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Sen. Terry Link
Filed: 5/18/2004
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LRB093 05723 MKM 51135 a |
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| AMENDMENT TO HOUSE BILL 855
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| AMENDMENT NO. ______. Amend House Bill 855 by replacing |
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| everything after the enacting clause with the following:
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| "Section 5. The Illinois Income Tax Act is amended by |
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| changing Sections 303, 701, and 710 as follows:
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| (35 ILCS 5/303) (from Ch. 120, par. 3-303)
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| Sec. 303. (a) In general. Any item of capital gain or loss |
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| ; , and any
item of income from rents or royalties from real or |
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| tangible personal
property, interest, dividends, and patent or |
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| copyright royalties ;
, and prizes
awarded under the Illinois |
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| Lottery Law ; and, for taxable years ending on or after December |
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| 31, 2004, any item of income from wagering and gambling |
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| winnings from Illinois sources , to the extent such item |
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| constitutes
nonbusiness income, together with any item of |
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| deduction directly allocable
thereto, shall be allocated by any |
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| person other than a resident as provided
in this Section.
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| (b) Capital gains and losses. (1) Real property. Capital |
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| gains and
losses from sales or exchanges of real property are |
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| allocable to this State
if the property is located in this |
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| State.
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| (2) Tangible personal property. Capital gains and losses |
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| from sales
or exchanges of tangible personal property are |
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| allocable to this State if,
at the time of such sale or |
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| exchange:
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LRB093 05723 MKM 51135 a |
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| (A) The property had its situs in this State; or
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| (B) The taxpayer had its commercial domicile in this State |
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| and was not
taxable in the state in which the property had its |
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| situs.
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| (3) Intangibles. Capital gains and losses from sales or |
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| exchanges of
intangible personal property are allocable to this |
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| State if the taxpayer
had its commercial domicile in this State |
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| at the time of such sale or
exchange.
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| (c) Rents and royalties. (1) Real property. Rents and |
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| royalties
from real property are allocable to this State if the |
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| property is located
in this State.
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| (2) Tangible personal property. Rents and royalties from |
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| tangible
personal property are allocable to this State:
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| (A) If and to the extent that the property is utilized in |
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| this State; or
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| (B) In their entirety if, at the time such rents or |
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| royalties were paid
or accrued, the taxpayer had its commercial |
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| domicile in this State and was
not organized under the laws of |
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| or taxable with respect to such rents or
royalties in the state |
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| in which the property was utilized.
The extent of utilization |
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| of tangible personal property in a state is
determined by |
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| multiplying the rents or royalties derived from such property
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| by a fraction, the numerator of which is the number of days of |
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| physical
location of the property in the state during the |
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| rental or royalty period
in the taxable year and the |
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| denominator of which is the number of days of
physical location |
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| of the property everywhere during all rental or royalty
periods |
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| in the taxable year. If the physical location of the property
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| during the rental or royalty period is unknown or |
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| unascertainable by the
taxpayer, tangible personal property is |
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| utilized in the state in which the
property was located at the |
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| time the rental or royalty payer obtained
possession.
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| (d) Patent and copyright royalties.
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| (1) Allocation. Patent and copyright royalties are |
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LRB093 05723 MKM 51135 a |
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| allocable to this
State:
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| (A) If and to the extent that the patent or copyright is |
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| utilized by the
payer in this State; or
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| (B) If and to the extent that the patent or copyright is |
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| utilized by the
payer in a state in which the taxpayer is not |
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| taxable with respect to such
royalties and, at the time such |
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| royalties were paid or accrued, the
taxpayer had its commercial |
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| domicile in this State.
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| (2) Utilization.
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| (A) A patent is utilized in a state to the extent that it |
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| is employed in
production, fabrication, manufacturing or other |
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| processing in the state or
to the extent that a patented |
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| product is produced in the state. If the
basis of receipts from |
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| patent royalties does not permit allocation to
states or if the |
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| accounting procedures do not reflect states of
utilization, the |
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| patent is utilized in this State if the taxpayer has its
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| commercial domicile in this State.
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| (B) A copyright is utilized in a state to the extent that |
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| printing or
other publication originates in the state. If the |
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| basis of receipts from
copyright royalties does not permit |
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| allocation to states or if the
accounting procedures do not |
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| reflect states of utilization, the copyright
is utilized in |
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| this State if the taxpayer has its commercial domicile in
this |
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| State.
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| (e) Illinois lottery prizes. Prizes awarded under the |
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| "Illinois Lottery
Law", approved December 14, 1973, are |
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| allocable to this State.
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| (e-5) Wagering and gambling winnings. Payments made after |
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| December 31, 2004 of winnings from pari-mutuel wagering |
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| conducted at a wagering facility licensed under the Illinois |
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| Horse Racing Act of 1975 or from gambling games conducted on a |
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| riverboat licensed under the Riverboat Gambling Act are |
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| allocable to this State.
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| (f) Taxability in other state. For purposes of allocation |
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| of income
pursuant to this Section, a taxpayer is taxable in |
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| another state if:
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| (1) In that state he is subject to a net income tax, a |
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| franchise tax
measured by net income, a franchise tax for the |
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| privilege of doing
business, or a corporate stock tax; or
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| (2) That state has jurisdiction to subject the taxpayer to |
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| a net income
tax regardless of whether, in fact, the state does |
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| or does not.
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| (g) Cross references. (1) For allocation of interest and |
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| dividends by
persons other than residents, see Section |
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| 301(c)(2).
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| (2) For allocation of nonbusiness income by residents, see |
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| Section
301(a).
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| (Source: P.A. 79-743.)
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| (35 ILCS 5/701) (from Ch. 120, par. 7-701)
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| Sec. 701. Requirement and Amount of Withholding.
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| (a) In General. Every
employer maintaining an office or |
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| transacting business within this State
and required under the |
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| provisions of the Internal Revenue Code to
withhold a tax on:
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| (1) compensation paid in this State (as determined |
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| under Section
304(a)(2)(B) to an individual; or
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| (2) payments described in subsection (b) shall deduct |
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| and withhold from
such compensation for each payroll period |
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| (as defined in Section 3401 of
the Internal Revenue Code) |
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| an amount equal to the amount by which such
individual's
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| compensation exceeds the proportionate part of this |
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| withholding exemption
(computed as provided in Section |
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| 702) attributable to the payroll period
for which such |
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| compensation is payable multiplied by a percentage equal
to |
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| the percentage tax rate for individuals provided in |
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| subsection (b) of
Section 201.
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| (b) Payment to Residents. Any payment (including |
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| compensation , but not including a payment from which |
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LRB093 05723 MKM 51135 a |
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| withholding is required under Section 710 of this Act ) to a
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| resident
by a payor maintaining an office or transacting |
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| business within this State
(including any agency, officer, or |
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| employee of this State or of any political
subdivision of this |
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| State) and on which withholding of tax is required under
the |
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| provisions of the
Internal Revenue Code shall be deemed to be |
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| compensation paid in this State
by an employer to an employee |
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| for the purposes of Article 7 and Section
601(b)(1) to the |
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| extent such payment is included in the recipient's base
income |
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| and not subjected to withholding by another state.
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| Notwithstanding any other provision to the contrary, no amount |
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| shall be
withheld from unemployment insurance benefit payments |
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| made to an individual
pursuant to the Unemployment Insurance |
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| Act unless the individual has
voluntarily elected the |
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| withholding pursuant to rules promulgated by the
Director of |
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| Employment Security.
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| (c) Special Definitions. Withholding shall be considered |
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| required under
the provisions of the Internal Revenue Code to |
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| the extent the Internal Revenue
Code either requires |
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| withholding or allows for voluntary withholding the
payor and |
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| recipient have entered into such a voluntary withholding |
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| agreement.
For the purposes of Article 7 and Section 1002(c) |
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| the term "employer" includes
any payor who is required to |
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| withhold tax pursuant to this Section.
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| (d) Reciprocal Exemption. The Director may enter into an |
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| agreement with
the taxing authorities of any state which |
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| imposes a tax on or measured by
income to provide that |
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| compensation paid in such state to residents of this
State |
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| shall be exempt from withholding of such tax; in such case, any
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| compensation paid in this State to residents of such state |
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| shall be exempt
from withholding.
All reciprocal agreements |
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| shall be subject to the requirements of Section
2505-575 of the |
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| Department of Revenue Law (20 ILCS
2505/2505-575).
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| (e) Notwithstanding subsection (a)(2) of this Section, no |
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| withholding
is required on payments for which withholding is |
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| required under Section
3405 or 3406 of the Internal Revenue |
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| Code of 1954.
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| (Source: P.A. 92-846, eff. 8-23-02; 93-634, eff. 1-1-04.)
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| (35 ILCS 5/710) (from Ch. 120, par. 7-710)
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| Sec. 710. Withholding from lottery , wagering, and gambling |
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| winnings. (a) In General. Any person
making a payment to a |
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| resident or nonresident of winnings under the Illinois
Lottery |
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| Law and not required to withhold Illinois income tax from such |
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| payment
under Subsection (b) of Section 701 of this Act because |
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| those winnings are
not subject to Federal income tax |
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| withholding, must withhold Illinois income
tax from such |
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| payment at a rate equal to the percentage tax rate for |
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| individuals
provided in subsection (b) of Section 201, provided |
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| that withholding is
not required if such payment of winnings is |
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| less than $1,000. Any person making a payment after December |
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| 31, 2004 to a resident or nonresident of winnings from |
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| pari-mutuel wagering conducted at a wagering facility licensed |
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| under the Illinois Horse Racing Act of 1975 or from gambling |
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| games conducted on a riverboat licensed under the Riverboat |
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| Gambling Act must withhold Illinois income tax from that |
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| payment at a rate equal to the percentage tax rate for |
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| individuals provided in subsection (b) of Section 201, provided |
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| that the withholding is not required if the payment of winnings |
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| is less than $1,000.
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| (b) Credit for taxes withheld. Any amount withheld under |
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| Subsection (a)
shall be a credit against the Illinois income |
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| tax liability of the person
to whom the payment of winnings was |
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| made for the taxable year in which that
person incurred an |
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| Illinois income tax liability with respect to those winnings.
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| (Source: P.A. 85-731.)
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| Section 99. Effective date. This Act takes effect upon |