101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB3633

 

Introduced , by Rep. Natalie A. Manley

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/304  from Ch. 120, par. 3-304

    Amends the Illinois Income Tax Act. Provides that, for purposes of being liable for income tax, compensation is paid in this State if some of the individual's service is performed within this State, the individual's service performed within this State is nonincidental to the individual's service performed without this State, and the individual's service is performed within this State for more than 30 working days during the tax year. Defines terms. Effective immediately.


LRB101 10562 HLH 55668 b

 

 

A BILL FOR

 

HB3633LRB101 10562 HLH 55668 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 304 as follows:
 
6    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
7    Sec. 304. Business income of persons other than residents.
8    (a) In general. The business income of a person other than
9a resident shall be allocated to this State if such person's
10business income is derived solely from this State. If a person
11other than a resident derives business income from this State
12and one or more other states, then, for tax years ending on or
13before December 30, 1998, and except as otherwise provided by
14this Section, such person's business income shall be
15apportioned to this State by multiplying the income by a
16fraction, the numerator of which is the sum of the property
17factor (if any), the payroll factor (if any) and 200% of the
18sales factor (if any), and the denominator of which is 4
19reduced by the number of factors other than the sales factor
20which have a denominator of zero and by an additional 2 if the
21sales factor has a denominator of zero. For tax years ending on
22or after December 31, 1998, and except as otherwise provided by
23this Section, persons other than residents who derive business

 

 

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1income from this State and one or more other states shall
2compute their apportionment factor by weighting their
3property, payroll, and sales factors as provided in subsection
4(h) of this Section.
5    (1) Property factor.
6        (A) The property factor is a fraction, the numerator of
7    which is the average value of the person's real and
8    tangible personal property owned or rented and used in the
9    trade or business in this State during the taxable year and
10    the denominator of which is the average value of all the
11    person's real and tangible personal property owned or
12    rented and used in the trade or business during the taxable
13    year.
14        (B) Property owned by the person is valued at its
15    original cost. Property rented by the person is valued at 8
16    times the net annual rental rate. Net annual rental rate is
17    the annual rental rate paid by the person less any annual
18    rental rate received by the person from sub-rentals.
19        (C) The average value of property shall be determined
20    by averaging the values at the beginning and ending of the
21    taxable year but the Director may require the averaging of
22    monthly values during the taxable year if reasonably
23    required to reflect properly the average value of the
24    person's property.
25    (2) Payroll factor.
26        (A) The payroll factor is a fraction, the numerator of

 

 

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1    which is the total amount paid in this State during the
2    taxable year by the person for compensation, and the
3    denominator of which is the total compensation paid
4    everywhere during the taxable year.
5        (B) Compensation is paid in this State if:
6            (i) The individual's service is performed entirely
7        within this State;
8            (ii) The individual's service is performed both
9        within and without this State, but the service
10        performed without this State is incidental to the
11        individual's service performed within this State; or
12            (iii) For tax years ending prior to December 31,
13        2019, some Some of the service is performed within this
14        State and either the base of operations, or if there is
15        no base of operations, the place from which the service
16        is directed or controlled is within this State, or the
17        base of operations or the place from which the service
18        is directed or controlled is not in any state in which
19        some part of the service is performed, but the
20        individual's residence is in this State. For tax years
21        ending on or after December 31, 2019, compensation is
22        paid in this State if some of the individual's service
23        is performed within this State, the individual's
24        service performed within this State is nonincidental
25        to the individual's service performed without this
26        State, and the individual's service is performed

 

 

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1        within this State for more than 30 working days during
2        the tax year. The amount of compensation paid in this
3        State shall include the portion of the individual's
4        total compensation for services performed on behalf of
5        his or her employer during the tax year which the
6        number of working days spent within this State during
7        the tax year bears to the total number of working days
8        spent both within and without this State during the tax
9        year. For purposes of this paragraph:
10                (a) The term "working day" means all days
11            during the tax year in which the individual
12            performs duties on behalf of his or her employer.
13            All days in which the individual performs no duties
14            on behalf of his or her employer (e.g., weekends,
15            vacation days, sick days, and holidays) are not
16            working days.
17                (b) A working day is spent within this State
18            if:
19                    (1) the individual performs service on
20                behalf of the employer and a greater amount of
21                time on that day is spent by the individual
22                performing duties on behalf of the employer
23                within this State, without regard to time spent
24                traveling, than is spent performing duties on
25                behalf of the employer without this State; or
26                    (2) the only service the individual

 

 

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1                performs on behalf of the employer on that day
2                is traveling to a destination within this
3                State, and the individual arrives on that day.
4            (iv) Compensation paid to nonresident professional
5        athletes.
6            (a) General. The Illinois source income of a
7        nonresident individual who is a member of a
8        professional athletic team includes the portion of the
9        individual's total compensation for services performed
10        as a member of a professional athletic team during the
11        taxable year which the number of duty days spent within
12        this State performing services for the team in any
13        manner during the taxable year bears to the total
14        number of duty days spent both within and without this
15        State during the taxable year.
16            (b) Travel days. Travel days that do not involve
17        either a game, practice, team meeting, or other similar
18        team event are not considered duty days spent in this
19        State. However, such travel days are considered in the
20        total duty days spent both within and without this
21        State.
22            (c) Definitions. For purposes of this subpart
23        (iv):
24                (1) The term "professional athletic team"
25            includes, but is not limited to, any professional
26            baseball, basketball, football, soccer, or hockey

 

 

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1            team.
2                (2) The term "member of a professional
3            athletic team" includes those employees who are
4            active players, players on the disabled list, and
5            any other persons required to travel and who travel
6            with and perform services on behalf of a
7            professional athletic team on a regular basis.
8            This includes, but is not limited to, coaches,
9            managers, and trainers.
10                (3) Except as provided in items (C) and (D) of
11            this subpart (3), the term "duty days" means all
12            days during the taxable year from the beginning of
13            the professional athletic team's official
14            pre-season training period through the last game
15            in which the team competes or is scheduled to
16            compete. Duty days shall be counted for the year in
17            which they occur, including where a team's
18            official pre-season training period through the
19            last game in which the team competes or is
20            scheduled to compete, occurs during more than one
21            tax year.
22                    (A) Duty days shall also include days on
23                which a member of a professional athletic team
24                performs service for a team on a date that does
25                not fall within the foregoing period (e.g.,
26                participation in instructional leagues, the

 

 

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1                "All Star Game", or promotional "caravans").
2                Performing a service for a professional
3                athletic team includes conducting training and
4                rehabilitation activities, when such
5                activities are conducted at team facilities.
6                    (B) Also included in duty days are game
7                days, practice days, days spent at team
8                meetings, promotional caravans, preseason
9                training camps, and days served with the team
10                through all post-season games in which the team
11                competes or is scheduled to compete.
12                    (C) Duty days for any person who joins a
13                team during the period from the beginning of
14                the professional athletic team's official
15                pre-season training period through the last
16                game in which the team competes, or is
17                scheduled to compete, shall begin on the day
18                that person joins the team. Conversely, duty
19                days for any person who leaves a team during
20                this period shall end on the day that person
21                leaves the team. Where a person switches teams
22                during a taxable year, a separate duty-day
23                calculation shall be made for the period the
24                person was with each team.
25                    (D) Days for which a member of a
26                professional athletic team is not compensated

 

 

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1                and is not performing services for the team in
2                any manner, including days when such member of
3                a professional athletic team has been
4                suspended without pay and prohibited from
5                performing any services for the team, shall not
6                be treated as duty days.
7                    (E) Days for which a member of a
8                professional athletic team is on the disabled
9                list and does not conduct rehabilitation
10                activities at facilities of the team, and is
11                not otherwise performing services for the team
12                in Illinois, shall not be considered duty days
13                spent in this State. All days on the disabled
14                list, however, are considered to be included in
15                total duty days spent both within and without
16                this State.
17                (4) The term "total compensation for services
18            performed as a member of a professional athletic
19            team" means the total compensation received during
20            the taxable year for services performed:
21                    (A) from the beginning of the official
22                pre-season training period through the last
23                game in which the team competes or is scheduled
24                to compete during that taxable year; and
25                    (B) during the taxable year on a date which
26                does not fall within the foregoing period

 

 

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1                (e.g., participation in instructional leagues,
2                the "All Star Game", or promotional caravans).
3                This compensation shall include, but is not
4            limited to, salaries, wages, bonuses as described
5            in this subpart, and any other type of compensation
6            paid during the taxable year to a member of a
7            professional athletic team for services performed
8            in that year. This compensation does not include
9            strike benefits, severance pay, termination pay,
10            contract or option year buy-out payments,
11            expansion or relocation payments, or any other
12            payments not related to services performed for the
13            team.
14                For purposes of this subparagraph, "bonuses"
15            included in "total compensation for services
16            performed as a member of a professional athletic
17            team" subject to the allocation described in
18            Section 302(c)(1) are: bonuses earned as a result
19            of play (i.e., performance bonuses) during the
20            season, including bonuses paid for championship,
21            playoff or "bowl" games played by a team, or for
22            selection to all-star league or other honorary
23            positions; and bonuses paid for signing a
24            contract, unless the payment of the signing bonus
25            is not conditional upon the signee playing any
26            games for the team or performing any subsequent

 

 

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1            services for the team or even making the team, the
2            signing bonus is payable separately from the
3            salary and any other compensation, and the signing
4            bonus is nonrefundable.
5    (3) Sales factor.
6        (A) The sales factor is a fraction, the numerator of
7    which is the total sales of the person in this State during
8    the taxable year, and the denominator of which is the total
9    sales of the person everywhere during the taxable year.
10        (B) Sales of tangible personal property are in this
11    State if:
12            (i) The property is delivered or shipped to a
13        purchaser, other than the United States government,
14        within this State regardless of the f. o. b. point or
15        other conditions of the sale; or
16            (ii) The property is shipped from an office, store,
17        warehouse, factory or other place of storage in this
18        State and either the purchaser is the United States
19        government or the person is not taxable in the state of
20        the purchaser; provided, however, that premises owned
21        or leased by a person who has independently contracted
22        with the seller for the printing of newspapers,
23        periodicals or books shall not be deemed to be an
24        office, store, warehouse, factory or other place of
25        storage for purposes of this Section. Sales of tangible
26        personal property are not in this State if the seller

 

 

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1        and purchaser would be members of the same unitary
2        business group but for the fact that either the seller
3        or purchaser is a person with 80% or more of total
4        business activity outside of the United States and the
5        property is purchased for resale.
6        (B-1) Patents, copyrights, trademarks, and similar
7    items of intangible personal property.
8            (i) Gross receipts from the licensing, sale, or
9        other disposition of a patent, copyright, trademark,
10        or similar item of intangible personal property, other
11        than gross receipts governed by paragraph (B-7) of this
12        item (3), are in this State to the extent the item is
13        utilized in this State during the year the gross
14        receipts are included in gross income.
15            (ii) Place of utilization.
16                (I) A patent is utilized in a state to the
17            extent that it is employed in production,
18            fabrication, manufacturing, or other processing in
19            the state or to the extent that a patented product
20            is produced in the state. If a patent is utilized
21            in more than one state, the extent to which it is
22            utilized in any one state shall be a fraction equal
23            to the gross receipts of the licensee or purchaser
24            from sales or leases of items produced,
25            fabricated, manufactured, or processed within that
26            state using the patent and of patented items

 

 

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1            produced within that state, divided by the total of
2            such gross receipts for all states in which the
3            patent is utilized.
4                (II) A copyright is utilized in a state to the
5            extent that printing or other publication
6            originates in the state. If a copyright is utilized
7            in more than one state, the extent to which it is
8            utilized in any one state shall be a fraction equal
9            to the gross receipts from sales or licenses of
10            materials printed or published in that state
11            divided by the total of such gross receipts for all
12            states in which the copyright is utilized.
13                (III) Trademarks and other items of intangible
14            personal property governed by this paragraph (B-1)
15            are utilized in the state in which the commercial
16            domicile of the licensee or purchaser is located.
17            (iii) If the state of utilization of an item of
18        property governed by this paragraph (B-1) cannot be
19        determined from the taxpayer's books and records or
20        from the books and records of any person related to the
21        taxpayer within the meaning of Section 267(b) of the
22        Internal Revenue Code, 26 U.S.C. 267, the gross
23        receipts attributable to that item shall be excluded
24        from both the numerator and the denominator of the
25        sales factor.
26        (B-2) Gross receipts from the license, sale, or other

 

 

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1    disposition of patents, copyrights, trademarks, and
2    similar items of intangible personal property, other than
3    gross receipts governed by paragraph (B-7) of this item
4    (3), may be included in the numerator or denominator of the
5    sales factor only if gross receipts from licenses, sales,
6    or other disposition of such items comprise more than 50%
7    of the taxpayer's total gross receipts included in gross
8    income during the tax year and during each of the 2
9    immediately preceding tax years; provided that, when a
10    taxpayer is a member of a unitary business group, such
11    determination shall be made on the basis of the gross
12    receipts of the entire unitary business group.
13        (B-5) For taxable years ending on or after December 31,
14    2008, except as provided in subsections (ii) through (vii),
15    receipts from the sale of telecommunications service or
16    mobile telecommunications service are in this State if the
17    customer's service address is in this State.
18            (i) For purposes of this subparagraph (B-5), the
19        following terms have the following meanings:
20            "Ancillary services" means services that are
21        associated with or incidental to the provision of
22        "telecommunications services", including but not
23        limited to "detailed telecommunications billing",
24        "directory assistance", "vertical service", and "voice
25        mail services".
26            "Air-to-Ground Radiotelephone service" means a

 

 

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1        radio service, as that term is defined in 47 CFR 22.99,
2        in which common carriers are authorized to offer and
3        provide radio telecommunications service for hire to
4        subscribers in aircraft.
5            "Call-by-call Basis" means any method of charging
6        for telecommunications services where the price is
7        measured by individual calls.
8            "Communications Channel" means a physical or
9        virtual path of communications over which signals are
10        transmitted between or among customer channel
11        termination points.
12            "Conference bridging service" means an "ancillary
13        service" that links two or more participants of an
14        audio or video conference call and may include the
15        provision of a telephone number. "Conference bridging
16        service" does not include the "telecommunications
17        services" used to reach the conference bridge.
18            "Customer Channel Termination Point" means the
19        location where the customer either inputs or receives
20        the communications.
21            "Detailed telecommunications billing service"
22        means an "ancillary service" of separately stating
23        information pertaining to individual calls on a
24        customer's billing statement.
25            "Directory assistance" means an "ancillary
26        service" of providing telephone number information,

 

 

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1        and/or address information.
2            "Home service provider" means the facilities based
3        carrier or reseller with which the customer contracts
4        for the provision of mobile telecommunications
5        services.
6            "Mobile telecommunications service" means
7        commercial mobile radio service, as defined in Section
8        20.3 of Title 47 of the Code of Federal Regulations as
9        in effect on June 1, 1999.
10            "Place of primary use" means the street address
11        representative of where the customer's use of the
12        telecommunications service primarily occurs, which
13        must be the residential street address or the primary
14        business street address of the customer. In the case of
15        mobile telecommunications services, "place of primary
16        use" must be within the licensed service area of the
17        home service provider.
18            "Post-paid telecommunication service" means the
19        telecommunications service obtained by making a
20        payment on a call-by-call basis either through the use
21        of a credit card or payment mechanism such as a bank
22        card, travel card, credit card, or debit card, or by
23        charge made to a telephone number which is not
24        associated with the origination or termination of the
25        telecommunications service. A post-paid calling
26        service includes telecommunications service, except a

 

 

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1        prepaid wireless calling service, that would be a
2        prepaid calling service except it is not exclusively a
3        telecommunication service.
4            "Prepaid telecommunication service" means the
5        right to access exclusively telecommunications
6        services, which must be paid for in advance and which
7        enables the origination of calls using an access number
8        or authorization code, whether manually or
9        electronically dialed, and that is sold in
10        predetermined units or dollars of which the number
11        declines with use in a known amount.
12            "Prepaid Mobile telecommunication service" means a
13        telecommunications service that provides the right to
14        utilize mobile wireless service as well as other
15        non-telecommunication services, including but not
16        limited to ancillary services, which must be paid for
17        in advance that is sold in predetermined units or
18        dollars of which the number declines with use in a
19        known amount.
20            "Private communication service" means a
21        telecommunication service that entitles the customer
22        to exclusive or priority use of a communications
23        channel or group of channels between or among
24        termination points, regardless of the manner in which
25        such channel or channels are connected, and includes
26        switching capacity, extension lines, stations, and any

 

 

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1        other associated services that are provided in
2        connection with the use of such channel or channels.
3            "Service address" means:
4                (a) The location of the telecommunications
5            equipment to which a customer's call is charged and
6            from which the call originates or terminates,
7            regardless of where the call is billed or paid;
8                (b) If the location in line (a) is not known,
9            service address means the origination point of the
10            signal of the telecommunications services first
11            identified by either the seller's
12            telecommunications system or in information
13            received by the seller from its service provider
14            where the system used to transport such signals is
15            not that of the seller; and
16                (c) If the locations in line (a) and line (b)
17            are not known, the service address means the
18            location of the customer's place of primary use.
19            "Telecommunications service" means the electronic
20        transmission, conveyance, or routing of voice, data,
21        audio, video, or any other information or signals to a
22        point, or between or among points. The term
23        "telecommunications service" includes such
24        transmission, conveyance, or routing in which computer
25        processing applications are used to act on the form,
26        code or protocol of the content for purposes of

 

 

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1        transmission, conveyance or routing without regard to
2        whether such service is referred to as voice over
3        Internet protocol services or is classified by the
4        Federal Communications Commission as enhanced or value
5        added. "Telecommunications service" does not include:
6                (a) Data processing and information services
7            that allow data to be generated, acquired, stored,
8            processed, or retrieved and delivered by an
9            electronic transmission to a purchaser when such
10            purchaser's primary purpose for the underlying
11            transaction is the processed data or information;
12                (b) Installation or maintenance of wiring or
13            equipment on a customer's premises;
14                (c) Tangible personal property;
15                (d) Advertising, including but not limited to
16            directory advertising;
17                (e) Billing and collection services provided
18            to third parties;
19                (f) Internet access service;
20                (g) Radio and television audio and video
21            programming services, regardless of the medium,
22            including the furnishing of transmission,
23            conveyance and routing of such services by the
24            programming service provider. Radio and television
25            audio and video programming services shall include
26            but not be limited to cable service as defined in

 

 

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1            47 USC 522(6) and audio and video programming
2            services delivered by commercial mobile radio
3            service providers, as defined in 47 CFR 20.3;
4                (h) "Ancillary services"; or
5                (i) Digital products "delivered
6            electronically", including but not limited to
7            software, music, video, reading materials or ring
8            tones.
9            "Vertical service" means an "ancillary service"
10        that is offered in connection with one or more
11        "telecommunications services", which offers advanced
12        calling features that allow customers to identify
13        callers and to manage multiple calls and call
14        connections, including "conference bridging services".
15            "Voice mail service" means an "ancillary service"
16        that enables the customer to store, send or receive
17        recorded messages. "Voice mail service" does not
18        include any "vertical services" that the customer may
19        be required to have in order to utilize the "voice mail
20        service".
21            (ii) Receipts from the sale of telecommunications
22        service sold on an individual call-by-call basis are in
23        this State if either of the following applies:
24                (a) The call both originates and terminates in
25            this State.
26                (b) The call either originates or terminates

 

 

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1            in this State and the service address is located in
2            this State.
3            (iii) Receipts from the sale of postpaid
4        telecommunications service at retail are in this State
5        if the origination point of the telecommunication
6        signal, as first identified by the service provider's
7        telecommunication system or as identified by
8        information received by the seller from its service
9        provider if the system used to transport
10        telecommunication signals is not the seller's, is
11        located in this State.
12            (iv) Receipts from the sale of prepaid
13        telecommunications service or prepaid mobile
14        telecommunications service at retail are in this State
15        if the purchaser obtains the prepaid card or similar
16        means of conveyance at a location in this State.
17        Receipts from recharging a prepaid telecommunications
18        service or mobile telecommunications service is in
19        this State if the purchaser's billing information
20        indicates a location in this State.
21            (v) Receipts from the sale of private
22        communication services are in this State as follows:
23                (a) 100% of receipts from charges imposed at
24            each channel termination point in this State.
25                (b) 100% of receipts from charges for the total
26            channel mileage between each channel termination

 

 

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1            point in this State.
2                (c) 50% of the total receipts from charges for
3            service segments when those segments are between 2
4            customer channel termination points, 1 of which is
5            located in this State and the other is located
6            outside of this State, which segments are
7            separately charged.
8                (d) The receipts from charges for service
9            segments with a channel termination point located
10            in this State and in two or more other states, and
11            which segments are not separately billed, are in
12            this State based on a percentage determined by
13            dividing the number of customer channel
14            termination points in this State by the total
15            number of customer channel termination points.
16            (vi) Receipts from charges for ancillary services
17        for telecommunications service sold to customers at
18        retail are in this State if the customer's primary
19        place of use of telecommunications services associated
20        with those ancillary services is in this State. If the
21        seller of those ancillary services cannot determine
22        where the associated telecommunications are located,
23        then the ancillary services shall be based on the
24        location of the purchaser.
25            (vii) Receipts to access a carrier's network or
26        from the sale of telecommunication services or

 

 

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1        ancillary services for resale are in this State as
2        follows:
3                (a) 100% of the receipts from access fees
4            attributable to intrastate telecommunications
5            service that both originates and terminates in
6            this State.
7                (b) 50% of the receipts from access fees
8            attributable to interstate telecommunications
9            service if the interstate call either originates
10            or terminates in this State.
11                (c) 100% of the receipts from interstate end
12            user access line charges, if the customer's
13            service address is in this State. As used in this
14            subdivision, "interstate end user access line
15            charges" includes, but is not limited to, the
16            surcharge approved by the federal communications
17            commission and levied pursuant to 47 CFR 69.
18                (d) Gross receipts from sales of
19            telecommunication services or from ancillary
20            services for telecommunications services sold to
21            other telecommunication service providers for
22            resale shall be sourced to this State using the
23            apportionment concepts used for non-resale
24            receipts of telecommunications services if the
25            information is readily available to make that
26            determination. If the information is not readily

 

 

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1            available, then the taxpayer may use any other
2            reasonable and consistent method.
3        (B-7) For taxable years ending on or after December 31,
4    2008, receipts from the sale of broadcasting services are
5    in this State if the broadcasting services are received in
6    this State. For purposes of this paragraph (B-7), the
7    following terms have the following meanings:
8            "Advertising revenue" means consideration received
9        by the taxpayer in exchange for broadcasting services
10        or allowing the broadcasting of commercials or
11        announcements in connection with the broadcasting of
12        film or radio programming, from sponsorships of the
13        programming, or from product placements in the
14        programming.
15            "Audience factor" means the ratio that the
16        audience or subscribers located in this State of a
17        station, a network, or a cable system bears to the
18        total audience or total subscribers for that station,
19        network, or cable system. The audience factor for film
20        or radio programming shall be determined by reference
21        to the books and records of the taxpayer or by
22        reference to published rating statistics provided the
23        method used by the taxpayer is consistently used from
24        year to year for this purpose and fairly represents the
25        taxpayer's activity in this State.
26            "Broadcast" or "broadcasting" or "broadcasting

 

 

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1        services" means the transmission or provision of film
2        or radio programming, whether through the public
3        airwaves, by cable, by direct or indirect satellite
4        transmission, or by any other means of communication,
5        either through a station, a network, or a cable system.
6            "Film" or "film programming" means the broadcast
7        on television of any and all performances, events, or
8        productions, including but not limited to news,
9        sporting events, plays, stories, or other literary,
10        commercial, educational, or artistic works, either
11        live or through the use of video tape, disc, or any
12        other type of format or medium. Each episode of a
13        series of films produced for television shall
14        constitute separate "film" notwithstanding that the
15        series relates to the same principal subject and is
16        produced during one or more tax periods.
17            "Radio" or "radio programming" means the broadcast
18        on radio of any and all performances, events, or
19        productions, including but not limited to news,
20        sporting events, plays, stories, or other literary,
21        commercial, educational, or artistic works, either
22        live or through the use of an audio tape, disc, or any
23        other format or medium. Each episode in a series of
24        radio programming produced for radio broadcast shall
25        constitute a separate "radio programming"
26        notwithstanding that the series relates to the same

 

 

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1        principal subject and is produced during one or more
2        tax periods.
3                (i) In the case of advertising revenue from
4            broadcasting, the customer is the advertiser and
5            the service is received in this State if the
6            commercial domicile of the advertiser is in this
7            State.
8                (ii) In the case where film or radio
9            programming is broadcast by a station, a network,
10            or a cable system for a fee or other remuneration
11            received from the recipient of the broadcast, the
12            portion of the service that is received in this
13            State is measured by the portion of the recipients
14            of the broadcast located in this State.
15            Accordingly, the fee or other remuneration for
16            such service that is included in the Illinois
17            numerator of the sales factor is the total of those
18            fees or other remuneration received from
19            recipients in Illinois. For purposes of this
20            paragraph, a taxpayer may determine the location
21            of the recipients of its broadcast using the
22            address of the recipient shown in its contracts
23            with the recipient or using the billing address of
24            the recipient in the taxpayer's records.
25                (iii) In the case where film or radio
26            programming is broadcast by a station, a network,

 

 

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1            or a cable system for a fee or other remuneration
2            from the person providing the programming, the
3            portion of the broadcast service that is received
4            by such station, network, or cable system in this
5            State is measured by the portion of recipients of
6            the broadcast located in this State. Accordingly,
7            the amount of revenue related to such an
8            arrangement that is included in the Illinois
9            numerator of the sales factor is the total fee or
10            other total remuneration from the person providing
11            the programming related to that broadcast
12            multiplied by the Illinois audience factor for
13            that broadcast.
14                (iv) In the case where film or radio
15            programming is provided by a taxpayer that is a
16            network or station to a customer for broadcast in
17            exchange for a fee or other remuneration from that
18            customer the broadcasting service is received at
19            the location of the office of the customer from
20            which the services were ordered in the regular
21            course of the customer's trade or business.
22            Accordingly, in such a case the revenue derived by
23            the taxpayer that is included in the taxpayer's
24            Illinois numerator of the sales factor is the
25            revenue from such customers who receive the
26            broadcasting service in Illinois.

 

 

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1                (v) In the case where film or radio programming
2            is provided by a taxpayer that is not a network or
3            station to another person for broadcasting in
4            exchange for a fee or other remuneration from that
5            person, the broadcasting service is received at
6            the location of the office of the customer from
7            which the services were ordered in the regular
8            course of the customer's trade or business.
9            Accordingly, in such a case the revenue derived by
10            the taxpayer that is included in the taxpayer's
11            Illinois numerator of the sales factor is the
12            revenue from such customers who receive the
13            broadcasting service in Illinois.
14        (B-8) Gross receipts from winnings under the Illinois
15    Lottery Law from the assignment of a prize under Section
16    13.1 of the Illinois Lottery Law are received in this
17    State. This paragraph (B-8) applies only to taxable years
18    ending on or after December 31, 2013.
19        (C) For taxable years ending before December 31, 2008,
20    sales, other than sales governed by paragraphs (B), (B-1),
21    (B-2), and (B-8) are in this State if:
22            (i) The income-producing activity is performed in
23        this State; or
24            (ii) The income-producing activity is performed
25        both within and without this State and a greater
26        proportion of the income-producing activity is

 

 

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1        performed within this State than without this State,
2        based on performance costs.
3        (C-5) For taxable years ending on or after December 31,
4    2008, sales, other than sales governed by paragraphs (B),
5    (B-1), (B-2), (B-5), and (B-7), are in this State if any of
6    the following criteria are met:
7            (i) Sales from the sale or lease of real property
8        are in this State if the property is located in this
9        State.
10            (ii) Sales from the lease or rental of tangible
11        personal property are in this State if the property is
12        located in this State during the rental period. Sales
13        from the lease or rental of tangible personal property
14        that is characteristically moving property, including,
15        but not limited to, motor vehicles, rolling stock,
16        aircraft, vessels, or mobile equipment are in this
17        State to the extent that the property is used in this
18        State.
19            (iii) In the case of interest, net gains (but not
20        less than zero) and other items of income from
21        intangible personal property, the sale is in this State
22        if:
23                (a) in the case of a taxpayer who is a dealer
24            in the item of intangible personal property within
25            the meaning of Section 475 of the Internal Revenue
26            Code, the income or gain is received from a

 

 

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1            customer in this State. For purposes of this
2            subparagraph, a customer is in this State if the
3            customer is an individual, trust or estate who is a
4            resident of this State and, for all other
5            customers, if the customer's commercial domicile
6            is in this State. Unless the dealer has actual
7            knowledge of the residence or commercial domicile
8            of a customer during a taxable year, the customer
9            shall be deemed to be a customer in this State if
10            the billing address of the customer, as shown in
11            the records of the dealer, is in this State; or
12                (b) in all other cases, if the
13            income-producing activity of the taxpayer is
14            performed in this State or, if the
15            income-producing activity of the taxpayer is
16            performed both within and without this State, if a
17            greater proportion of the income-producing
18            activity of the taxpayer is performed within this
19            State than in any other state, based on performance
20            costs.
21            (iv) Sales of services are in this State if the
22        services are received in this State. For the purposes
23        of this section, gross receipts from the performance of
24        services provided to a corporation, partnership, or
25        trust may only be attributed to a state where that
26        corporation, partnership, or trust has a fixed place of

 

 

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1        business. If the state where the services are received
2        is not readily determinable or is a state where the
3        corporation, partnership, or trust receiving the
4        service does not have a fixed place of business, the
5        services shall be deemed to be received at the location
6        of the office of the customer from which the services
7        were ordered in the regular course of the customer's
8        trade or business. If the ordering office cannot be
9        determined, the services shall be deemed to be received
10        at the office of the customer to which the services are
11        billed. If the taxpayer is not taxable in the state in
12        which the services are received, the sale must be
13        excluded from both the numerator and the denominator of
14        the sales factor. The Department shall adopt rules
15        prescribing where specific types of service are
16        received, including, but not limited to, publishing,
17        and utility service.
18        (D) For taxable years ending on or after December 31,
19    1995, the following items of income shall not be included
20    in the numerator or denominator of the sales factor:
21    dividends; amounts included under Section 78 of the
22    Internal Revenue Code; and Subpart F income as defined in
23    Section 952 of the Internal Revenue Code. No inference
24    shall be drawn from the enactment of this paragraph (D) in
25    construing this Section for taxable years ending before
26    December 31, 1995.

 

 

HB3633- 31 -LRB101 10562 HLH 55668 b

1        (E) Paragraphs (B-1) and (B-2) shall apply to tax years
2    ending on or after December 31, 1999, provided that a
3    taxpayer may elect to apply the provisions of these
4    paragraphs to prior tax years. Such election shall be made
5    in the form and manner prescribed by the Department, shall
6    be irrevocable, and shall apply to all tax years; provided
7    that, if a taxpayer's Illinois income tax liability for any
8    tax year, as assessed under Section 903 prior to January 1,
9    1999, was computed in a manner contrary to the provisions
10    of paragraphs (B-1) or (B-2), no refund shall be payable to
11    the taxpayer for that tax year to the extent such refund is
12    the result of applying the provisions of paragraph (B-1) or
13    (B-2) retroactively. In the case of a unitary business
14    group, such election shall apply to all members of such
15    group for every tax year such group is in existence, but
16    shall not apply to any taxpayer for any period during which
17    that taxpayer is not a member of such group.
18    (b) Insurance companies.
19        (1) In general. Except as otherwise provided by
20    paragraph (2), business income of an insurance company for
21    a taxable year shall be apportioned to this State by
22    multiplying such income by a fraction, the numerator of
23    which is the direct premiums written for insurance upon
24    property or risk in this State, and the denominator of
25    which is the direct premiums written for insurance upon
26    property or risk everywhere. For purposes of this

 

 

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1    subsection, the term "direct premiums written" means the
2    total amount of direct premiums written, assessments and
3    annuity considerations as reported for the taxable year on
4    the annual statement filed by the company with the Illinois
5    Director of Insurance in the form approved by the National
6    Convention of Insurance Commissioners or such other form as
7    may be prescribed in lieu thereof.
8        (2) Reinsurance. If the principal source of premiums
9    written by an insurance company consists of premiums for
10    reinsurance accepted by it, the business income of such
11    company shall be apportioned to this State by multiplying
12    such income by a fraction, the numerator of which is the
13    sum of (i) direct premiums written for insurance upon
14    property or risk in this State, plus (ii) premiums written
15    for reinsurance accepted in respect of property or risk in
16    this State, and the denominator of which is the sum of
17    (iii) direct premiums written for insurance upon property
18    or risk everywhere, plus (iv) premiums written for
19    reinsurance accepted in respect of property or risk
20    everywhere. For purposes of this paragraph, premiums
21    written for reinsurance accepted in respect of property or
22    risk in this State, whether or not otherwise determinable,
23    may, at the election of the company, be determined on the
24    basis of the proportion which premiums written for
25    reinsurance accepted from companies commercially domiciled
26    in Illinois bears to premiums written for reinsurance

 

 

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1    accepted from all sources, or, alternatively, in the
2    proportion which the sum of the direct premiums written for
3    insurance upon property or risk in this State by each
4    ceding company from which reinsurance is accepted bears to
5    the sum of the total direct premiums written by each such
6    ceding company for the taxable year. The election made by a
7    company under this paragraph for its first taxable year
8    ending on or after December 31, 2011, shall be binding for
9    that company for that taxable year and for all subsequent
10    taxable years, and may be altered only with the written
11    permission of the Department, which shall not be
12    unreasonably withheld.
13    (c) Financial organizations.
14        (1) In general. For taxable years ending before
15    December 31, 2008, business income of a financial
16    organization shall be apportioned to this State by
17    multiplying such income by a fraction, the numerator of
18    which is its business income from sources within this
19    State, and the denominator of which is its business income
20    from all sources. For the purposes of this subsection, the
21    business income of a financial organization from sources
22    within this State is the sum of the amounts referred to in
23    subparagraphs (A) through (E) following, but excluding the
24    adjusted income of an international banking facility as
25    determined in paragraph (2):
26            (A) Fees, commissions or other compensation for

 

 

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1        financial services rendered within this State;
2            (B) Gross profits from trading in stocks, bonds or
3        other securities managed within this State;
4            (C) Dividends, and interest from Illinois
5        customers, which are received within this State;
6            (D) Interest charged to customers at places of
7        business maintained within this State for carrying
8        debit balances of margin accounts, without deduction
9        of any costs incurred in carrying such accounts; and
10            (E) Any other gross income resulting from the
11        operation as a financial organization within this
12        State. In computing the amounts referred to in
13        paragraphs (A) through (E) of this subsection, any
14        amount received by a member of an affiliated group
15        (determined under Section 1504(a) of the Internal
16        Revenue Code but without reference to whether any such
17        corporation is an "includible corporation" under
18        Section 1504(b) of the Internal Revenue Code) from
19        another member of such group shall be included only to
20        the extent such amount exceeds expenses of the
21        recipient directly related thereto.
22        (2) International Banking Facility. For taxable years
23    ending before December 31, 2008:
24            (A) Adjusted Income. The adjusted income of an
25        international banking facility is its income reduced
26        by the amount of the floor amount.

 

 

HB3633- 35 -LRB101 10562 HLH 55668 b

1            (B) Floor Amount. The floor amount shall be the
2        amount, if any, determined by multiplying the income of
3        the international banking facility by a fraction, not
4        greater than one, which is determined as follows:
5                (i) The numerator shall be:
6                The average aggregate, determined on a
7            quarterly basis, of the financial organization's
8            loans to banks in foreign countries, to foreign
9            domiciled borrowers (except where secured
10            primarily by real estate) and to foreign
11            governments and other foreign official
12            institutions, as reported for its branches,
13            agencies and offices within the state on its
14            "Consolidated Report of Condition", Schedule A,
15            Lines 2.c., 5.b., and 7.a., which was filed with
16            the Federal Deposit Insurance Corporation and
17            other regulatory authorities, for the year 1980,
18            minus
19                The average aggregate, determined on a
20            quarterly basis, of such loans (other than loans of
21            an international banking facility), as reported by
22            the financial institution for its branches,
23            agencies and offices within the state, on the
24            corresponding Schedule and lines of the
25            Consolidated Report of Condition for the current
26            taxable year, provided, however, that in no case

 

 

HB3633- 36 -LRB101 10562 HLH 55668 b

1            shall the amount determined in this clause (the
2            subtrahend) exceed the amount determined in the
3            preceding clause (the minuend); and
4                (ii) the denominator shall be the average
5            aggregate, determined on a quarterly basis, of the
6            international banking facility's loans to banks in
7            foreign countries, to foreign domiciled borrowers
8            (except where secured primarily by real estate)
9            and to foreign governments and other foreign
10            official institutions, which were recorded in its
11            financial accounts for the current taxable year.
12            (C) Change to Consolidated Report of Condition and
13        in Qualification. In the event the Consolidated Report
14        of Condition which is filed with the Federal Deposit
15        Insurance Corporation and other regulatory authorities
16        is altered so that the information required for
17        determining the floor amount is not found on Schedule
18        A, lines 2.c., 5.b. and 7.a., the financial institution
19        shall notify the Department and the Department may, by
20        regulations or otherwise, prescribe or authorize the
21        use of an alternative source for such information. The
22        financial institution shall also notify the Department
23        should its international banking facility fail to
24        qualify as such, in whole or in part, or should there
25        be any amendment or change to the Consolidated Report
26        of Condition, as originally filed, to the extent such

 

 

HB3633- 37 -LRB101 10562 HLH 55668 b

1        amendment or change alters the information used in
2        determining the floor amount.
3        (3) For taxable years ending on or after December 31,
4    2008, the business income of a financial organization shall
5    be apportioned to this State by multiplying such income by
6    a fraction, the numerator of which is its gross receipts
7    from sources in this State or otherwise attributable to
8    this State's marketplace and the denominator of which is
9    its gross receipts everywhere during the taxable year.
10    "Gross receipts" for purposes of this subparagraph (3)
11    means gross income, including net taxable gain on
12    disposition of assets, including securities and money
13    market instruments, when derived from transactions and
14    activities in the regular course of the financial
15    organization's trade or business. The following examples
16    are illustrative:
17            (i) Receipts from the lease or rental of real or
18        tangible personal property are in this State if the
19        property is located in this State during the rental
20        period. Receipts from the lease or rental of tangible
21        personal property that is characteristically moving
22        property, including, but not limited to, motor
23        vehicles, rolling stock, aircraft, vessels, or mobile
24        equipment are from sources in this State to the extent
25        that the property is used in this State.
26            (ii) Interest income, commissions, fees, gains on

 

 

HB3633- 38 -LRB101 10562 HLH 55668 b

1        disposition, and other receipts from assets in the
2        nature of loans that are secured primarily by real
3        estate or tangible personal property are from sources
4        in this State if the security is located in this State.
5            (iii) Interest income, commissions, fees, gains on
6        disposition, and other receipts from consumer loans
7        that are not secured by real or tangible personal
8        property are from sources in this State if the debtor
9        is a resident of this State.
10            (iv) Interest income, commissions, fees, gains on
11        disposition, and other receipts from commercial loans
12        and installment obligations that are not secured by
13        real or tangible personal property are from sources in
14        this State if the proceeds of the loan are to be
15        applied in this State. If it cannot be determined where
16        the funds are to be applied, the income and receipts
17        are from sources in this State if the office of the
18        borrower from which the loan was negotiated in the
19        regular course of business is located in this State. If
20        the location of this office cannot be determined, the
21        income and receipts shall be excluded from the
22        numerator and denominator of the sales factor.
23            (v) Interest income, fees, gains on disposition,
24        service charges, merchant discount income, and other
25        receipts from credit card receivables are from sources
26        in this State if the card charges are regularly billed

 

 

HB3633- 39 -LRB101 10562 HLH 55668 b

1        to a customer in this State.
2            (vi) Receipts from the performance of services,
3        including, but not limited to, fiduciary, advisory,
4        and brokerage services, are in this State if the
5        services are received in this State within the meaning
6        of subparagraph (a)(3)(C-5)(iv) of this Section.
7            (vii) Receipts from the issuance of travelers
8        checks and money orders are from sources in this State
9        if the checks and money orders are issued from a
10        location within this State.
11            (viii) Receipts from investment assets and
12        activities and trading assets and activities are
13        included in the receipts factor as follows:
14                (1) Interest, dividends, net gains (but not
15            less than zero) and other income from investment
16            assets and activities from trading assets and
17            activities shall be included in the receipts
18            factor. Investment assets and activities and
19            trading assets and activities include but are not
20            limited to: investment securities; trading account
21            assets; federal funds; securities purchased and
22            sold under agreements to resell or repurchase;
23            options; futures contracts; forward contracts;
24            notional principal contracts such as swaps;
25            equities; and foreign currency transactions. With
26            respect to the investment and trading assets and

 

 

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1            activities described in subparagraphs (A) and (B)
2            of this paragraph, the receipts factor shall
3            include the amounts described in such
4            subparagraphs.
5                    (A) The receipts factor shall include the
6                amount by which interest from federal funds
7                sold and securities purchased under resale
8                agreements exceeds interest expense on federal
9                funds purchased and securities sold under
10                repurchase agreements.
11                    (B) The receipts factor shall include the
12                amount by which interest, dividends, gains and
13                other income from trading assets and
14                activities, including but not limited to
15                assets and activities in the matched book, in
16                the arbitrage book, and foreign currency
17                transactions, exceed amounts paid in lieu of
18                interest, amounts paid in lieu of dividends,
19                and losses from such assets and activities.
20                (2) The numerator of the receipts factor
21            includes interest, dividends, net gains (but not
22            less than zero), and other income from investment
23            assets and activities and from trading assets and
24            activities described in paragraph (1) of this
25            subsection that are attributable to this State.
26                    (A) The amount of interest, dividends, net

 

 

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1                gains (but not less than zero), and other
2                income from investment assets and activities
3                in the investment account to be attributed to
4                this State and included in the numerator is
5                determined by multiplying all such income from
6                such assets and activities by a fraction, the
7                numerator of which is the gross income from
8                such assets and activities which are properly
9                assigned to a fixed place of business of the
10                taxpayer within this State and the denominator
11                of which is the gross income from all such
12                assets and activities.
13                    (B) The amount of interest from federal
14                funds sold and purchased and from securities
15                purchased under resale agreements and
16                securities sold under repurchase agreements
17                attributable to this State and included in the
18                numerator is determined by multiplying the
19                amount described in subparagraph (A) of
20                paragraph (1) of this subsection from such
21                funds and such securities by a fraction, the
22                numerator of which is the gross income from
23                such funds and such securities which are
24                properly assigned to a fixed place of business
25                of the taxpayer within this State and the
26                denominator of which is the gross income from

 

 

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1                all such funds and such securities.
2                    (C) The amount of interest, dividends,
3                gains, and other income from trading assets and
4                activities, including but not limited to
5                assets and activities in the matched book, in
6                the arbitrage book and foreign currency
7                transactions (but excluding amounts described
8                in subparagraphs (A) or (B) of this paragraph),
9                attributable to this State and included in the
10                numerator is determined by multiplying the
11                amount described in subparagraph (B) of
12                paragraph (1) of this subsection by a fraction,
13                the numerator of which is the gross income from
14                such trading assets and activities which are
15                properly assigned to a fixed place of business
16                of the taxpayer within this State and the
17                denominator of which is the gross income from
18                all such assets and activities.
19                    (D) Properly assigned, for purposes of
20                this paragraph (2) of this subsection, means
21                the investment or trading asset or activity is
22                assigned to the fixed place of business with
23                which it has a preponderance of substantive
24                contacts. An investment or trading asset or
25                activity assigned by the taxpayer to a fixed
26                place of business without the State shall be

 

 

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1                presumed to have been properly assigned if:
2                        (i) the taxpayer has assigned, in the
3                    regular course of its business, such asset
4                    or activity on its records to a fixed place
5                    of business consistent with federal or
6                    state regulatory requirements;
7                        (ii) such assignment on its records is
8                    based upon substantive contacts of the
9                    asset or activity to such fixed place of
10                    business; and
11                        (iii) the taxpayer uses such records
12                    reflecting assignment of such assets or
13                    activities for the filing of all state and
14                    local tax returns for which an assignment
15                    of such assets or activities to a fixed
16                    place of business is required.
17                    (E) The presumption of proper assignment
18                of an investment or trading asset or activity
19                provided in subparagraph (D) of paragraph (2)
20                of this subsection may be rebutted upon a
21                showing by the Department, supported by a
22                preponderance of the evidence, that the
23                preponderance of substantive contacts
24                regarding such asset or activity did not occur
25                at the fixed place of business to which it was
26                assigned on the taxpayer's records. If the

 

 

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1                fixed place of business that has a
2                preponderance of substantive contacts cannot
3                be determined for an investment or trading
4                asset or activity to which the presumption in
5                subparagraph (D) of paragraph (2) of this
6                subsection does not apply or with respect to
7                which that presumption has been rebutted, that
8                asset or activity is properly assigned to the
9                state in which the taxpayer's commercial
10                domicile is located. For purposes of this
11                subparagraph (E), it shall be presumed,
12                subject to rebuttal, that taxpayer's
13                commercial domicile is in the state of the
14                United States or the District of Columbia to
15                which the greatest number of employees are
16                regularly connected with the management of the
17                investment or trading income or out of which
18                they are working, irrespective of where the
19                services of such employees are performed, as of
20                the last day of the taxable year.
21        (4) (Blank).
22        (5) (Blank).
23    (c-1) Federally regulated exchanges. For taxable years
24ending on or after December 31, 2012, business income of a
25federally regulated exchange shall, at the option of the
26federally regulated exchange, be apportioned to this State by

 

 

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1multiplying such income by a fraction, the numerator of which
2is its business income from sources within this State, and the
3denominator of which is its business income from all sources.
4For purposes of this subsection, the business income within
5this State of a federally regulated exchange is the sum of the
6following:
7        (1) Receipts attributable to transactions executed on
8    a physical trading floor if that physical trading floor is
9    located in this State.
10        (2) Receipts attributable to all other matching,
11    execution, or clearing transactions, including without
12    limitation receipts from the provision of matching,
13    execution, or clearing services to another entity,
14    multiplied by (i) for taxable years ending on or after
15    December 31, 2012 but before December 31, 2013, 63.77%; and
16    (ii) for taxable years ending on or after December 31,
17    2013, 27.54%.
18        (3) All other receipts not governed by subparagraphs
19    (1) or (2) of this subsection (c-1), to the extent the
20    receipts would be characterized as "sales in this State"
21    under item (3) of subsection (a) of this Section.
22    "Federally regulated exchange" means (i) a "registered
23entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B),
24or (C), (ii) an "exchange" or "clearing agency" within the
25meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such
26entities regulated under any successor regulatory structure to

 

 

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1the foregoing, and (iv) all taxpayers who are members of the
2same unitary business group as a federally regulated exchange,
3determined without regard to the prohibition in Section
41501(a)(27) of this Act against including in a unitary business
5group taxpayers who are ordinarily required to apportion
6business income under different subsections of this Section;
7provided that this subparagraph (iv) shall apply only if 50% or
8more of the business receipts of the unitary business group
9determined by application of this subparagraph (iv) for the
10taxable year are attributable to the matching, execution, or
11clearing of transactions conducted by an entity described in
12subparagraph (i), (ii), or (iii) of this paragraph.
13    In no event shall the Illinois apportionment percentage
14computed in accordance with this subsection (c-1) for any
15taxpayer for any tax year be less than the Illinois
16apportionment percentage computed under this subsection (c-1)
17for that taxpayer for the first full tax year ending on or
18after December 31, 2013 for which this subsection (c-1) applied
19to the taxpayer.
20    (d) Transportation services. For taxable years ending
21before December 31, 2008, business income derived from
22furnishing transportation services shall be apportioned to
23this State in accordance with paragraphs (1) and (2):
24        (1) Such business income (other than that derived from
25    transportation by pipeline) shall be apportioned to this
26    State by multiplying such income by a fraction, the

 

 

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1    numerator of which is the revenue miles of the person in
2    this State, and the denominator of which is the revenue
3    miles of the person everywhere. For purposes of this
4    paragraph, a revenue mile is the transportation of 1
5    passenger or 1 net ton of freight the distance of 1 mile
6    for a consideration. Where a person is engaged in the
7    transportation of both passengers and freight, the
8    fraction above referred to shall be determined by means of
9    an average of the passenger revenue mile fraction and the
10    freight revenue mile fraction, weighted to reflect the
11    person's
12            (A) relative railway operating income from total
13        passenger and total freight service, as reported to the
14        Interstate Commerce Commission, in the case of
15        transportation by railroad, and
16            (B) relative gross receipts from passenger and
17        freight transportation, in case of transportation
18        other than by railroad.
19        (2) Such business income derived from transportation
20    by pipeline shall be apportioned to this State by
21    multiplying such income by a fraction, the numerator of
22    which is the revenue miles of the person in this State, and
23    the denominator of which is the revenue miles of the person
24    everywhere. For the purposes of this paragraph, a revenue
25    mile is the transportation by pipeline of 1 barrel of oil,
26    1,000 cubic feet of gas, or of any specified quantity of

 

 

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1    any other substance, the distance of 1 mile for a
2    consideration.
3        (3) For taxable years ending on or after December 31,
4    2008, business income derived from providing
5    transportation services other than airline services shall
6    be apportioned to this State by using a fraction, (a) the
7    numerator of which shall be (i) all receipts from any
8    movement or shipment of people, goods, mail, oil, gas, or
9    any other substance (other than by airline) that both
10    originates and terminates in this State, plus (ii) that
11    portion of the person's gross receipts from movements or
12    shipments of people, goods, mail, oil, gas, or any other
13    substance (other than by airline) that originates in one
14    state or jurisdiction and terminates in another state or
15    jurisdiction, that is determined by the ratio that the
16    miles traveled in this State bears to total miles
17    everywhere and (b) the denominator of which shall be all
18    revenue derived from the movement or shipment of people,
19    goods, mail, oil, gas, or any other substance (other than
20    by airline). Where a taxpayer is engaged in the
21    transportation of both passengers and freight, the
22    fraction above referred to shall first be determined
23    separately for passenger miles and freight miles. Then an
24    average of the passenger miles fraction and the freight
25    miles fraction shall be weighted to reflect the taxpayer's:
26            (A) relative railway operating income from total

 

 

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1        passenger and total freight service, as reported to the
2        Surface Transportation Board, in the case of
3        transportation by railroad; and
4            (B) relative gross receipts from passenger and
5        freight transportation, in case of transportation
6        other than by railroad.
7        (4) For taxable years ending on or after December 31,
8    2008, business income derived from furnishing airline
9    transportation services shall be apportioned to this State
10    by multiplying such income by a fraction, the numerator of
11    which is the revenue miles of the person in this State, and
12    the denominator of which is the revenue miles of the person
13    everywhere. For purposes of this paragraph, a revenue mile
14    is the transportation of one passenger or one net ton of
15    freight the distance of one mile for a consideration. If a
16    person is engaged in the transportation of both passengers
17    and freight, the fraction above referred to shall be
18    determined by means of an average of the passenger revenue
19    mile fraction and the freight revenue mile fraction,
20    weighted to reflect the person's relative gross receipts
21    from passenger and freight airline transportation.
22    (e) Combined apportionment. Where 2 or more persons are
23engaged in a unitary business as described in subsection
24(a)(27) of Section 1501, a part of which is conducted in this
25State by one or more members of the group, the business income
26attributable to this State by any such member or members shall

 

 

HB3633- 50 -LRB101 10562 HLH 55668 b

1be apportioned by means of the combined apportionment method.
2    (f) Alternative allocation. If the allocation and
3apportionment provisions of subsections (a) through (e) and of
4subsection (h) do not, for taxable years ending before December
531, 2008, fairly represent the extent of a person's business
6activity in this State, or, for taxable years ending on or
7after December 31, 2008, fairly represent the market for the
8person's goods, services, or other sources of business income,
9the person may petition for, or the Director may, without a
10petition, permit or require, in respect of all or any part of
11the person's business activity, if reasonable:
12        (1) Separate accounting;
13        (2) The exclusion of any one or more factors;
14        (3) The inclusion of one or more additional factors
15    which will fairly represent the person's business
16    activities or market in this State; or
17        (4) The employment of any other method to effectuate an
18    equitable allocation and apportionment of the person's
19    business income.
20    (g) Cross reference. For allocation of business income by
21residents, see Section 301(a).
22    (h) For tax years ending on or after December 31, 1998, the
23apportionment factor of persons who apportion their business
24income to this State under subsection (a) shall be equal to:
25        (1) for tax years ending on or after December 31, 1998
26    and before December 31, 1999, 16 2/3% of the property

 

 

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1    factor plus 16 2/3% of the payroll factor plus 66 2/3% of
2    the sales factor;
3        (2) for tax years ending on or after December 31, 1999
4    and before December 31, 2000, 8 1/3% of the property factor
5    plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
6    factor;
7        (3) for tax years ending on or after December 31, 2000,
8    the sales factor.
9If, in any tax year ending on or after December 31, 1998 and
10before December 31, 2000, the denominator of the payroll,
11property, or sales factor is zero, the apportionment factor
12computed in paragraph (1) or (2) of this subsection for that
13year shall be divided by an amount equal to 100% minus the
14percentage weight given to each factor whose denominator is
15equal to zero.
16(Source: P.A. 99-642, eff. 7-28-16; 100-201, eff. 8-18-17.)
 
17    Section 99. Effective date. This Act takes effect upon
18becoming law.