremental Income Tax attributable to New
Construction EDGE Employees at the Applicant's New
Construction EDGE Project.
"New Construction EDGE Employee" means a laborer or worker
who is employed by an Illinois contractor or subcontractor in
the actual construction work on the site of a New Construction
EDGE Project, pursuant to a New Construction EDGE Agreement.
"New Construction EDGE Incremental Income Tax" means the
total amount withheld during the taxable year from the
compensation of New Construction EDGE Employees.
"New Construction EDGE Project" means the building of a
Taxpayer's structure or building, or making improvements of any
kind to real property. "New Construction EDGE Project" does not
include the routine operation, routine repair, or routine
maintenance of existing structures, buildings, or real
property.
"New Employee" means:
(a) A Full-time Employee first employed by a Taxpayer
in the project that is the subject of an Agreement and who
is hired after the Taxpayer enters into the tax credit
Agreement.
(b) The term "New Employee" does not include:
(1) an employee of the Taxpayer who performs a job
that was previously performed by another employee, if
that job existed for at least 6 months before hiring
the employee;
(2) an employee of the Taxpayer who was previously
employed in Illinois by a Related Member of the
Taxpayer and whose employment was shifted to the
Taxpayer after the Taxpayer entered into the tax credit
Agreement; or
(3) a child, grandchild, parent, or spouse, other
than a spouse who is legally separated from the
individual, of any individual who has a direct or an
indirect ownership interest of at least 5% in the
profits, capital, or value of the Taxpayer.
(c) Notwithstanding paragraph (1) of subsection (b),
an employee may be considered a New Employee under the
Agreement if the employee performs a job that was
previously performed by an employee who was:
(1) treated under the Agreement as a New Employee;
and
(2) promoted by the Taxpayer to another job.
(d) Notwithstanding subsection (a), the Department may
award Credit to an Applicant with respect to an employee
hired prior to the date of the Agreement if:
(1) the Applicant is in receipt of a letter from
the Department stating an intent to enter into a credit
Agreement;
(2) the letter described in paragraph (1) is issued
by the Department not later than 15 days after the
effective date of this Act; and
(3) the employee was hired after the date the
letter described in paragraph (1) was issued.
"Noncompliance Date" means, in the case of a Taxpayer that
is not complying with the requirements of the Agreement or the
provisions of this Act, the day following the last date upon
which the Taxpayer was in compliance with the requirements of
the Agreement and the provisions of this Act, as determined by
the Director, pursuant to Section 5-65.
"Pass Through Entity" means an entity that is exempt from
the tax under subsection (b) or (c) of Section 205 of the
Illinois Income Tax Act.
"Professional Employer Organization" (PEO) means an
employee leasing company, as defined in Section 206.1(A)(2) of
the Illinois Unemployment Insurance Act.
"Related Member" means a person that, with respect to the
Taxpayer during any portion of the taxable year, is any one of
the following:
(1) An individual stockholder, if the stockholder and
the members of the stockholder's family (as defined in
Section 318 of the Internal Revenue Code) own directly,
indirectly, beneficially, or constructively, in the
aggregate, at least 50% of the value of the Taxpayer's
outstanding stock.
(2) A partnership, estate, or trust and any partner or
beneficiary, if the partnership, estate, or trust, and its
partners or beneficiaries own directly, indirectly,
beneficially, or constructively, in the aggregate, at
least 50% of the profits, capital, stock, or value of the
Taxpayer.
(3) A corporation, and any party related to the
corporation in a manner that would require an attribution
of stock from the corporation to the party or from the
party to the corporation under the attribution rules of
Section 318 of the Internal Revenue Code, if the Taxpayer
owns directly, indirectly, beneficially, or constructively
at least 50% of the value of the corporation's outstanding
stock.
(4) A corporation and any party related to that
corporation in a manner that would require an attribution
of stock from the corporation to the party or from the
party to the corporation under the attribution rules of
Section 318 of the Internal Revenue Code, if the
corporation and all such related parties own in the
aggregate at least 50% of the profits, capital, stock, or
value of the Taxpayer.
(5) A person to or from whom there is attribution of
stock ownership in accordance with Section 1563(e) of the
Internal Revenue Code, except, for purposes of determining
whether a person is a Related Member under this paragraph,
20% shall be substituted for 5% wherever 5% appears in
Section 1563(e) of the Internal Revenue Code.
"Taxpayer" means an individual, corporation, partnership,
or other entity that has any Illinois Income Tax liability.
"Underserved area" means a geographic area that meets one
or more of the following conditions:
(1) the area has a poverty rate of at least 20%
according to the latest federal decennial census;
(2) 75% or more of the children in the area participate
in the federal free lunch program according to reported
statistics from the State Board of Education;
(3) at least 20% of the households in the area receive
assistance under the Supplemental Nutrition Assistance
Program (SNAP); or
(4) the area has an average unemployment rate, as
determined by the Illinois Department of Employment
Security, that is more than 120% of the national
unemployment average, as determined by the U.S. Department
of Labor, for a period of at least 2 consecutive calendar
years preceding the date of the application.
(Source: P.A. 100-511, eff. 9-18-17.)
(35 ILCS 10/5-51 new)
Sec. 5-51. New Construction EDGE Agreement.
(a) Notwithstanding any other provisions of this Act, and
in addition to any Credit otherwise allowed under this Act,
beginning on January 1, 2021, there is allowed a New
Construction EDGE Credit for eligible Applicants that meet the
following criteria:
(1) the Department has certified that the Applicant
meets all requirements of Sections 5-15, 5-20, and 5-25;
and
(2) the Department has certified that, pursuant to
Section 5-20, the Applicant's Agreement includes a capital
investment of at least $10,000,000 in a New Construction
EDGE Project to be placed in service within the State as a
direct result of an Agreement entered into pursuant to this
Section.
(b) The Department shall notify each Applicant during the
application process that their project is eligible for a New
Construction EDGE Credit. The Department shall create a
separate application to be filled out by the Applicant
regarding the New Construction EDGE credit. The Application
shall include the following:
(1) a detailed description of the New Construction EDGE
Project that is subject to the New Construction EDGE
Agreement, including the location and amount of the
investment and jobs created or retained;
(2) the duration of the New Construction EDGE Credit
and the first taxable year for which the Credit may be
claimed;
(3) the New Construction EDGE Credit amount that will
be allowed for each taxable year;
(4) a requirement that the Director is authorized to
verify with the appropriate State agencies the amount of
the incremental income tax withheld by a Taxpayer, and
after doing so, shall issue a certificate to the Taxpayer
stating that the amounts have been verified;
(5) the amount of the capital investment, which may at
no point be less than $10,000,000, the time period of
placing the New Construction EDGE Project in service, and
the designated location in Illinois for the investment;
(6) a requirement that the Taxpayer shall provide
written notification to the Director not more than 30 days
after the Taxpayer determines that the capital investment
of at least $10,000,000 is not or will not be achieved or
maintained as set forth in the terms and conditions of the
Agreement;
(7) a detailed provision that the Taxpayer shall be
awarded a New Construction EDGE Credit upon the verified
completion and occupancy of a New Construction EDGE
Project; and
(8) any other performance conditions, including the
ability to verify that a New Construction EDGE Project is
built and completed, or that contract provisions as the
Department determines are appropriate.
(c) The Department shall post on its website the terms of
each New Construction EDGE Agreement entered into under this
Act on or after the effective date of this amendatory Act of
the 101st General Assembly. Such information shall be posted
within 10 days after entering into the Agreement and must
include the following:
(1) the name of the recipient business;
(2) the location of the project;
(3) the estimated value of the credit; and
(4) whether or not the project is located in an
underserved area.
(d) The Department, in collaboration with the Department of
Labor, shall require that certified payroll reporting,
pursuant to Section 5-56 of this Act, be completed in order to
verify the wages and any other necessary information which the
Department may deem necessary to ascertain and certify the
total number of New Construction EDGE Employees subject to a
New Construction EDGE Agreement and amount of a New
Construction EDGE Credit.
(e) The total aggregate amount of credits awarded under the
Blue Collar Jobs Act (Article 20 of this amendatory Act of the
101st General Assembly) shall not exceed $20,000,000 in any
State fiscal year.
(35 ILCS 10/5-56 new)
Sec. 5-56. Certified payroll.
(a) Each contractor and subcontractor that is engaged in
and is executing a New Construction EDGE Project for a
Taxpayer, pursuant to a New Construction EDGE Agreement shall:
(1) make and keep, for a period of 5 years from the
date of the last payment made on or after the effective
date of this amendatory Act of the 101st General Assembly
on a contract or subcontract for a New Construction EDGE
Project pursuant to a New Construction EDGE Agreement,
records of all laborers and other workers employed by the
contractor or subcontractor on the project; the records
shall include:
(A) the worker's name;
(B) the worker's address;
(C) the worker's telephone number, if available;
(D) the worker's social security number;
(E) the worker's classification or
classifications;
(F) the worker's gross and net wages paid in each
pay period;
(G) the worker's number of hours worked each day;
(H) the worker's starting and ending times of work
each day;
(I) the worker's hourly wage rate; and
(J) the worker's hourly overtime wage rate; and
(2) no later than the 15th day of each calendar month,
provide a certified payroll for the immediately preceding
month to the taxpayer in charge of the project; within 5
business days after receiving the certified payroll, the
taxpayer shall file the certified payroll with the
Department of Labor and the Department of Commerce and
Economic Opportunity; a certified payroll must be filed for
only those calendar months during which construction on a
New Construction EDGE Project has occurred; the certified
payroll shall consist of a complete copy of the records
identified in paragraph (1), but may exclude the starting
and ending times of work each day; the certified payroll
shall be accompanied by a statement signed by the
contractor or subcontractor or an officer, employee, or
agent of the contractor or subcontractor which avers that:
(A) he or she has examined the certified payroll
records required to be submitted by the Act and such
records are true and accurate; and
(B) the contractor or subcontractor is aware that
filing a certified payroll that he or she knows to be
false is a Class A misdemeanor.
A general contractor is not prohibited from relying on a
certified payroll of a lower-tier subcontractor, provided the
general contractor does not knowingly rely upon a
subcontractor's false certification.
Any contractor or subcontractor subject to this Section,
and any officer, employee, or agent of such contractor or
subcontractor whose duty as an officer, employee, or agent it
is to file a certified payroll under this Section, who
willfully fails to file such a certified payroll on or before
the date such certified payroll is required to be filed and any
person who willfully files a false certified payroll that is
false as to any material fact is in violation of this Act and
guilty of a Class A misdemeanor.
The taxpayer in charge of the project shall keep the
records submitted in accordance with this subsection on or
after the effective date of this amendatory Act of the 101st
General Assembly for a period of 5 years from the date of the
last payment for work on a contract or subcontract for the
project.
The records submitted in accordance with this subsection
shall be considered public records, except an employee's
address, telephone number, and social security number, and made
available in accordance with the Freedom of Information Act.
The Department of Labor shall accept any reasonable submissions
by the contractor that meet the requirements of this subsection
and shall share the information with the Department in order to
comply with the awarding of New Construction EDGE Credits. A
contractor, subcontractor, or public body may retain records
required under this Section in paper or electronic format.
Upon 7 business days' notice, the contractor and each
subcontractor shall make available for inspection and copying
at a location within this State during reasonable hours, the
records identified in paragraph (1) of this subsection to the
taxpayer in charge of the project, its officers and agents, the
Director of Labor and his deputies and agents, and to federal,
State, or local law enforcement agencies and prosecutors.
Section 20-20. The River Edge Redevelopment Zone Act is
amended by changing Section 10-3 and by adding Sections 10-10.3
and 10-10.4 as follows:
(65 ILCS 115/10-3)
Sec. 10-3. Definitions. As used in this Act:
"Department" means the Department of Commerce and Economic
Opportunity.
"River Edge Redevelopment Zone" means an area of the State
certified by the Department as a River Edge Redevelopment Zone
pursuant to this Act.
"Designated zone organization" means an association or
entity: (1) the members of which are substantially all
residents of the River Edge Redevelopment Zone or of the
municipality in which the River Edge Redevelopment Zone is
located; (2) the board of directors of which is elected by the
members of the organization; (3) that satisfies the criteria
set forth in Section 501(c) (3) or 501(c) (4) of the Internal
Revenue Code; and (4) that exists primarily for the purpose of
performing within the zone, for the benefit of the residents
and businesses thereof, any of the functions set forth in
Section 8 of this Act.
"Incremental income tax" means the total amount withheld
during the taxable year from the compensation of River Edge
Construction Jobs Employees.
"Agency" means: each officer, board, commission, and
agency created by the Constitution, in the executive branch of
State government, other than the State Board of Elections; each
officer, department, board, commission, agency, institution,
authority, university, and body politic and corporate of the
State; each administrative unit or corporate outgrowth of the
State government that is created by or pursuant to statute,
other than units of local government and their officers, school
districts, and boards of election commissioners; and each
administrative unit or corporate outgrowth of the above and as
may be created by executive order of the Governor. No entity is
an "agency" for the purposes of this Act unless the entity is
authorized by law to make rules or regulations.
"River Edge construction jobs credit" means an amount equal
to 50% of the incremental income tax attributable to River Edge
construction employees employed on a River Edge construction
jobs project. However, the amount may equal 75% of the
incremental income tax attributable to River Edge construction
employees employed on a River Edge construction jobs project
located in an underserved area. The total aggregate amount of
credits awarded under the Blue Collar Jobs Act (Article 20 of
this amendatory Act of the 101st General Assembly) shall not
exceed $20,000,000 in any State fiscal year.
"River Edge construction jobs employee" means a laborer or
worker who is employed by an Illinois contractor or
subcontractor in the actual construction work on the site of a
River Edge construction jobs project.
"River Edge construction jobs project" means building a
structure or building, or making improvements of any kind to
real property, in a River Edge Redevelopment Zone that is built
or improved in the course of completing a qualified
rehabilitation plan. "River Edge construction jobs project"
does not include the routine operation, routine repair, or
routine maintenance of existing structures, buildings, or real
property.
"Rule" means each agency statement of general
applicability that implements, applies, interprets, or
prescribes law or policy, but does not include (i) statements
concerning only the internal management of an agency and not
affecting private rights or procedures available to persons or
entities outside the agency, (ii) intra-agency memoranda, or
(iii) the prescription of standardized forms.
"Underserved area" means a geographic area that meets one
or more of the following conditions:
(1) the area has a poverty rate of at least 20%
according to the latest federal decennial census;
(2) 75% or more of the children in the area participate
in the federal free lunch program according to reported
statistics from the State Board of Education;
(3) at least 20% of the households in the area receive
assistance under the Supplemental Nutrition Assistance
Program (SNAP); or
(4) the area has an average unemployment rate, as
determined by the Illinois Department of Employment
Security, that is more than 120% of the national
unemployment average, as determined by the U.S. Department
of Labor, for a period of at least 2 consecutive calendar
years preceding the date of the application.
(Source: P.A. 94-1021, eff. 7-12-06.)
(65 ILCS 115/10-10.3 new)
Sec. 10-10.3. River Edge Construction Jobs Credit.
(a) Beginning on January 1, 2021, a business entity may
receive a tax credit against the tax imposed under subsections
(a) and (b) of Section 201 in an amount equal to 50% (or 75% if
the project is located in an underserved area) of the amount of
the incremental income tax attributable to River Edge
construction jobs employees employed in the course of
completing a River Edge construction jobs project. The credit
allowed under this Section shall apply only to taxpayers that
make a capital investment of at least $1,000,000 in a qualified
rehabilitation plan.
(b) A business entity seeking a credit under this Section
must submit an application to the Department describing the
nature and benefit of the River Edge construction jobs project
to the qualified rehabilitation project and the River Edge
Redevelopment Zone. The Department may adopt any necessary
rules in order to administer the provisions of this Section.
(c) Within 45 days after the receipt of an application, the
Department shall give notice to the applicant as to whether the
application has been approved or disapproved. If the Department
disapproves the application, it shall specify the reasons for
this decision and allow 60 days for the applicant to amend and
resubmit its application. The Department shall provide
assistance upon request to applicants. Resubmitted
applications shall receive the Department's approval or
disapproval within 30 days of resubmission. Those resubmitted
applications satisfying initial Department objectives shall be
approved unless reasonable circumstances warrant disapproval.
(d) On an annual basis, the designated zone organization
shall furnish a statement to the Department on the programmatic
and financial status of any approved project and an audited
financial statement of the project.
(e) The Department shall certify to the Department of
Revenue the identity of the taxpayers who are eligible for
River Edge construction jobs credits and the amounts of River
Edge construction jobs credits awarded in each taxable year.
(f) The Department, in collaboration with the Department of
Labor, shall require certified payroll reporting, pursuant to
Section 10-10.4 of this Act, be completed in order to verify
the wages and any other necessary information which the
Department may deem necessary to ascertain and certify the
total number of River Edge construction jobs employees and
determine the amount of a River Edge construction jobs credit.
(g) The total aggregate amount of credits awarded under the
Blue Collar Jobs Act (Article 20 of this amendatory Act of the
101st General Assembly) shall not exceed $20,000,000 in any
State fiscal year.
(65 ILCS 115/10-10.4 new)
Sec. 10-10.4. Certified payroll.
(a) Any contractor and each subcontractor who is engaged in
and is executing a River Edge construction jobs project for a
taxpayer that is entitled to a credit pursuant to Section
10-10.3 of this Act shall:
(1) make and keep, for a period of 5 years from the
date of the last payment made on or after the effective
date of this amendatory Act of the 101st General Assembly
on a contract or subcontract for a River Edge Construction
Jobs Project in a River Edge Redevelopment Zone records of
all laborers and other workers employed by them on the
project; the records shall include:
(A) the worker's name;
(B) the worker's address;
(C) the worker's telephone number, if available;
(D) the worker's social security number;
(E) the worker's classification or
classifications;
(F) the worker's gross and net wages paid in each
pay period;
(G) the worker's number of hours worked each day;
(H) the worker's starting and ending times of work
each day;
(I) the worker's hourly wage rate; and
(J) the worker's hourly overtime wage rate;
(2) no later than the 15th day of each calendar month,
provide a certified payroll for the immediately preceding
month to the taxpayer in charge of the project; within 5
business days after receiving the certified payroll, the
taxpayer shall file the certified payroll with the
Department of Labor and the Department of Commerce and
Economic Opportunity; a certified payroll must be filed for
only those calendar months during which construction on a
River Edge Construction Jobs Project has occurred; the
certified payroll shall consist of a complete copy of the
records identified in paragraph (1), but may exclude the
starting and ending times of work each day; the certified
payroll shall be accompanied by a statement signed by the
contractor or subcontractor or an officer, employee, or
agent of the contractor or subcontractor which avers that:
(A) he or she has examined the certified payroll
records required to be submitted and such records are
true and accurate; and
(B) the contractor or subcontractor is aware that
filing a certified payroll that he or she knows to be
false is a Class A misdemeanor.
A general contractor is not prohibited from relying on a
certified payroll of a lower-tier subcontractor, provided the
general contractor does not knowingly rely upon a
subcontractor's false certification.
Any contractor or subcontractor subject to this Section,
and any officer, employee, or agent of such contractor or
subcontractor whose duty as an officer, employee, or agent it
is to file a certified payroll under this Section, who
willfully fails to file such a certified payroll on or before
the date such certified payroll is required to be filed and any
person who willfully files a false certified payroll that is
false as to any material fact is in violation of this Act and
guilty of a Class A misdemeanor.
The taxpayer in charge of the project shall keep the
records submitted in accordance with this Section on or after
the effective date of this amendatory Act of the 101st General
Assembly for a period of 5 years from the date of the last
payment for work on a contract or subcontract for the project.
The records submitted in accordance with this subsection
shall be considered public records, except an employee's
address, telephone number, and social security number, and made
available in accordance with the Freedom of Information Act.
The Department of Labor shall accept any reasonable submissions
by the contractor that meet the requirements of this subsection
and shall share the information with the Department in order to
comply with the awarding of River Edge construction jobs
credits. A contractor, subcontractor, or public body may retain
records required under this Section in paper or electronic
format.
Upon 7 business days' notice, the contractor and each
subcontractor shall make available for inspection and copying
at a location within this State during reasonable hours, the
records identified in paragraph (1) of this subsection to the
taxpayer in charge of the project, its officers and agents, the
Director of Labor and his deputies and agents, and to federal,
State, or local law enforcement agencies and prosecutors.
ARTICLE 25. MANUFACTURING MACHINERY AND EQUIPMENT
Section 25-5. The Use Tax Act is amended by changing
Sections 3-5 and 3-50 as follows:
(35 ILCS 105/3-5)
Sec. 3-5. Exemptions. Use of the following tangible
personal property is exempt from the tax imposed by this Act:
(1) Personal property purchased from a corporation,
society, association, foundation, institution, or
organization, other than a limited liability company, that is
organized and operated as a not-for-profit service enterprise
for the benefit of persons 65 years of age or older if the
personal property was not purchased by the enterprise for the
purpose of resale by the enterprise.
(2) Personal property purchased by a not-for-profit
Illinois county fair association for use in conducting,
operating, or promoting the county fair.
(3) Personal property purchased by a not-for-profit arts or
cultural organization that establishes, by proof required by
the Department by rule, that it has received an exemption under
Section 501(c)(3) of the Internal Revenue Code and that is
organized and operated primarily for the presentation or
support of arts or cultural programming, activities, or
services. These organizations include, but are not limited to,
music and dramatic arts organizations such as symphony
orchestras and theatrical groups, arts and cultural service
organizations, local arts councils, visual arts organizations,
and media arts organizations. On and after July 1, 2001 (the
effective date of Public Act 92-35), however, an entity
otherwise eligible for this exemption shall not make tax-free
purchases unless it has an active identification number issued
by the Department.
(4) Personal property purchased by a governmental body, by
a corporation, society, association, foundation, or
institution organized and operated exclusively for charitable,
religious, or educational purposes, or by a not-for-profit
corporation, society, association, foundation, institution, or
organization that has no compensated officers or employees and
that is organized and operated primarily for the recreation of
persons 55 years of age or older. A limited liability company
may qualify for the exemption under this paragraph only if the
limited liability company is organized and operated
exclusively for educational purposes. On and after July 1,
1987, however, no entity otherwise eligible for this exemption
shall make tax-free purchases unless it has an active exemption
identification number issued by the Department.
(5) Until July 1, 2003, a passenger car that is a
replacement vehicle to the extent that the purchase price of
the car is subject to the Replacement Vehicle Tax.
(6) Until July 1, 2003 and beginning again on September 1,
2004 through August 30, 2014, graphic arts machinery and
equipment, including repair and replacement parts, both new and
used, and including that manufactured on special order,
certified by the purchaser to be used primarily for graphic
arts production, and including machinery and equipment
purchased for lease. Equipment includes chemicals or chemicals
acting as catalysts but only if the chemicals or chemicals
acting as catalysts effect a direct and immediate change upon a
graphic arts product. Beginning on July 1, 2017, graphic arts
machinery and equipment is included in the manufacturing and
assembling machinery and equipment exemption under paragraph
(18).
(7) Farm chemicals.
(8) Legal tender, currency, medallions, or gold or silver
coinage issued by the State of Illinois, the government of the
United States of America, or the government of any foreign
country, and bullion.
(9) Personal property purchased from a teacher-sponsored
student organization affiliated with an elementary or
secondary school located in Illinois.
(10) A motor vehicle that is used for automobile renting,
as defined in the Automobile Renting Occupation and Use Tax
Act.
(11) Farm machinery and equipment, both new and used,
including that manufactured on special order, certified by the
purchaser to be used primarily for production agriculture or
State or federal agricultural programs, including individual
replacement parts for the machinery and equipment, including
machinery and equipment purchased for lease, and including
implements of husbandry defined in Section 1-130 of the
Illinois Vehicle Code, farm machinery and agricultural
chemical and fertilizer spreaders, and nurse wagons required to
be registered under Section 3-809 of the Illinois Vehicle Code,
but excluding other motor vehicles required to be registered
under the Illinois Vehicle Code. Horticultural polyhouses or
hoop houses used for propagating, growing, or overwintering
plants shall be considered farm machinery and equipment under
this item (11). Agricultural chemical tender tanks and dry
boxes shall include units sold separately from a motor vehicle
required to be licensed and units sold mounted on a motor
vehicle required to be licensed if the selling price of the
tender is separately stated.
Farm machinery and equipment shall include precision
farming equipment that is installed or purchased to be
installed on farm machinery and equipment including, but not
limited to, tractors, harvesters, sprayers, planters, seeders,
or spreaders. Precision farming equipment includes, but is not
limited to, soil testing sensors, computers, monitors,
software, global positioning and mapping systems, and other
such equipment.
Farm machinery and equipment also includes computers,
sensors, software, and related equipment used primarily in the
computer-assisted operation of production agriculture
facilities, equipment, and activities such as, but not limited
to, the collection, monitoring, and correlation of animal and
crop data for the purpose of formulating animal diets and
agricultural chemicals. This item (11) is exempt from the
provisions of Section 3-90.
(12) Until June 30, 2013, fuel and petroleum products sold
to or used by an air common carrier, certified by the carrier
to be used for consumption, shipment, or storage in the conduct
of its business as an air common carrier, for a flight destined
for or returning from a location or locations outside the
United States without regard to previous or subsequent domestic
stopovers.
Beginning July 1, 2013, fuel and petroleum products sold to
or used by an air carrier, certified by the carrier to be used
for consumption, shipment, or storage in the conduct of its
business as an air common carrier, for a flight that (i) is
engaged in foreign trade or is engaged in trade between the
United States and any of its possessions and (ii) transports at
least one individual or package for hire from the city of
origination to the city of final destination on the same
aircraft, without regard to a change in the flight number of
that aircraft.
(13) Proceeds of mandatory service charges separately
stated on customers' bills for the purchase and consumption of
food and beverages purchased at retail from a retailer, to the
extent that the proceeds of the service charge are in fact
turned over as tips or as a substitute for tips to the
employees who participate directly in preparing, serving,
hosting or cleaning up the food or beverage function with
respect to which the service charge is imposed.
(14) Until July 1, 2003, oil field exploration, drilling,
and production equipment, including (i) rigs and parts of rigs,
rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
tubular goods, including casing and drill strings, (iii) pumps
and pump-jack units, (iv) storage tanks and flow lines, (v) any
individual replacement part for oil field exploration,
drilling, and production equipment, and (vi) machinery and
equipment purchased for lease; but excluding motor vehicles
required to be registered under the Illinois Vehicle Code.
(15) Photoprocessing machinery and equipment, including
repair and replacement parts, both new and used, including that
manufactured on special order, certified by the purchaser to be
used primarily for photoprocessing, and including
photoprocessing machinery and equipment purchased for lease.
(16) Until July 1, 2023, coal and aggregate exploration,
mining, off-highway hauling, processing, maintenance, and
reclamation equipment, including replacement parts and
equipment, and including equipment purchased for lease, but
excluding motor vehicles required to be registered under the
Illinois Vehicle Code. The changes made to this Section by
Public Act 97-767 apply on and after July 1, 2003, but no claim
for credit or refund is allowed on or after August 16, 2013
(the effective date of Public Act 98-456) for such taxes paid
during the period beginning July 1, 2003 and ending on August
16, 2013 (the effective date of Public Act 98-456).
(17) Until July 1, 2003, distillation machinery and
equipment, sold as a unit or kit, assembled or installed by the
retailer, certified by the user to be used only for the
production of ethyl alcohol that will be used for consumption
as motor fuel or as a component of motor fuel for the personal
use of the user, and not subject to sale or resale.
(18) Manufacturing and assembling machinery and equipment
used primarily in the process of manufacturing or assembling
tangible personal property for wholesale or retail sale or
lease, whether that sale or lease is made directly by the
manufacturer or by some other person, whether the materials
used in the process are owned by the manufacturer or some other
person, or whether that sale or lease is made apart from or as
an incident to the seller's engaging in the service occupation
of producing machines, tools, dies, jigs, patterns, gauges, or
other similar items of no commercial value on special order for
a particular purchaser. The exemption provided by this
paragraph (18) includes production related tangible personal
property, as defined in Section 3-50, purchased on or after
July 1, 2019. The exemption provided by this paragraph (18)
does not include machinery and equipment used in (i) the
generation of electricity for wholesale or retail sale; (ii)
the generation or treatment of natural or artificial gas for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of Public Act 98-583
are declaratory of existing law as to the meaning and scope of
this exemption. Beginning on July 1, 2017, the exemption
provided by this paragraph (18) includes, but is not limited
to, graphic arts machinery and equipment, as defined in
paragraph (6) of this Section.
(19) Personal property delivered to a purchaser or
purchaser's donee inside Illinois when the purchase order for
that personal property was received by a florist located
outside Illinois who has a florist located inside Illinois
deliver the personal property.
(20) Semen used for artificial insemination of livestock
for direct agricultural production.
(21) Horses, or interests in horses, registered with and
meeting the requirements of any of the Arabian Horse Club
Registry of America, Appaloosa Horse Club, American Quarter
Horse Association, United States Trotting Association, or
Jockey Club, as appropriate, used for purposes of breeding or
racing for prizes. This item (21) is exempt from the provisions
of Section 3-90, and the exemption provided for under this item
(21) applies for all periods beginning May 30, 1995, but no
claim for credit or refund is allowed on or after January 1,
2008 for such taxes paid during the period beginning May 30,
2000 and ending on January 1, 2008.
(22) Computers and communications equipment utilized for
any hospital purpose and equipment used in the diagnosis,
analysis, or treatment of hospital patients purchased by a
lessor who leases the equipment, under a lease of one year or
longer executed or in effect at the time the lessor would
otherwise be subject to the tax imposed by this Act, to a
hospital that has been issued an active tax exemption
identification number by the Department under Section 1g of the
Retailers' Occupation Tax Act. If the equipment is leased in a
manner that does not qualify for this exemption or is used in
any other non-exempt manner, the lessor shall be liable for the
tax imposed under this Act or the Service Use Tax Act, as the
case may be, based on the fair market value of the property at
the time the non-qualifying use occurs. No lessor shall collect
or attempt to collect an amount (however designated) that
purports to reimburse that lessor for the tax imposed by this
Act or the Service Use Tax Act, as the case may be, if the tax
has not been paid by the lessor. If a lessor improperly
collects any such amount from the lessee, the lessee shall have
a legal right to claim a refund of that amount from the lessor.
If, however, that amount is not refunded to the lessee for any
reason, the lessor is liable to pay that amount to the
Department.
(23) Personal property purchased by a lessor who leases the
property, under a lease of one year or longer executed or in
effect at the time the lessor would otherwise be subject to the
tax imposed by this Act, to a governmental body that has been
issued an active sales tax exemption identification number by
the Department under Section 1g of the Retailers' Occupation
Tax Act. If the property is leased in a manner that does not
qualify for this exemption or used in any other non-exempt
manner, the lessor shall be liable for the tax imposed under
this Act or the Service Use Tax Act, as the case may be, based
on the fair market value of the property at the time the
non-qualifying use occurs. No lessor shall collect or attempt
to collect an amount (however designated) that purports to
reimburse that lessor for the tax imposed by this Act or the
Service Use Tax Act, as the case may be, if the tax has not been
paid by the lessor. If a lessor improperly collects any such
amount from the lessee, the lessee shall have a legal right to
claim a refund of that amount from the lessor. If, however,
that amount is not refunded to the lessee for any reason, the
lessor is liable to pay that amount to the Department.
(24) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is donated for
disaster relief to be used in a State or federally declared
disaster area in Illinois or bordering Illinois by a
manufacturer or retailer that is registered in this State to a
corporation, society, association, foundation, or institution
that has been issued a sales tax exemption identification
number by the Department that assists victims of the disaster
who reside within the declared disaster area.
(25) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is used in the
performance of infrastructure repairs in this State, including
but not limited to municipal roads and streets, access roads,
bridges, sidewalks, waste disposal systems, water and sewer
line extensions, water distribution and purification
facilities, storm water drainage and retention facilities, and
sewage treatment facilities, resulting from a State or
federally declared disaster in Illinois or bordering Illinois
when such repairs are initiated on facilities located in the
declared disaster area within 6 months after the disaster.
(26) Beginning July 1, 1999, game or game birds purchased
at a "game breeding and hunting preserve area" as that term is
used in the Wildlife Code. This paragraph is exempt from the
provisions of Section 3-90.
(27) A motor vehicle, as that term is defined in Section
1-146 of the Illinois Vehicle Code, that is donated to a
corporation, limited liability company, society, association,
foundation, or institution that is determined by the Department
to be organized and operated exclusively for educational
purposes. For purposes of this exemption, "a corporation,
limited liability company, society, association, foundation,
or institution organized and operated exclusively for
educational purposes" means all tax-supported public schools,
private schools that offer systematic instruction in useful
branches of learning by methods common to public schools and
that compare favorably in their scope and intensity with the
course of study presented in tax-supported schools, and
vocational or technical schools or institutes organized and
operated exclusively to provide a course of study of not less
than 6 weeks duration and designed to prepare individuals to
follow a trade or to pursue a manual, technical, mechanical,
industrial, business, or commercial occupation.
(28) Beginning January 1, 2000, personal property,
including food, purchased through fundraising events for the
benefit of a public or private elementary or secondary school,
a group of those schools, or one or more school districts if
the events are sponsored by an entity recognized by the school
district that consists primarily of volunteers and includes
parents and teachers of the school children. This paragraph
does not apply to fundraising events (i) for the benefit of
private home instruction or (ii) for which the fundraising
entity purchases the personal property sold at the events from
another individual or entity that sold the property for the
purpose of resale by the fundraising entity and that profits
from the sale to the fundraising entity. This paragraph is
exempt from the provisions of Section 3-90.
(29) Beginning January 1, 2000 and through December 31,
2001, new or used automatic vending machines that prepare and
serve hot food and beverages, including coffee, soup, and other
items, and replacement parts for these machines. Beginning
January 1, 2002 and through June 30, 2003, machines and parts
for machines used in commercial, coin-operated amusement and
vending business if a use or occupation tax is paid on the
gross receipts derived from the use of the commercial,
coin-operated amusement and vending machines. This paragraph
is exempt from the provisions of Section 3-90.
(30) Beginning January 1, 2001 and through June 30, 2016,
food for human consumption that is to be consumed off the
premises where it is sold (other than alcoholic beverages, soft
drinks, and food that has been prepared for immediate
consumption) and prescription and nonprescription medicines,
drugs, medical appliances, and insulin, urine testing
materials, syringes, and needles used by diabetics, for human
use, when purchased for use by a person receiving medical
assistance under Article V of the Illinois Public Aid Code who
resides in a licensed long-term care facility, as defined in
the Nursing Home Care Act, or in a licensed facility as defined
in the ID/DD Community Care Act, the MC/DD Act, or the
Specialized Mental Health Rehabilitation Act of 2013.
(31) Beginning on August 2, 2001 (the effective date of
Public Act 92-227), computers and communications equipment
utilized for any hospital purpose and equipment used in the
diagnosis, analysis, or treatment of hospital patients
purchased by a lessor who leases the equipment, under a lease
of one year or longer executed or in effect at the time the
lessor would otherwise be subject to the tax imposed by this
Act, to a hospital that has been issued an active tax exemption
identification number by the Department under Section 1g of the
Retailers' Occupation Tax Act. If the equipment is leased in a
manner that does not qualify for this exemption or is used in
any other nonexempt manner, the lessor shall be liable for the
tax imposed under this Act or the Service Use Tax Act, as the
case may be, based on the fair market value of the property at
the time the nonqualifying use occurs. No lessor shall collect
or attempt to collect an amount (however designated) that
purports to reimburse that lessor for the tax imposed by this
Act or the Service Use Tax Act, as the case may be, if the tax
has not been paid by the lessor. If a lessor improperly
collects any such amount from the lessee, the lessee shall have
a legal right to claim a refund of that amount from the lessor.
If, however, that amount is not refunded to the lessee for any
reason, the lessor is liable to pay that amount to the
Department. This paragraph is exempt from the provisions of
Section 3-90.
(32) Beginning on August 2, 2001 (the effective date of
Public Act 92-227), personal property purchased by a lessor who
leases the property, under a lease of one year or longer
executed or in effect at the time the lessor would otherwise be
subject to the tax imposed by this Act, to a governmental body
that has been issued an active sales tax exemption
identification number by the Department under Section 1g of the
Retailers' Occupation Tax Act. If the property is leased in a
manner that does not qualify for this exemption or used in any
other nonexempt manner, the lessor shall be liable for the tax
imposed under this Act or the Service Use Tax Act, as the case
may be, based on the fair market value of the property at the
time the nonqualifying use occurs. No lessor shall collect or
attempt to collect an amount (however designated) that purports
to reimburse that lessor for the tax imposed by this Act or the
Service Use Tax Act, as the case may be, if the tax has not been
paid by the lessor. If a lessor improperly collects any such
amount from the lessee, the lessee shall have a legal right to
claim a refund of that amount from the lessor. If, however,
that amount is not refunded to the lessee for any reason, the
lessor is liable to pay that amount to the Department. This
paragraph is exempt from the provisions of Section 3-90.
(33) On and after July 1, 2003 and through June 30, 2004,
the use in this State of motor vehicles of the second division
with a gross vehicle weight in excess of 8,000 pounds and that
are subject to the commercial distribution fee imposed under
Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
1, 2004 and through June 30, 2005, the use in this State of
motor vehicles of the second division: (i) with a gross vehicle
weight rating in excess of 8,000 pounds; (ii) that are subject
to the commercial distribution fee imposed under Section
3-815.1 of the Illinois Vehicle Code; and (iii) that are
primarily used for commercial purposes. Through June 30, 2005,
this exemption applies to repair and replacement parts added
after the initial purchase of such a motor vehicle if that
motor vehicle is used in a manner that would qualify for the
rolling stock exemption otherwise provided for in this Act. For
purposes of this paragraph, the term "used for commercial
purposes" means the transportation of persons or property in
furtherance of any commercial or industrial enterprise,
whether for-hire or not.
(34) Beginning January 1, 2008, tangible personal property
used in the construction or maintenance of a community water
supply, as defined under Section 3.145 of the Environmental
Protection Act, that is operated by a not-for-profit
corporation that holds a valid water supply permit issued under
Title IV of the Environmental Protection Act. This paragraph is
exempt from the provisions of Section 3-90.
(35) Beginning January 1, 2010, materials, parts,
equipment, components, and furnishings incorporated into or
upon an aircraft as part of the modification, refurbishment,
completion, replacement, repair, or maintenance of the
aircraft. This exemption includes consumable supplies used in
the modification, refurbishment, completion, replacement,
repair, and maintenance of aircraft, but excludes any
materials, parts, equipment, components, and consumable
supplies used in the modification, replacement, repair, and
maintenance of aircraft engines or power plants, whether such
engines or power plants are installed or uninstalled upon any
such aircraft. "Consumable supplies" include, but are not
limited to, adhesive, tape, sandpaper, general purpose
lubricants, cleaning solution, latex gloves, and protective
films. This exemption applies only to the use of qualifying
tangible personal property by persons who modify, refurbish,
complete, repair, replace, or maintain aircraft and who (i)
hold an Air Agency Certificate and are empowered to operate an
approved repair station by the Federal Aviation
Administration, (ii) have a Class IV Rating, and (iii) conduct
operations in accordance with Part 145 of the Federal Aviation
Regulations. The exemption does not include aircraft operated
by a commercial air carrier providing scheduled passenger air
service pursuant to authority issued under Part 121 or Part 129
of the Federal Aviation Regulations. The changes made to this
paragraph (35) by Public Act 98-534 are declarative of existing
law.
(36) Tangible personal property purchased by a
public-facilities corporation, as described in Section
11-65-10 of the Illinois Municipal Code, for purposes of
constructing or furnishing a municipal convention hall, but
only if the legal title to the municipal convention hall is
transferred to the municipality without any further
consideration by or on behalf of the municipality at the time
of the completion of the municipal convention hall or upon the
retirement or redemption of any bonds or other debt instruments
issued by the public-facilities corporation in connection with
the development of the municipal convention hall. This
exemption includes existing public-facilities corporations as
provided in Section 11-65-25 of the Illinois Municipal Code.
This paragraph is exempt from the provisions of Section 3-90.
(37) Beginning January 1, 2017, menstrual pads, tampons,
and menstrual cups.
(38) Merchandise that is subject to the Rental Purchase
Agreement Occupation and Use Tax. The purchaser must certify
that the item is purchased to be rented subject to a rental
purchase agreement, as defined in the Rental Purchase Agreement
Act, and provide proof of registration under the Rental
Purchase Agreement Occupation and Use Tax Act. This paragraph
is exempt from the provisions of Section 3-90.
(39) Tangible personal property purchased by a purchaser
who is exempt from the tax imposed by this Act by operation of
federal law. This paragraph is exempt from the provisions of
Section 3-90.
(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;
100-22, eff. 7-6-17; 100-437, eff. 1-1-18; 100-594, eff.
6-29-18; 100-863, eff. 8-14-18; 100-1171, eff. 1-4-19; revised
1-8-19.)
(35 ILCS 105/3-50) (from Ch. 120, par. 439.3-50)
Sec. 3-50. Manufacturing and assembly exemption. The
manufacturing and assembling machinery and equipment exemption
includes machinery and equipment that replaces machinery and
equipment in an existing manufacturing facility as well as
machinery and equipment that are for use in an expanded or new
manufacturing facility. The machinery and equipment exemption
also includes machinery and equipment used in the general
maintenance or repair of exempt machinery and equipment or for
in-house manufacture of exempt machinery and equipment.
Beginning on July 1, 2017, the manufacturing and assembling
machinery and equipment exemption also includes graphic arts
machinery and equipment, as defined in paragraph (6) of Section
3-5. The machinery and equipment exemption does not include
machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the generation
or treatment of natural or artificial gas for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of this amendatory
Act of the 98th General Assembly are declaratory of existing
law as to the meaning and scope of this exemption. For the
purposes of this exemption, terms have the following meanings:
(1) "Manufacturing process" means the production of an
article of tangible personal property, whether the article
is a finished product or an article for use in the process
of manufacturing or assembling a different article of
tangible personal property, by a procedure commonly
regarded as manufacturing, processing, fabricating, or
refining that changes some existing material into a
material with a different form, use, or name. In relation
to a recognized integrated business composed of a series of
operations that collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process commences with the first operation
or stage of production in the series and does not end until
the completion of the final product in the last operation
or stage of production in the series. For purposes of this
exemption, photoprocessing is a manufacturing process of
tangible personal property for wholesale or retail sale.
(2) "Assembling process" means the production of an
article of tangible personal property, whether the article
is a finished product or an article for use in the process
of manufacturing or assembling a different article of
tangible personal property, by the combination of existing
materials in a manner commonly regarded as assembling that
results in an article or material of a different form, use,
or name.
(3) "Machinery" means major mechanical machines or
major components of those machines contributing to a
manufacturing or assembling process.
(4) "Equipment" includes an independent device or tool
separate from machinery but essential to an integrated
manufacturing or assembly process; including computers
used primarily in a manufacturer's computer assisted
design, computer assisted manufacturing (CAD/CAM) system;
any subunit or assembly comprising a component of any
machinery or auxiliary, adjunct, or attachment parts of
machinery, such as tools, dies, jigs, fixtures, patterns,
and molds; and any parts that require periodic replacement
in the course of normal operation; but does not include
hand tools. Equipment includes chemicals or chemicals
acting as catalysts but only if the chemicals or chemicals
acting as catalysts effect a direct and immediate change
upon a product being manufactured or assembled for
wholesale or retail sale or lease.
(5) "Production related tangible personal property"
means all tangible personal property that is used or
consumed by the purchaser in a manufacturing facility in
which a manufacturing process takes place and includes,
without limitation, tangible personal property that is
purchased for incorporation into real estate within a
manufacturing facility, supplies and consumables used in a
manufacturing facility including fuels, coolants,
solvents, oils, lubricants, and adhesives, hand tools,
protective apparel, and fire and safety equipment used or
consumed within a manufacturing facility, and tangible
personal property that is used or consumed in activities
such as research and development, preproduction material
handling, receiving, quality control, inventory control,
storage, staging, and packaging for shipping and
transportation purposes. "Production related tangible
personal property" does not include (i) tangible personal
property that is used, within or without a manufacturing
facility, in sales, purchasing, accounting, fiscal
management, marketing, personnel recruitment or selection,
or landscaping or (ii) tangible personal property that is
required to be titled or registered with a department,
agency, or unit of federal, State, or local government.
The manufacturing and assembling machinery and equipment
exemption includes production related tangible personal
property that is purchased on or after July 1, 2007 and on or
before June 30, 2008 and on or after July 1, 2019. The
exemption for production related tangible personal property
purchased on or after July 1, 2007 and on or before June 30,
2008 is subject to both of the following limitations:
(1) The maximum amount of the exemption for any one
taxpayer may not exceed 5% of the purchase price of
production related tangible personal property that is
purchased on or after July 1, 2007 and on or before June
30, 2008. A credit under Section 3-85 of this Act may not
be earned by the purchase of production related tangible
personal property for which an exemption is received under
this Section.
(2) The maximum aggregate amount of the exemptions for
production related tangible personal property purchased on
or after July 1, 2007 and on or before June 30, 2008
awarded under this Act and the Retailers' Occupation Tax
Act to all taxpayers may not exceed $10,000,000. If the
claims for the exemption exceed $10,000,000, then the
Department shall reduce the amount of the exemption to each
taxpayer on a pro rata basis.
The Department shall may adopt rules to implement and
administer the exemption for production related tangible
personal property.
The manufacturing and assembling machinery and equipment
exemption includes the sale of materials to a purchaser who
produces exempted types of machinery, equipment, or tools and
who rents or leases that machinery, equipment, or tools to a
manufacturer of tangible personal property. This exemption
also includes the sale of materials to a purchaser who
manufactures those materials into an exempted type of
machinery, equipment, or tools that the purchaser uses himself
or herself in the manufacturing of tangible personal property.
This exemption includes the sale of exempted types of machinery
or equipment to a purchaser who is not the manufacturer, but
who rents or leases the use of the property to a manufacturer.
The purchaser of the machinery and equipment who has an active
resale registration number shall furnish that number to the
seller at the time of purchase. A user of the machinery,
equipment, or tools without an active resale registration
number shall prepare a certificate of exemption for each
transaction stating facts establishing the exemption for that
transaction, and that certificate shall be available to the
Department for inspection or audit. The Department shall
prescribe the form of the certificate. Informal rulings,
opinions, or letters issued by the Department in response to an
inquiry or request for an opinion from any person regarding the
coverage and applicability of this exemption to specific
devices shall be published, maintained as a public record, and
made available for public inspection and copying. If the
informal ruling, opinion, or letter contains trade secrets or
other confidential information, where possible, the Department
shall delete that information before publication. Whenever
informal rulings, opinions, or letters contain a policy of
general applicability, the Department shall formulate and
adopt that policy as a rule in accordance with the Illinois
Administrative Procedure Act.
The manufacturing and assembling machinery and equipment
exemption is exempt from the provisions of Section 3-90.
(Source: P.A. 100-22, eff. 7-6-17.)
Section 25-10. The Service Use Tax Act is amended by
changing Section 2 as follows:
(35 ILCS 110/2) (from Ch. 120, par. 439.32)
Sec. 2. Definitions. In this Act:
"Use" means the exercise by any person of any right or
power over tangible personal property incident to the ownership
of that property, but does not include the sale or use for
demonstration by him of that property in any form as tangible
personal property in the regular course of business. "Use" does
not mean the interim use of tangible personal property nor the
physical incorporation of tangible personal property, as an
ingredient or constituent, into other tangible personal
property, (a) which is sold in the regular course of business
or (b) which the person incorporating such ingredient or
constituent therein has undertaken at the time of such purchase
to cause to be transported in interstate commerce to
destinations outside the State of Illinois.
"Purchased from a serviceman" means the acquisition of the
ownership of, or title to, tangible personal property through a
sale of service.
"Purchaser" means any person who, through a sale of
service, acquires the ownership of, or title to, any tangible
personal property.
"Cost price" means the consideration paid by the serviceman
for a purchase valued in money, whether paid in money or
otherwise, including cash, credits and services, and shall be
determined without any deduction on account of the supplier's
cost of the property sold or on account of any other expense
incurred by the supplier. When a serviceman contracts out part
or all of the services required in his sale of service, it
shall be presumed that the cost price to the serviceman of the
property transferred to him or her by his or her subcontractor
is equal to 50% of the subcontractor's charges to the
serviceman in the absence of proof of the consideration paid by
the subcontractor for the purchase of such property.
"Selling price" means the consideration for a sale valued
in money whether received in money or otherwise, including
cash, credits and service, and shall be determined without any
deduction on account of the serviceman's cost of the property
sold, the cost of materials used, labor or service cost or any
other expense whatsoever, but does not include interest or
finance charges which appear as separate items on the bill of
sale or sales contract nor charges that are added to prices by
sellers on account of the seller's duty to collect, from the
purchaser, the tax that is imposed by this Act.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, public or
private corporation, limited liability company, and any
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Sale of service" means any transaction except:
(1) a retail sale of tangible personal property taxable
under the Retailers' Occupation Tax Act or under the Use
Tax Act.
(2) a sale of tangible personal property for the
purpose of resale made in compliance with Section 2c of the
Retailers' Occupation Tax Act.
(3) except as hereinafter provided, a sale or transfer
of tangible personal property as an incident to the
rendering of service for or by any governmental body, or
for or by any corporation, society, association,
foundation or institution organized and operated
exclusively for charitable, religious or educational
purposes or any not-for-profit corporation, society,
association, foundation, institution or organization which
has no compensated officers or employees and which is
organized and operated primarily for the recreation of
persons 55 years of age or older. A limited liability
company may qualify for the exemption under this paragraph
only if the limited liability company is organized and
operated exclusively for educational purposes.
(4) (blank).
(4a) a sale or transfer of tangible personal property
as an incident to the rendering of service for owners,
lessors, or shippers of tangible personal property which is
utilized by interstate carriers for hire for use as rolling
stock moving in interstate commerce so long as so used by
interstate carriers for hire, and equipment operated by a
telecommunications provider, licensed as a common carrier
by the Federal Communications Commission, which is
permanently installed in or affixed to aircraft moving in
interstate commerce.
(4a-5) on and after July 1, 2003 and through June 30,
2004, a sale or transfer of a motor vehicle of the second
division with a gross vehicle weight in excess of 8,000
pounds as an incident to the rendering of service if that
motor vehicle is subject to the commercial distribution fee
imposed under Section 3-815.1 of the Illinois Vehicle Code.
Beginning on July 1, 2004 and through June 30, 2005, the
use in this State of motor vehicles of the second division:
(i) with a gross vehicle weight rating in excess of 8,000
pounds; (ii) that are subject to the commercial
distribution fee imposed under Section 3-815.1 of the
Illinois Vehicle Code; and (iii) that are primarily used
for commercial purposes. Through June 30, 2005, this
exemption applies to repair and replacement parts added
after the initial purchase of such a motor vehicle if that
motor vehicle is used in a manner that would qualify for
the rolling stock exemption otherwise provided for in this
Act. For purposes of this paragraph, "used for commercial
purposes" means the transportation of persons or property
in furtherance of any commercial or industrial enterprise
whether for-hire or not.
(5) a sale or transfer of machinery and equipment used
primarily in the process of the manufacturing or
assembling, either in an existing, an expanded or a new
manufacturing facility, of tangible personal property for
wholesale or retail sale or lease, whether such sale or
lease is made directly by the manufacturer or by some other
person, whether the materials used in the process are owned
by the manufacturer or some other person, or whether such
sale or lease is made apart from or as an incident to the
seller's engaging in a service occupation and the
applicable tax is a Service Use Tax or Service Occupation
Tax, rather than Use Tax or Retailers' Occupation Tax. The
exemption provided by this paragraph (5) includes
production related tangible personal property, as defined
in Section 3-50 of the Use Tax Act, purchased on or after
July 1, 2019. The exemption provided by this paragraph (5)
does not include machinery and equipment used in (i) the
generation of electricity for wholesale or retail sale;
(ii) the generation or treatment of natural or artificial
gas for wholesale or retail sale that is delivered to
customers through pipes, pipelines, or mains; or (iii) the
treatment of water for wholesale or retail sale that is
delivered to customers through pipes, pipelines, or mains.
The provisions of Public Act 98-583 are declaratory of
existing law as to the meaning and scope of this exemption.
The exemption under this paragraph (5) is exempt from the
provisions of Section 3-75.
(5a) the repairing, reconditioning or remodeling, for
a common carrier by rail, of tangible personal property
which belongs to such carrier for hire, and as to which
such carrier receives the physical possession of the
repaired, reconditioned or remodeled item of tangible
personal property in Illinois, and which such carrier
transports, or shares with another common carrier in the
transportation of such property, out of Illinois on a
standard uniform bill of lading showing the person who
repaired, reconditioned or remodeled the property to a
destination outside Illinois, for use outside Illinois.
(5b) a sale or transfer of tangible personal property
which is produced by the seller thereof on special order in
such a way as to have made the applicable tax the Service
Occupation Tax or the Service Use Tax, rather than the
Retailers' Occupation Tax or the Use Tax, for an interstate
carrier by rail which receives the physical possession of
such property in Illinois, and which transports such
property, or shares with another common carrier in the
transportation of such property, out of Illinois on a
standard uniform bill of lading showing the seller of the
property as the shipper or consignor of such property to a
destination outside Illinois, for use outside Illinois.
(6) until July 1, 2003, a sale or transfer of
distillation machinery and equipment, sold as a unit or kit
and assembled or installed by the retailer, which machinery
and equipment is certified by the user to be used only for
the production of ethyl alcohol that will be used for
consumption as motor fuel or as a component of motor fuel
for the personal use of such user and not subject to sale
or resale.
(7) at the election of any serviceman not required to
be otherwise registered as a retailer under Section 2a of
the Retailers' Occupation Tax Act, made for each fiscal
year sales of service in which the aggregate annual cost
price of tangible personal property transferred as an
incident to the sales of service is less than 35%, or 75%
in the case of servicemen transferring prescription drugs
or servicemen engaged in graphic arts production, of the
aggregate annual total gross receipts from all sales of
service. The purchase of such tangible personal property by
the serviceman shall be subject to tax under the Retailers'
Occupation Tax Act and the Use Tax Act. However, if a
primary serviceman who has made the election described in
this paragraph subcontracts service work to a secondary
serviceman who has also made the election described in this
paragraph, the primary serviceman does not incur a Use Tax
liability if the secondary serviceman (i) has paid or will
pay Use Tax on his or her cost price of any tangible
personal property transferred to the primary serviceman
and (ii) certifies that fact in writing to the primary
serviceman.
Tangible personal property transferred incident to the
completion of a maintenance agreement is exempt from the tax
imposed pursuant to this Act.
Exemption (5) also includes machinery and equipment used in
the general maintenance or repair of such exempt machinery and
equipment or for in-house manufacture of exempt machinery and
equipment. On and after July 1, 2017, exemption (5) also
includes graphic arts machinery and equipment, as defined in
paragraph (5) of Section 3-5. The machinery and equipment
exemption does not include machinery and equipment used in (i)
the generation of electricity for wholesale or retail sale;
(ii) the generation or treatment of natural or artificial gas
for wholesale or retail sale that is delivered to customers
through pipes, pipelines, or mains; or (iii) the treatment of
water for wholesale or retail sale that is delivered to
customers through pipes, pipelines, or mains. The provisions of
Public Act 98-583 are declaratory of existing law as to the
meaning and scope of this exemption. For the purposes of
exemption (5), each of these terms shall have the following
meanings: (1) "manufacturing process" shall mean the
production of any article of tangible personal property,
whether such article is a finished product or an article for
use in the process of manufacturing or assembling a different
article of tangible personal property, by procedures commonly
regarded as manufacturing, processing, fabricating, or
refining which changes some existing material or materials into
a material with a different form, use or name. In relation to a
recognized integrated business composed of a series of
operations which collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process shall be deemed to commence with the
first operation or stage of production in the series, and shall
not be deemed to end until the completion of the final product
in the last operation or stage of production in the series; and
further, for purposes of exemption (5), photoprocessing is
deemed to be a manufacturing process of tangible personal
property for wholesale or retail sale; (2) "assembling process"
shall mean the production of any article of tangible personal
property, whether such article is a finished product or an
article for use in the process of manufacturing or assembling a
different article of tangible personal property, by the
combination of existing materials in a manner commonly regarded
as assembling which results in a material of a different form,
use or name; (3) "machinery" shall mean major mechanical
machines or major components of such machines contributing to a
manufacturing or assembling process; and (4) "equipment" shall
include any independent device or tool separate from any
machinery but essential to an integrated manufacturing or
assembly process; including computers used primarily in a
manufacturer's computer assisted design, computer assisted
manufacturing (CAD/CAM) system; or any subunit or assembly
comprising a component of any machinery or auxiliary, adjunct
or attachment parts of machinery, such as tools, dies, jigs,
fixtures, patterns and molds; or any parts which require
periodic replacement in the course of normal operation; but
shall not include hand tools. Equipment includes chemicals or
chemicals acting as catalysts but only if the chemicals or
chemicals acting as catalysts effect a direct and immediate
change upon a product being manufactured or assembled for
wholesale or retail sale or lease. The purchaser of such
machinery and equipment who has an active resale registration
number shall furnish such number to the seller at the time of
purchase. The user of such machinery and equipment and tools
without an active resale registration number shall prepare a
certificate of exemption for each transaction stating facts
establishing the exemption for that transaction, which
certificate shall be available to the Department for inspection
or audit. The Department shall prescribe the form of the
certificate.
Any informal rulings, opinions or letters issued by the
Department in response to an inquiry or request for any opinion
from any person regarding the coverage and applicability of
exemption (5) to specific devices shall be published,
maintained as a public record, and made available for public
inspection and copying. If the informal ruling, opinion or
letter contains trade secrets or other confidential
information, where possible the Department shall delete such
information prior to publication. Whenever such informal
rulings, opinions, or letters contain any policy of general
applicability, the Department shall formulate and adopt such
policy as a rule in accordance with the provisions of the
Illinois Administrative Procedure Act.
On and after July 1, 1987, no entity otherwise eligible
under exemption (3) of this Section shall make tax-free
purchases unless it has an active exemption identification
number issued by the Department.
The purchase, employment and transfer of such tangible
personal property as newsprint and ink for the primary purpose
of conveying news (with or without other information) is not a
purchase, use or sale of service or of tangible personal
property within the meaning of this Act.
"Serviceman" means any person who is engaged in the
occupation of making sales of service.
"Sale at retail" means "sale at retail" as defined in the
Retailers' Occupation Tax Act.
"Supplier" means any person who makes sales of tangible
personal property to servicemen for the purpose of resale as an
incident to a sale of service.
"Serviceman maintaining a place of business in this State",
or any like term, means and includes any serviceman:
(1) having or maintaining within this State, directly
or by a subsidiary, an office, distribution house, sales
house, warehouse or other place of business, or any agent
or other representative operating within this State under
the authority of the serviceman or its subsidiary,
irrespective of whether such place of business or agent or
other representative is located here permanently or
temporarily, or whether such serviceman or subsidiary is
licensed to do business in this State;
(1.1) having a contract with a person located in this
State under which the person, for a commission or other
consideration based on the sale of service by the
serviceman, directly or indirectly refers potential
customers to the serviceman by providing to the potential
customers a promotional code or other mechanism that allows
the serviceman to track purchases referred by such persons.
Examples of mechanisms that allow the serviceman to track
purchases referred by such persons include but are not
limited to the use of a link on the person's Internet
website, promotional codes distributed through the
person's hand-delivered or mailed material, and
promotional codes distributed by the person through radio
or other broadcast media. The provisions of this paragraph
(1.1) shall apply only if the cumulative gross receipts
from sales of service by the serviceman to customers who
are referred to the serviceman by all persons in this State
under such contracts exceed $10,000 during the preceding 4
quarterly periods ending on the last day of March, June,
September, and December; a serviceman meeting the
requirements of this paragraph (1.1) shall be presumed to
be maintaining a place of business in this State but may
rebut this presumption by submitting proof that the
referrals or other activities pursued within this State by
such persons were not sufficient to meet the nexus
standards of the United States Constitution during the
preceding 4 quarterly periods;
(1.2) beginning July 1, 2011, having a contract with a
person located in this State under which:
(A) the serviceman sells the same or substantially
similar line of services as the person located in this
State and does so using an identical or substantially
similar name, trade name, or trademark as the person
located in this State; and
(B) the serviceman provides a commission or other
consideration to the person located in this State based
upon the sale of services by the serviceman.
The provisions of this paragraph (1.2) shall apply only if
the cumulative gross receipts from sales of service by the
serviceman to customers in this State under all such
contracts exceed $10,000 during the preceding 4 quarterly
periods ending on the last day of March, June, September,
and December;
(2) soliciting orders for tangible personal property
by means of a telecommunication or television shopping
system (which utilizes toll free numbers) which is intended
by the retailer to be broadcast by cable television or
other means of broadcasting, to consumers located in this
State;
(3) pursuant to a contract with a broadcaster or
publisher located in this State, soliciting orders for
tangible personal property by means of advertising which is
disseminated primarily to consumers located in this State
and only secondarily to bordering jurisdictions;
(4) soliciting orders for tangible personal property
by mail if the solicitations are substantial and recurring
and if the retailer benefits from any banking, financing,
debt collection, telecommunication, or marketing
activities occurring in this State or benefits from the
location in this State of authorized installation,
servicing, or repair facilities;
(5) being owned or controlled by the same interests
which own or control any retailer engaging in business in
the same or similar line of business in this State;
(6) having a franchisee or licensee operating under its
trade name if the franchisee or licensee is required to
collect the tax under this Section;
(7) pursuant to a contract with a cable television
operator located in this State, soliciting orders for
tangible personal property by means of advertising which is
transmitted or distributed over a cable television system
in this State;
(8) engaging in activities in Illinois, which
activities in the state in which the supply business
engaging in such activities is located would constitute
maintaining a place of business in that state; or
(9) beginning October 1, 2018, making sales of service
to purchasers in Illinois from outside of Illinois if:
(A) the cumulative gross receipts from sales of
service to purchasers in Illinois are $100,000 or more;
or
(B) the serviceman enters into 200 or more separate
transactions for sales of service to purchasers in
Illinois.
The serviceman shall determine on a quarterly basis,
ending on the last day of March, June, September, and
December, whether he or she meets the criteria of either
subparagraph (A) or (B) of this paragraph (9) for the
preceding 12-month period. If the serviceman meets the
criteria of either subparagraph (A) or (B) for a 12-month
period, he or she is considered a serviceman maintaining a
place of business in this State and is required to collect
and remit the tax imposed under this Act and file returns
for one year. At the end of that one-year period, the
serviceman shall determine whether the serviceman met the
criteria of either subparagraph (A) or (B) during the
preceding 12-month period. If the serviceman met the
criteria in either subparagraph (A) or (B) for the
preceding 12-month period, he or she is considered a
serviceman maintaining a place of business in this State
and is required to collect and remit the tax imposed under
this Act and file returns for the subsequent year. If at
the end of a one-year period a serviceman that was required
to collect and remit the tax imposed under this Act
determines that he or she did not meet the criteria in
either subparagraph (A) or (B) during the preceding
12-month period, the serviceman subsequently shall
determine on a quarterly basis, ending on the last day of
March, June, September, and December, whether he or she
meets the criteria of either subparagraph (A) or (B) for
the preceding 12-month period.
(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
100-587, eff. 6-4-18; 100-863, eff. 8-14-18.)
Section 25-15. The Service Occupation Tax Act is amended by
changing Section 2 as follows:
(35 ILCS 115/2) (from Ch. 120, par. 439.102)
Sec. 2. In this Act:
"Transfer" means any transfer of the title to property or
of the ownership of property whether or not the transferor
retains title as security for the payment of amounts due him
from the transferee.
"Cost Price" means the consideration paid by the serviceman
for a purchase valued in money, whether paid in money or
otherwise, including cash, credits and services, and shall be
determined without any deduction on account of the supplier's
cost of the property sold or on account of any other expense
incurred by the supplier. When a serviceman contracts out part
or all of the services required in his sale of service, it
shall be presumed that the cost price to the serviceman of the
property transferred to him by his or her subcontractor is
equal to 50% of the subcontractor's charges to the serviceman
in the absence of proof of the consideration paid by the
subcontractor for the purchase of such property.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, public or
private corporation, limited liability company, and any
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Sale of Service" means any transaction except:
(a) A retail sale of tangible personal property taxable
under the Retailers' Occupation Tax Act or under the Use Tax
Act.
(b) A sale of tangible personal property for the purpose of
resale made in compliance with Section 2c of the Retailers'
Occupation Tax Act.
(c) Except as hereinafter provided, a sale or transfer of
tangible personal property as an incident to the rendering of
service for or by any governmental body or for or by any
corporation, society, association, foundation or institution
organized and operated exclusively for charitable, religious
or educational purposes or any not-for-profit corporation,
society, association, foundation, institution or organization
which has no compensated officers or employees and which is
organized and operated primarily for the recreation of persons
55 years of age or older. A limited liability company may
qualify for the exemption under this paragraph only if the
limited liability company is organized and operated
exclusively for educational purposes.
(d) (Blank).
(d-1) A sale or transfer of tangible personal property as
an incident to the rendering of service for owners, lessors or
shippers of tangible personal property which is utilized by
interstate carriers for hire for use as rolling stock moving in
interstate commerce, and equipment operated by a
telecommunications provider, licensed as a common carrier by
the Federal Communications Commission, which is permanently
installed in or affixed to aircraft moving in interstate
commerce.
(d-1.1) On and after July 1, 2003 and through June 30,
2004, a sale or transfer of a motor vehicle of the second
division with a gross vehicle weight in excess of 8,000 pounds
as an incident to the rendering of service if that motor
vehicle is subject to the commercial distribution fee imposed
under Section 3-815.1 of the Illinois Vehicle Code. Beginning
on July 1, 2004 and through June 30, 2005, the use in this
State of motor vehicles of the second division: (i) with a
gross vehicle weight rating in excess of 8,000 pounds; (ii)
that are subject to the commercial distribution fee imposed
under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
that are primarily used for commercial purposes. Through June
30, 2005, this exemption applies to repair and replacement
parts added after the initial purchase of such a motor vehicle
if that motor vehicle is used in a manner that would qualify
for the rolling stock exemption otherwise provided for in this
Act. For purposes of this paragraph, "used for commercial
purposes" means the transportation of persons or property in
furtherance of any commercial or industrial enterprise whether
for-hire or not.
(d-2) The repairing, reconditioning or remodeling, for a
common carrier by rail, of tangible personal property which
belongs to such carrier for hire, and as to which such carrier
receives the physical possession of the repaired,
reconditioned or remodeled item of tangible personal property
in Illinois, and which such carrier transports, or shares with
another common carrier in the transportation of such property,
out of Illinois on a standard uniform bill of lading showing
the person who repaired, reconditioned or remodeled the
property as the shipper or consignor of such property to a
destination outside Illinois, for use outside Illinois.
(d-3) A sale or transfer of tangible personal property
which is produced by the seller thereof on special order in
such a way as to have made the applicable tax the Service
Occupation Tax or the Service Use Tax, rather than the
Retailers' Occupation Tax or the Use Tax, for an interstate
carrier by rail which receives the physical possession of such
property in Illinois, and which transports such property, or
shares with another common carrier in the transportation of
such property, out of Illinois on a standard uniform bill of
lading showing the seller of the property as the shipper or
consignor of such property to a destination outside Illinois,
for use outside Illinois.
(d-4) Until January 1, 1997, a sale, by a registered
serviceman paying tax under this Act to the Department, of
special order printed materials delivered outside Illinois and
which are not returned to this State, if delivery is made by
the seller or agent of the seller, including an agent who
causes the product to be delivered outside Illinois by a common
carrier or the U.S. postal service.
(e) A sale or transfer of machinery and equipment used
primarily in the process of the manufacturing or assembling,
either in an existing, an expanded or a new manufacturing
facility, of tangible personal property for wholesale or retail
sale or lease, whether such sale or lease is made directly by
the manufacturer or by some other person, whether the materials
used in the process are owned by the manufacturer or some other
person, or whether such sale or lease is made apart from or as
an incident to the seller's engaging in a service occupation
and the applicable tax is a Service Occupation Tax or Service
Use Tax, rather than Retailers' Occupation Tax or Use Tax. The
exemption provided by this paragraph (e) includes production
related tangible personal property, as defined in Section 3-50
of the Use Tax Act, purchased on or after July 1, 2019. The
exemption provided by this paragraph (e) does not include
machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the generation
or treatment of natural or artificial gas for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of Public Act 98-583
are declaratory of existing law as to the meaning and scope of
this exemption. The exemption under this subsection (e) is
exempt from the provisions of Section 3-75.
(f) Until July 1, 2003, the sale or transfer of
distillation machinery and equipment, sold as a unit or kit and
assembled or installed by the retailer, which machinery and
equipment is certified by the user to be used only for the
production of ethyl alcohol that will be used for consumption
as motor fuel or as a component of motor fuel for the personal
use of such user and not subject to sale or resale.
(g) At the election of any serviceman not required to be
otherwise registered as a retailer under Section 2a of the
Retailers' Occupation Tax Act, made for each fiscal year sales
of service in which the aggregate annual cost price of tangible
personal property transferred as an incident to the sales of
service is less than 35% (75% in the case of servicemen
transferring prescription drugs or servicemen engaged in
graphic arts production) of the aggregate annual total gross
receipts from all sales of service. The purchase of such
tangible personal property by the serviceman shall be subject
to tax under the Retailers' Occupation Tax Act and the Use Tax
Act. However, if a primary serviceman who has made the election
described in this paragraph subcontracts service work to a
secondary serviceman who has also made the election described
in this paragraph, the primary serviceman does not incur a Use
Tax liability if the secondary serviceman (i) has paid or will
pay Use Tax on his or her cost price of any tangible personal
property transferred to the primary serviceman and (ii)
certifies that fact in writing to the primary serviceman.
Tangible personal property transferred incident to the
completion of a maintenance agreement is exempt from the tax
imposed pursuant to this Act.
Exemption (e) also includes machinery and equipment used in
the general maintenance or repair of such exempt machinery and
equipment or for in-house manufacture of exempt machinery and
equipment. On and after July 1, 2017, exemption (e) also
includes graphic arts machinery and equipment, as defined in
paragraph (5) of Section 3-5. The machinery and equipment
exemption does not include machinery and equipment used in (i)
the generation of electricity for wholesale or retail sale;
(ii) the generation or treatment of natural or artificial gas
for wholesale or retail sale that is delivered to customers
through pipes, pipelines, or mains; or (iii) the treatment of
water for wholesale or retail sale that is delivered to
customers through pipes, pipelines, or mains. The provisions of
Public Act 98-583 are declaratory of existing law as to the
meaning and scope of this exemption. For the purposes of
exemption (e), each of these terms shall have the following
meanings: (1) "manufacturing process" shall mean the
production of any article of tangible personal property,
whether such article is a finished product or an article for
use in the process of manufacturing or assembling a different
article of tangible personal property, by procedures commonly
regarded as manufacturing, processing, fabricating, or
refining which changes some existing material or materials into
a material with a different form, use or name. In relation to a
recognized integrated business composed of a series of
operations which collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process shall be deemed to commence with the
first operation or stage of production in the series, and shall
not be deemed to end until the completion of the final product
in the last operation or stage of production in the series; and
further for purposes of exemption (e), photoprocessing is
deemed to be a manufacturing process of tangible personal
property for wholesale or retail sale; (2) "assembling process"
shall mean the production of any article of tangible personal
property, whether such article is a finished product or an
article for use in the process of manufacturing or assembling a
different article of tangible personal property, by the
combination of existing materials in a manner commonly regarded
as assembling which results in a material of a different form,
use or name; (3) "machinery" shall mean major mechanical
machines or major components of such machines contributing to a
manufacturing or assembling process; and (4) "equipment" shall
include any independent device or tool separate from any
machinery but essential to an integrated manufacturing or
assembly process; including computers used primarily in a
manufacturer's computer assisted design, computer assisted
manufacturing (CAD/CAM) system; or any subunit or assembly
comprising a component of any machinery or auxiliary, adjunct
or attachment parts of machinery, such as tools, dies, jigs,
fixtures, patterns and molds; or any parts which require
periodic replacement in the course of normal operation; but
shall not include hand tools. Equipment includes chemicals or
chemicals acting as catalysts but only if the chemicals or
chemicals acting as catalysts effect a direct and immediate
change upon a product being manufactured or assembled for
wholesale or retail sale or lease. The purchaser of such
machinery and equipment who has an active resale registration
number shall furnish such number to the seller at the time of
purchase. The purchaser of such machinery and equipment and
tools without an active resale registration number shall
furnish to the seller a certificate of exemption for each
transaction stating facts establishing the exemption for that
transaction, which certificate shall be available to the
Department for inspection or audit.
Except as provided in Section 2d of this Act, the rolling
stock exemption applies to rolling stock used by an interstate
carrier for hire, even just between points in Illinois, if such
rolling stock transports, for hire, persons whose journeys or
property whose shipments originate or terminate outside
Illinois.
Any informal rulings, opinions or letters issued by the
Department in response to an inquiry or request for any opinion
from any person regarding the coverage and applicability of
exemption (e) to specific devices shall be published,
maintained as a public record, and made available for public
inspection and copying. If the informal ruling, opinion or
letter contains trade secrets or other confidential
information, where possible the Department shall delete such
information prior to publication. Whenever such informal
rulings, opinions, or letters contain any policy of general
applicability, the Department shall formulate and adopt such
policy as a rule in accordance with the provisions of the
Illinois Administrative Procedure Act.
On and after July 1, 1987, no entity otherwise eligible
under exemption (c) of this Section shall make tax-free
purchases unless it has an active exemption identification
number issued by the Department.
"Serviceman" means any person who is engaged in the
occupation of making sales of service.
"Sale at Retail" means "sale at retail" as defined in the
Retailers' Occupation Tax Act.
"Supplier" means any person who makes sales of tangible
personal property to servicemen for the purpose of resale as an
incident to a sale of service.
(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
100-863, eff. 8-14-18.)
Section 25-20. The Retailers' Occupation Tax Act is amended
by changing Section 2-45 as follows:
(35 ILCS 120/2-45) (from Ch. 120, par. 441-45)
Sec. 2-45. Manufacturing and assembly exemption. The
manufacturing and assembly machinery and equipment exemption
includes machinery and equipment that replaces machinery and
equipment in an existing manufacturing facility as well as
machinery and equipment that are for use in an expanded or new
manufacturing facility.
The machinery and equipment exemption also includes
machinery and equipment used in the general maintenance or
repair of exempt machinery and equipment or for in-house
manufacture of exempt machinery and equipment. Beginning on
July 1, 2017, the manufacturing and assembling machinery and
equipment exemption also includes graphic arts machinery and
equipment, as defined in paragraph (4) of Section 2-5. The
machinery and equipment exemption does not include machinery
and equipment used in (i) the generation of electricity for
wholesale or retail sale; (ii) the generation or treatment of
natural or artificial gas for wholesale or retail sale that is
delivered to customers through pipes, pipelines, or mains; or
(iii) the treatment of water for wholesale or retail sale that
is delivered to customers through pipes, pipelines, or mains.
The provisions of this amendatory Act of the 98th General
Assembly are declaratory of existing law as to the meaning and
scope of this exemption. For the purposes of this exemption,
terms have the following meanings:
(1) "Manufacturing process" means the production of an
article of tangible personal property, whether the article
is a finished product or an article for use in the process
of manufacturing or assembling a different article of
tangible personal property, by a procedure commonly
regarded as manufacturing, processing, fabricating, or
refining that changes some existing material or materials
into a material with a different form, use, or name. In
relation to a recognized integrated business composed of a
series of operations that collectively constitute
manufacturing, or individually constitute manufacturing
operations, the manufacturing process commences with the
first operation or stage of production in the series and
does not end until the completion of the final product in
the last operation or stage of production in the series.
For purposes of this exemption, photoprocessing is a
manufacturing process of tangible personal property for
wholesale or retail sale.
(2) "Assembling process" means the production of an
article of tangible personal property, whether the article
is a finished product or an article for use in the process
of manufacturing or assembling a different article of
tangible personal property, by the combination of existing
materials in a manner commonly regarded as assembling that
results in a material of a different form, use, or name.
(3) "Machinery" means major mechanical machines or
major components of those machines contributing to a
manufacturing or assembling process.
(4) "Equipment" includes an independent device or tool
separate from machinery but essential to an integrated
manufacturing or assembly process; including computers
used primarily in a manufacturer's computer assisted
design, computer assisted manufacturing (CAD/CAM) system;
any subunit or assembly comprising a component of any
machinery or auxiliary, adjunct, or attachment parts of
machinery, such as tools, dies, jigs, fixtures, patterns,
and molds; and any parts that require periodic replacement
in the course of normal operation; but does not include
hand tools. Equipment includes chemicals or chemicals
acting as catalysts but only if the chemicals or chemicals
acting as catalysts effect a direct and immediate change
upon a product being manufactured or assembled for
wholesale or retail sale or lease.
(5) "Production related tangible personal property"
means all tangible personal property that is used or
consumed by the purchaser in a manufacturing facility in
which a manufacturing process takes place and includes,
without limitation, tangible personal property that is
purchased for incorporation into real estate within a
manufacturing facility, supplies and consumables used in a
manufacturing facility including fuels, coolants,
solvents, oils, lubricants, and adhesives, hand tools,
protective apparel, and fire and safety equipment used or
consumed within a manufacturing facility, and tangible
personal property that is used or consumed in activities
such as research and development, preproduction material
handling, receiving, quality control, inventory control,
storage, staging, and packaging for shipping and
transportation purposes. "Production related tangible
personal property" does not include (i) tangible personal
property that is used, within or without a manufacturing
facility, in sales, purchasing, accounting, fiscal
management, marketing, personnel recruitment or selection,
or landscaping or (ii) tangible personal property that is
required to be titled or registered with a department,
agency, or unit of federal, State, or local government.
The manufacturing and assembling machinery and equipment
exemption includes production related tangible personal
property that is purchased on or after July 1, 2007 and on or
before June 30, 2008 and on or after July 1, 2019. The
exemption for production related tangible personal property
purchased on or after July 1, 2007 and before June 30, 2008 is
subject to both of the following limitations:
(1) The maximum amount of the exemption for any one
taxpayer may not exceed 5% of the purchase price of
production related tangible personal property that is
purchased on or after July 1, 2007 and on or before June
30, 2008. A credit under Section 3-85 of this Act may not
be earned by the purchase of production related tangible
personal property for which an exemption is received under
this Section.
(2) The maximum aggregate amount of the exemptions for
production related tangible personal property awarded
under this Act and the Use Tax Act to all taxpayers may not
exceed $10,000,000. If the claims for the exemption exceed
$10,000,000, then the Department shall reduce the amount of
the exemption to each taxpayer on a pro rata basis.
The Department shall may adopt rules to implement and
administer the exemption for production related tangible
personal property.
The manufacturing and assembling machinery and equipment
exemption includes the sale of materials to a purchaser who
produces exempted types of machinery, equipment, or tools and
who rents or leases that machinery, equipment, or tools to a
manufacturer of tangible personal property. This exemption
also includes the sale of materials to a purchaser who
manufactures those materials into an exempted type of
machinery, equipment, or tools that the purchaser uses himself
or herself in the manufacturing of tangible personal property.
The purchaser of the machinery and equipment who has an active
resale registration number shall furnish that number to the
seller at the time of purchase. A purchaser of the machinery,
equipment, and tools without an active resale registration
number shall furnish to the seller a certificate of exemption
for each transaction stating facts establishing the exemption
for that transaction, and that certificate shall be available
to the Department for inspection or audit. Informal rulings,
opinions, or letters issued by the Department in response to an
inquiry or request for an opinion from any person regarding the
coverage and applicability of this exemption to specific
devices shall be published, maintained as a public record, and
made available for public inspection and copying. If the
informal ruling, opinion, or letter contains trade secrets or
other confidential information, where possible, the Department
shall delete that information before publication. Whenever
informal rulings, opinions, or letters contain a policy of
general applicability, the Department shall formulate and
adopt that policy as a rule in accordance with the Illinois
Administrative Procedure Act.
The manufacturing and assembling machinery and equipment
exemption is exempt from the provisions of Section 2-70.
(Source: P.A. 100-22, eff. 7-6-17.)
ARTICLE 30. BUSINESS CORPORATION ACT OF 1983
Section 30-5. The Business Corporation Act of 1983 is
amended by changing Sections 14.30, 15.35, 15.65, and 15.97 as
follows:
(805 ILCS 5/14.30) (from Ch. 32, par. 14.30)
Sec. 14.30. Cumulative report of changes in issued shares
or paid-in capital.
(a) Each domestic corporation and each foreign corporation
authorized to transact business in this State that effects any
change in the number of issued shares or the amount of paid-in
capital prior to January 1, 2024 that has not theretofore been
reported in any report other than an annual report, interim
annual report, or final transition annual report, shall execute
and file, in accordance with Section 1.10 of this Act, a report
with respect to the changes in its issued shares or paid-in
capital:
(1) that have occurred subsequent to the last day of
the third month preceding its anniversary month in the
preceding year and prior to the first day of the second
month immediately preceding its anniversary month in the
current year; or
(2) in the case of a corporation that has established
an extended filing month, that have occurred during its
fiscal year; or
(3) in the case of a statutory merger or consolidation
or an amendment to the corporation's articles of
incorporation that affects the number of issued shares or
the amount of paid-in capital, that have occurred between
the last day of the third month immediately preceding its
anniversary month and the date of the merger,
consolidation, or amendment or, in the case of a
corporation that has established an extended filing month,
that have occurred between the first day of its fiscal year
and the date of the merger, consolidation, or amendment; or
(4) in the case of a statutory merger or consolidation
or an amendment to the corporation's articles of
incorporation that affects the number of issued shares or
the amount of paid-in capital, that have occurred between
the date of the merger, consolidation, or amendment (but
not including the merger, consolidation, or amendment) and
the first day of the second month immediately preceding its
anniversary month in the current year, or in the case of a
corporation that has established an extended filing month,
that have occurred between the date of the merger,
consolidation or amendment (but not including the merger,
consolidation or amendment) and the last day of its fiscal
year.
(b) The corporation shall file the report required under
subsection (a) not later than (i) the time its annual report is
required to be filed in 1992 and in each subsequent year and
(ii) not later than the time of filing the articles of merger,
consolidation, or amendment to the articles of incorporation
that affects the number of issued shares or the amount of
paid-in capital of a domestic corporation or the certified copy
of merger of a foreign corporation.
(c) The report shall net decreases against increases that
occur during the same taxable period. The report shall set
forth:
(1) The name of the corporation and the state or
country under the laws of which it is organized.
(2) A statement of the aggregate number of shares which
the corporation has authority to issue, itemized by classes
and series, if any, within a class.
(3) A statement of the aggregate number of issued
shares as last reported to the Secretary of State in any
document required or permitted by this Act to be filed,
other than an annual report, interim annual report or final
transition annual report, itemized by classes and series,
if any, within a class.
(4) A statement, expressed in dollars, of the amount of
paid-in capital of the corporation as last reported to the
Secretary of State in any document required or permitted by
this Act to be filed, other than an annual report, interim
annual report or final transition annual report.
(5) A statement, if applicable, of the aggregate number
of shares issued by the corporation not theretofore
reported to the Secretary of State as having been issued,
and a statement, expressed in dollars, of the value of the
entire consideration received, less expenses, including
commissions, paid or incurred in connection with the
issuance, for, or on account of, the issuance of the
shares, itemized by classes, and series, if any, within a
class; and in the case of shares issued as a share
dividend, the amount added or transferred to the paid-in
capital of the corporation for, or on account of, the
issuance of the shares; provided, however, that the report
shall also include the date of each issuance made prior to
the current reporting period, and the number of issued
shares and consideration received in each case.
(6) A statement, if applicable, expressed in dollars,
of the amount added or transferred to paid-in capital of
the corporation without the issuance of shares; provided,
however, that the report shall also include the date of
each increase made prior to the current reporting period,
and the consideration received in each case.
(7) In case of an exchange or reclassification of
issued shares resulting in an increase in the amount of
paid-in capital, a statement of the manner in which it was
effected, and a statement, expressed in dollars, of the
amount added or transferred to the paid-in capital of the
corporation as a result thereof, except any portion thereof
reported under any other subsection of this Section as a
part of the consideration received by the corporation for,
or on account of, its issued shares; provided, however,
that the report shall also include the date of each
exchange or reclassification made prior to the current
reporting period and the consideration received in each
case.
(8) If the consideration received for the issuance of
any shares not theretofore reported as having been issued
consists of labor or services performed or of property,
other than cash, then a statement, expressed in dollars, of
the value of that consideration as fixed by the board of
directors.
(9) In the case of a cancellation of shares or a
reduction in paid-in capital made pursuant to Section 9.20,
the aggregate reduction in paid-in capital; provided,
however, that the report shall also include the date of
each reduction made prior to the current reporting period.
(10) A statement of the aggregate number of issued
shares itemized by classes and series, if any, within a
class, after giving effect to the changes reported.
(11) A statement, expressed in dollars, of the amount
of paid-in capital of the corporation after giving effect
to the changes reported.
(d) No additional license fees or franchise taxes shall be
payable upon the filing of the report to the extent that
license fees or franchise taxes shall have been previously paid
by the corporation in respect of shares previously issued which
are being exchanged for the shares the issuance of which is
being reported, provided those facts are shown in the report.
(e) The report shall be made on forms prescribed and
furnished by the Secretary of State.
(f) Until the report under this Section or a report under
Section 14.25 shall have been filed in the Office of the
Secretary of State showing a reduction in paid-in capital, the
basis of the annual franchise tax payable by the corporation
shall not be reduced, provided, however, in no event shall the
annual franchise tax for any taxable year be reduced if the
report is not filed prior to the first day of the anniversary
month or, in the case of a corporation which has established an
extended filing month, the extended filing month of the
corporation of that taxable year and before payment of its
annual franchise tax.
(Source: P.A. 90-421, eff. 1-1-98.)
(805 ILCS 5/15.35) (from Ch. 32, par. 15.35)
Sec. 15.35. Franchise taxes payable by domestic
corporations. For the privilege of exercising its franchises in
this State, each domestic corporation shall pay to the
Secretary of State the following franchise taxes, computed on
the basis, at the rates and for the periods prescribed in this
Act:
(a) An initial franchise tax at the time of filing its
first report of issuance of shares.
(b) An additional franchise tax at the time of filing (1) a
report of the issuance of additional shares, or (2) a report of
an increase in paid-in capital without the issuance of shares,
or (3) an amendment to the articles of incorporation or a
report of cumulative changes in paid-in capital, whenever any
amendment or such report discloses an increase in its paid-in
capital over the amount thereof last reported in any document,
other than an annual report, interim annual report or final
transition annual report required by this Act to be filed in
the office of the Secretary of State.
(c) An additional franchise tax at the time of filing a
report of paid-in capital following a statutory merger or
consolidation, which discloses that the paid-in capital of the
surviving or new corporation immediately after the merger or
consolidation is greater than the sum of the paid-in capital of
all of the merged or consolidated corporations as last reported
by them in any documents, other than annual reports, required
by this Act to be filed in the office of the Secretary of
State; and in addition, the surviving or new corporation shall
be liable for a further additional franchise tax on the paid-in
capital of each of the merged or consolidated corporations as
last reported by them in any document, other than an annual
report, required by this Act to be filed with the Secretary of
State from their taxable year end to the next succeeding
anniversary month or, in the case of a corporation which has
established an extended filing month, the extended filing month
of the surviving or new corporation; however if the taxable
year ends within the 2 month period immediately preceding the
anniversary month or, in the case of a corporation which has
established an extended filing month, the extended filing month
of the surviving or new corporation the tax will be computed to
the anniversary month or, in the case of a corporation which
has established an extended filing month, the extended filing
month of the surviving or new corporation in the next
succeeding calendar year.
(d) An annual franchise tax payable each year with the
annual report which the corporation is required by this Act to
file.
(e) On or after January 1, 2020 and prior to January 1,
2021, the first $30 in liability is exempt from the tax imposed
under this Section. On or after January 1, 2021 and prior to
January 1, 2022, the first $1,000 in liability is exempt from
the tax imposed under this Section. On or after January 1, 2022
and prior to January 1, 2023, the first $10,000 in liability is
exempt from the tax imposed under this Section. On or after
January 1, 2023 and prior to January 1, 2024, the first
$100,000 in liability is exempt from the tax imposed under this
Section. The provisions of this Section shall not require the
payment of any franchise tax that would otherwise have been due
and payable on or after January 1, 2024. There shall be no
refunds or proration of franchise tax for any taxes due and
payable on or after January 1, 2024 on the basis that a portion
of the corporation's taxable year extends beyond January 1,
2024. This amendatory Act of the 101st General Assembly shall
not affect any right accrued or established, or any liability
or penalty incurred prior to January 1, 2024.
(f) This Section is repealed on December 31, 2025.
(Source: P.A. 86-985.)
(805 ILCS 5/15.65) (from Ch. 32, par. 15.65)
Sec. 15.65. Franchise taxes payable by foreign
corporations. For the privilege of exercising its authority to
transact such business in this State as set out in its
application therefor or any amendment thereto, each foreign
corporation shall pay to the Secretary of State the following
franchise taxes, computed on the basis, at the rates and for
the periods prescribed in this Act:
(a) An initial franchise tax at the time of filing its
application for authority to transact business in this State.
(b) An additional franchise tax at the time of filing (1) a
report of the issuance of additional shares, or (2) a report of
an increase in paid-in capital without the issuance of shares,
or (3) a report of cumulative changes in paid-in capital or a
report of an exchange or reclassification of shares, whenever
any such report discloses an increase in its paid-in capital
over the amount thereof last reported in any document, other
than an annual report, interim annual report or final
transition annual report, required by this Act to be filed in
the office of the Secretary of State.
(c) Whenever the corporation shall be a party to a
statutory merger and shall be the surviving corporation, an
additional franchise tax at the time of filing its report
following merger, if such report discloses that the amount
represented in this State of its paid-in capital immediately
after the merger is greater than the aggregate of the amounts
represented in this State of the paid-in capital of such of the
merged corporations as were authorized to transact business in
this State at the time of the merger, as last reported by them
in any documents, other than annual reports, required by this
Act to be filed in the office of the Secretary of State; and in
addition, the surviving corporation shall be liable for a
further additional franchise tax on the paid-in capital of each
of the merged corporations as last reported by them in any
document, other than an annual report, required by this Act to
be filed with the Secretary of State, from their taxable year
end to the next succeeding anniversary month or, in the case of
a corporation which has established an extended filing month,
the extended filing month of the surviving corporation; however
if the taxable year ends within the 2 month period immediately
preceding the anniversary month or the extended filing month of
the surviving corporation, the tax will be computed to the
anniversary or, extended filing month of the surviving
corporation in the next succeeding calendar year.
(d) An annual franchise tax payable each year with any
annual report which the corporation is required by this Act to
file.
(e) On or after January 1, 2020 and prior to January 1,
2021, the first $30 in liability is exempt from the tax imposed
under this Section. On or after January 1, 2021 and prior to
January 1, 2022, the first $1,000 in liability is exempt from
the tax imposed under this Section. On or after January 1, 2022
and prior to January 1, 2023, the first $10,000 in liability is
exempt from the tax imposed under this Section. On or after
January 1, 2023 and prior to January 1, 2024, the first
$100,000 in liability is exempt from the tax imposed under this
Section. The provisions of this Section shall not require the
payment of any franchise tax that would otherwise have been due
and payable on or after January 1, 2024. There shall be no
refunds or proration of franchise tax for any taxes due and
payable on or after January 1, 2024 on the basis that a portion
of the corporation's taxable year extends beyond January 1,
2024. This amendatory Act of the 101st General Assembly shall
not affect any right accrued or established, or any liability
or penalty incurred prior to January 1, 2024.
(f) This Section is repealed on December 31, 2024.
(Source: P.A. 92-33, eff. 7-1-01.)
(805 ILCS 5/15.97) (from Ch. 32, par. 15.97)
Sec. 15.97. Corporate Franchise Tax Refund Fund.
(a) Beginning July 1, 1993, a percentage of the amounts
collected under Sections 15.35, 15.45, 15.65, and 15.75 of this
Act shall be deposited into the Corporate Franchise Tax Refund
Fund, a special Fund hereby created in the State treasury. From
July 1, 1993, until December 31, 1994, there shall be deposited
into the Fund 3% of the amounts received under those Sections.
Beginning January 1, 1995, and for each fiscal year beginning
thereafter, 2% of the amounts collected under those Sections
during the preceding fiscal year shall be deposited into the
Fund.
(b) Beginning July 1, 1993, moneys in the Fund shall be
expended exclusively for the purpose of paying refunds payable
because of overpayment of franchise taxes, penalties, or
interest under Sections 13.70, 15.35, 15.45, 15.65, 15.75, and
16.05 of this Act and making transfers authorized under this
Section. Refunds in accordance with the provisions of
subsections (f) and (g) of Section 1.15 and Section 1.17 of
this Act may be made from the Fund only to the extent that
amounts collected under Sections 15.35, 15.45, 15.65, and 15.75
of this Act have been deposited in the Fund and remain
available. On or before August 31 of each year, the balance in
the Fund in excess of $100,000 shall be transferred to the
General Revenue Fund. Notwithstanding the provisions of this
subsection, for the period commencing on or after July 1, 2022,
amounts in the fund shall not be transferred to the General
Revenue Fund and shall be used to pay refunds in accordance
with the provisions of this Act. Within a reasonable time after
December 31, 2022, the Secretary of State shall direct and the
Comptroller shall order transferred to the General Revenue Fund
all amounts remaining in the fund.
(c) This Act shall constitute an irrevocable and continuing
appropriation from the Corporate Franchise Tax Refund Fund for
the purpose of paying refunds upon the order of the Secretary
of State in accordance with the provisions of this Section.
(d) This Section is repealed on December 31, 2022.
(Source: P.A. 99-620, eff. 1-1-17.)
ARTICLE 99. EFFECTIVE DATE
Section 999. Effective date. This Act takes effect upon
becoming law.
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