101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB5061

 

Introduced 2/18/2020, by Rep. Keith R. Wheeler

 

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

    Amends the Illinois Income Tax Act. In provisions concerning business income of persons other than residents, removes provisions providing that sales of tangible personal property are in this State if the property is shipped from an office, store, warehouse, factory or other place of storage in this State and the purchaser is not subject to tax in the state of the purchaser.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB5061LRB101 19282 HLH 68748 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        2020, 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, 2020, 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                (c) Working days spent within this State do not
5            include any day in which the employee is performing
6            services in this State during a disaster period
7            solely in response to a request made to his or her
8            employer by the government of this State, by any
9            political subdivision of this State, or by a person
10            conducting business in this State to perform
11            disaster or emergency-related services in this
12            State. For purposes of this item (c):
13                    "Declared State disaster or emergency"
14                means a disaster or emergency event (i) for
15                which a Governor's proclamation of a state of
16                emergency has been issued or (ii) for which a
17                Presidential declaration of a federal major
18                disaster or emergency has been issued.
19                    "Disaster period" means a period that
20                begins 10 days prior to the date of the
21                Governor's proclamation or the President's
22                declaration (whichever is earlier) and extends
23                for a period of 60 calendar days after the end
24                of the declared disaster or emergency period.
25                    "Disaster or emergency-related services"
26                means repairing, renovating, installing,

 

 

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1                building, or rendering services or conducting
2                other business activities that relate to
3                infrastructure that has been damaged,
4                impaired, or destroyed by the declared State
5                disaster or emergency.
6                    "Infrastructure" means property and
7                equipment owned or used by a public utility,
8                communications network, broadband and internet
9                service provider, cable and video service
10                provider, electric or gas distribution system,
11                or water pipeline that provides service to more
12                than one customer or person, including related
13                support facilities. "Infrastructure" includes,
14                but is not limited to, real and personal
15                property such as buildings, offices, power
16                lines, cable lines, poles, communications
17                lines, pipes, structures, and equipment.
18            (iv) Compensation paid to nonresident professional
19        athletes.
20            (a) General. The Illinois source income of a
21        nonresident individual who is a member of a
22        professional athletic team includes the portion of the
23        individual's total compensation for services performed
24        as a member of a professional athletic team during the
25        taxable year which the number of duty days spent within
26        this State performing services for the team in any

 

 

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1        manner during the taxable year bears to the total
2        number of duty days spent both within and without this
3        State during the taxable year.
4            (b) Travel days. Travel days that do not involve
5        either a game, practice, team meeting, or other similar
6        team event are not considered duty days spent in this
7        State. However, such travel days are considered in the
8        total duty days spent both within and without this
9        State.
10            (c) Definitions. For purposes of this subpart
11        (iv):
12                (1) The term "professional athletic team"
13            includes, but is not limited to, any professional
14            baseball, basketball, football, soccer, or hockey
15            team.
16                (2) The term "member of a professional
17            athletic team" includes those employees who are
18            active players, players on the disabled list, and
19            any other persons required to travel and who travel
20            with and perform services on behalf of a
21            professional athletic team on a regular basis.
22            This includes, but is not limited to, coaches,
23            managers, and trainers.
24                (3) Except as provided in items (C) and (D) of
25            this subpart (3), the term "duty days" means all
26            days during the taxable year from the beginning of

 

 

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1            the professional athletic team's official
2            pre-season training period through the last game
3            in which the team competes or is scheduled to
4            compete. Duty days shall be counted for the year in
5            which they occur, including where a team's
6            official pre-season training period through the
7            last game in which the team competes or is
8            scheduled to compete, occurs during more than one
9            tax year.
10                    (A) Duty days shall also include days on
11                which a member of a professional athletic team
12                performs service for a team on a date that does
13                not fall within the foregoing period (e.g.,
14                participation in instructional leagues, the
15                "All Star Game", or promotional "caravans").
16                Performing a service for a professional
17                athletic team includes conducting training and
18                rehabilitation activities, when such
19                activities are conducted at team facilities.
20                    (B) Also included in duty days are game
21                days, practice days, days spent at team
22                meetings, promotional caravans, preseason
23                training camps, and days served with the team
24                through all post-season games in which the team
25                competes or is scheduled to compete.
26                    (C) Duty days for any person who joins a

 

 

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1                team during the period from the beginning of
2                the professional athletic team's official
3                pre-season training period through the last
4                game in which the team competes, or is
5                scheduled to compete, shall begin on the day
6                that person joins the team. Conversely, duty
7                days for any person who leaves a team during
8                this period shall end on the day that person
9                leaves the team. Where a person switches teams
10                during a taxable year, a separate duty-day
11                calculation shall be made for the period the
12                person was with each team.
13                    (D) Days for which a member of a
14                professional athletic team is not compensated
15                and is not performing services for the team in
16                any manner, including days when such member of
17                a professional athletic team has been
18                suspended without pay and prohibited from
19                performing any services for the team, shall not
20                be treated as duty days.
21                    (E) Days for which a member of a
22                professional athletic team is on the disabled
23                list and does not conduct rehabilitation
24                activities at facilities of the team, and is
25                not otherwise performing services for the team
26                in Illinois, shall not be considered duty days

 

 

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1                spent in this State. All days on the disabled
2                list, however, are considered to be included in
3                total duty days spent both within and without
4                this State.
5                (4) The term "total compensation for services
6            performed as a member of a professional athletic
7            team" means the total compensation received during
8            the taxable year for services performed:
9                    (A) from the beginning of the official
10                pre-season training period through the last
11                game in which the team competes or is scheduled
12                to compete during that taxable year; and
13                    (B) during the taxable year on a date which
14                does not fall within the foregoing period
15                (e.g., participation in instructional leagues,
16                the "All Star Game", or promotional caravans).
17                This compensation shall include, but is not
18            limited to, salaries, wages, bonuses as described
19            in this subpart, and any other type of compensation
20            paid during the taxable year to a member of a
21            professional athletic team for services performed
22            in that year. This compensation does not include
23            strike benefits, severance pay, termination pay,
24            contract or option year buy-out payments,
25            expansion or relocation payments, or any other
26            payments not related to services performed for the

 

 

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1            team.
2                For purposes of this subparagraph, "bonuses"
3            included in "total compensation for services
4            performed as a member of a professional athletic
5            team" subject to the allocation described in
6            Section 302(c)(1) are: bonuses earned as a result
7            of play (i.e., performance bonuses) during the
8            season, including bonuses paid for championship,
9            playoff or "bowl" games played by a team, or for
10            selection to all-star league or other honorary
11            positions; and bonuses paid for signing a
12            contract, unless the payment of the signing bonus
13            is not conditional upon the signee playing any
14            games for the team or performing any subsequent
15            services for the team or even making the team, the
16            signing bonus is payable separately from the
17            salary and any other compensation, and the signing
18            bonus is nonrefundable.
19    (3) Sales factor.
20        (A) The sales factor is a fraction, the numerator of
21    which is the total sales of the person in this State during
22    the taxable year, and the denominator of which is the total
23    sales of the person everywhere during the taxable year.
24        (B) Sales of tangible personal property are in this
25    State if:
26            (i) The property is delivered or shipped to a

 

 

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1        purchaser, other than the United States government,
2        within this State regardless of the f. o. b. point or
3        other conditions of the sale; or
4            (ii) The property is shipped from an office, store,
5        warehouse, factory or other place of storage in this
6        State and either the purchaser is the United States
7        government or the person is not taxable in the state of
8        the purchaser; provided, however, that premises owned
9        or leased by a person who has independently contracted
10        with the seller for the printing of newspapers,
11        periodicals or books shall not be deemed to be an
12        office, store, warehouse, factory or other place of
13        storage for purposes of this Section. Sales of tangible
14        personal property are not in this State if the seller
15        and purchaser would be members of the same unitary
16        business group but for the fact that either the seller
17        or purchaser is a person with 80% or more of total
18        business activity outside of the United States and the
19        property is purchased for resale.
20        (B-1) Patents, copyrights, trademarks, and similar
21    items of intangible personal property.
22            (i) Gross receipts from the licensing, sale, or
23        other disposition of a patent, copyright, trademark,
24        or similar item of intangible personal property, other
25        than gross receipts governed by paragraph (B-7) of this
26        item (3), are in this State to the extent the item is

 

 

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1        utilized in this State during the year the gross
2        receipts are included in gross income.
3            (ii) Place of utilization.
4                (I) A patent is utilized in a state to the
5            extent that it is employed in production,
6            fabrication, manufacturing, or other processing in
7            the state or to the extent that a patented product
8            is produced in the state. If a patent is utilized
9            in more than one state, the extent to which it is
10            utilized in any one state shall be a fraction equal
11            to the gross receipts of the licensee or purchaser
12            from sales or leases of items produced,
13            fabricated, manufactured, or processed within that
14            state using the patent and of patented items
15            produced within that state, divided by the total of
16            such gross receipts for all states in which the
17            patent is utilized.
18                (II) A copyright is utilized in a state to the
19            extent that printing or other publication
20            originates in the state. If a copyright 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 from sales or licenses of
24            materials printed or published in that state
25            divided by the total of such gross receipts for all
26            states in which the copyright is utilized.

 

 

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1                (III) Trademarks and other items of intangible
2            personal property governed by this paragraph (B-1)
3            are utilized in the state in which the commercial
4            domicile of the licensee or purchaser is located.
5            (iii) If the state of utilization of an item of
6        property governed by this paragraph (B-1) cannot be
7        determined from the taxpayer's books and records or
8        from the books and records of any person related to the
9        taxpayer within the meaning of Section 267(b) of the
10        Internal Revenue Code, 26 U.S.C. 267, the gross
11        receipts attributable to that item shall be excluded
12        from both the numerator and the denominator of the
13        sales factor.
14        (B-2) Gross receipts from the license, sale, or other
15    disposition of patents, copyrights, trademarks, and
16    similar items of intangible personal property, other than
17    gross receipts governed by paragraph (B-7) of this item
18    (3), may be included in the numerator or denominator of the
19    sales factor only if gross receipts from licenses, sales,
20    or other disposition of such items comprise more than 50%
21    of the taxpayer's total gross receipts included in gross
22    income during the tax year and during each of the 2
23    immediately preceding tax years; provided that, when a
24    taxpayer is a member of a unitary business group, such
25    determination shall be made on the basis of the gross
26    receipts of the entire unitary business group.

 

 

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1        (B-5) For taxable years ending on or after December 31,
2    2008, except as provided in subsections (ii) through (vii),
3    receipts from the sale of telecommunications service or
4    mobile telecommunications service are in this State if the
5    customer's service address is in this State.
6            (i) For purposes of this subparagraph (B-5), the
7        following terms have the following meanings:
8            "Ancillary services" means services that are
9        associated with or incidental to the provision of
10        "telecommunications services", including, but not
11        limited to, "detailed telecommunications billing",
12        "directory assistance", "vertical service", and "voice
13        mail services".
14            "Air-to-Ground Radiotelephone service" means a
15        radio service, as that term is defined in 47 CFR 22.99,
16        in which common carriers are authorized to offer and
17        provide radio telecommunications service for hire to
18        subscribers in aircraft.
19            "Call-by-call Basis" means any method of charging
20        for telecommunications services where the price is
21        measured by individual calls.
22            "Communications Channel" means a physical or
23        virtual path of communications over which signals are
24        transmitted between or among customer channel
25        termination points.
26            "Conference bridging service" means an "ancillary

 

 

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1        service" that links two or more participants of an
2        audio or video conference call and may include the
3        provision of a telephone number. "Conference bridging
4        service" does not include the "telecommunications
5        services" used to reach the conference bridge.
6            "Customer Channel Termination Point" means the
7        location where the customer either inputs or receives
8        the communications.
9            "Detailed telecommunications billing service"
10        means an "ancillary service" of separately stating
11        information pertaining to individual calls on a
12        customer's billing statement.
13            "Directory assistance" means an "ancillary
14        service" of providing telephone number information,
15        and/or address information.
16            "Home service provider" means the facilities based
17        carrier or reseller with which the customer contracts
18        for the provision of mobile telecommunications
19        services.
20            "Mobile telecommunications service" means
21        commercial mobile radio service, as defined in Section
22        20.3 of Title 47 of the Code of Federal Regulations as
23        in effect on June 1, 1999.
24            "Place of primary use" means the street address
25        representative of where the customer's use of the
26        telecommunications service primarily occurs, which

 

 

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1        must be the residential street address or the primary
2        business street address of the customer. In the case of
3        mobile telecommunications services, "place of primary
4        use" must be within the licensed service area of the
5        home service provider.
6            "Post-paid telecommunication service" means the
7        telecommunications service obtained by making a
8        payment on a call-by-call basis either through the use
9        of a credit card or payment mechanism such as a bank
10        card, travel card, credit card, or debit card, or by
11        charge made to a telephone number which is not
12        associated with the origination or termination of the
13        telecommunications service. A post-paid calling
14        service includes telecommunications service, except a
15        prepaid wireless calling service, that would be a
16        prepaid calling service except it is not exclusively a
17        telecommunication service.
18            "Prepaid telecommunication service" means the
19        right to access exclusively telecommunications
20        services, which must be paid for in advance and which
21        enables the origination of calls using an access number
22        or authorization code, whether manually or
23        electronically dialed, and that is sold in
24        predetermined units or dollars of which the number
25        declines with use in a known amount.
26            "Prepaid Mobile telecommunication service" means a

 

 

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1        telecommunications service that provides the right to
2        utilize mobile wireless service as well as other
3        non-telecommunication services, including, but not
4        limited to, ancillary services, which must be paid for
5        in advance that is sold in predetermined units or
6        dollars of which the number declines with use in a
7        known amount.
8            "Private communication service" means a
9        telecommunication service that entitles the customer
10        to exclusive or priority use of a communications
11        channel or group of channels between or among
12        termination points, regardless of the manner in which
13        such channel or channels are connected, and includes
14        switching capacity, extension lines, stations, and any
15        other associated services that are provided in
16        connection with the use of such channel or channels.
17            "Service address" means:
18                (a) The location of the telecommunications
19            equipment to which a customer's call is charged and
20            from which the call originates or terminates,
21            regardless of where the call is billed or paid;
22                (b) If the location in line (a) is not known,
23            service address means the origination point of the
24            signal of the telecommunications services first
25            identified by either the seller's
26            telecommunications system or in information

 

 

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1            received by the seller from its service provider
2            where the system used to transport such signals is
3            not that of the seller; and
4                (c) If the locations in line (a) and line (b)
5            are not known, the service address means the
6            location of the customer's place of primary use.
7            "Telecommunications service" means the electronic
8        transmission, conveyance, or routing of voice, data,
9        audio, video, or any other information or signals to a
10        point, or between or among points. The term
11        "telecommunications service" includes such
12        transmission, conveyance, or routing in which computer
13        processing applications are used to act on the form,
14        code or protocol of the content for purposes of
15        transmission, conveyance or routing without regard to
16        whether such service is referred to as voice over
17        Internet protocol services or is classified by the
18        Federal Communications Commission as enhanced or value
19        added. "Telecommunications service" does not include:
20                (a) Data processing and information services
21            that allow data to be generated, acquired, stored,
22            processed, or retrieved and delivered by an
23            electronic transmission to a purchaser when such
24            purchaser's primary purpose for the underlying
25            transaction is the processed data or information;
26                (b) Installation or maintenance of wiring or

 

 

HB5061- 20 -LRB101 19282 HLH 68748 b

1            equipment on a customer's premises;
2                (c) Tangible personal property;
3                (d) Advertising, including, but not limited
4            to, directory advertising;
5                (e) Billing and collection services provided
6            to third parties;
7                (f) Internet access service;
8                (g) Radio and television audio and video
9            programming services, regardless of the medium,
10            including the furnishing of transmission,
11            conveyance and routing of such services by the
12            programming service provider. Radio and television
13            audio and video programming services shall
14            include, but not be limited to, cable service as
15            defined in 47 USC 522(6) and audio and video
16            programming services delivered by commercial
17            mobile radio service providers, as defined in 47
18            CFR 20.3;
19                (h) "Ancillary services"; or
20                (i) Digital products "delivered
21            electronically", including, but not limited to,
22            software, music, video, reading materials or ring
23            tones.
24            "Vertical service" means an "ancillary service"
25        that is offered in connection with one or more
26        "telecommunications services", which offers advanced

 

 

HB5061- 21 -LRB101 19282 HLH 68748 b

1        calling features that allow customers to identify
2        callers and to manage multiple calls and call
3        connections, including "conference bridging services".
4            "Voice mail service" means an "ancillary service"
5        that enables the customer to store, send or receive
6        recorded messages. "Voice mail service" does not
7        include any "vertical services" that the customer may
8        be required to have in order to utilize the "voice mail
9        service".
10            (ii) Receipts from the sale of telecommunications
11        service sold on an individual call-by-call basis are in
12        this State if either of the following applies:
13                (a) The call both originates and terminates in
14            this State.
15                (b) The call either originates or terminates
16            in this State and the service address is located in
17            this State.
18            (iii) Receipts from the sale of postpaid
19        telecommunications service at retail are in this State
20        if the origination point of the telecommunication
21        signal, as first identified by the service provider's
22        telecommunication system or as identified by
23        information received by the seller from its service
24        provider if the system used to transport
25        telecommunication signals is not the seller's, is
26        located in this State.

 

 

HB5061- 22 -LRB101 19282 HLH 68748 b

1            (iv) Receipts from the sale of prepaid
2        telecommunications service or prepaid mobile
3        telecommunications service at retail are in this State
4        if the purchaser obtains the prepaid card or similar
5        means of conveyance at a location in this State.
6        Receipts from recharging a prepaid telecommunications
7        service or mobile telecommunications service is in
8        this State if the purchaser's billing information
9        indicates a location in this State.
10            (v) Receipts from the sale of private
11        communication services are in this State as follows:
12                (a) 100% of receipts from charges imposed at
13            each channel termination point in this State.
14                (b) 100% of receipts from charges for the total
15            channel mileage between each channel termination
16            point in this State.
17                (c) 50% of the total receipts from charges for
18            service segments when those segments are between 2
19            customer channel termination points, 1 of which is
20            located in this State and the other is located
21            outside of this State, which segments are
22            separately charged.
23                (d) The receipts from charges for service
24            segments with a channel termination point located
25            in this State and in two or more other states, and
26            which segments are not separately billed, are in

 

 

HB5061- 23 -LRB101 19282 HLH 68748 b

1            this State based on a percentage determined by
2            dividing the number of customer channel
3            termination points in this State by the total
4            number of customer channel termination points.
5            (vi) Receipts from charges for ancillary services
6        for telecommunications service sold to customers at
7        retail are in this State if the customer's primary
8        place of use of telecommunications services associated
9        with those ancillary services is in this State. If the
10        seller of those ancillary services cannot determine
11        where the associated telecommunications are located,
12        then the ancillary services shall be based on the
13        location of the purchaser.
14            (vii) Receipts to access a carrier's network or
15        from the sale of telecommunication services or
16        ancillary services for resale are in this State as
17        follows:
18                (a) 100% of the receipts from access fees
19            attributable to intrastate telecommunications
20            service that both originates and terminates in
21            this State.
22                (b) 50% of the receipts from access fees
23            attributable to interstate telecommunications
24            service if the interstate call either originates
25            or terminates in this State.
26                (c) 100% of the receipts from interstate end

 

 

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1            user access line charges, if the customer's
2            service address is in this State. As used in this
3            subdivision, "interstate end user access line
4            charges" includes, but is not limited to, the
5            surcharge approved by the federal communications
6            commission and levied pursuant to 47 CFR 69.
7                (d) Gross receipts from sales of
8            telecommunication services or from ancillary
9            services for telecommunications services sold to
10            other telecommunication service providers for
11            resale shall be sourced to this State using the
12            apportionment concepts used for non-resale
13            receipts of telecommunications services if the
14            information is readily available to make that
15            determination. If the information is not readily
16            available, then the taxpayer may use any other
17            reasonable and consistent method.
18        (B-7) For taxable years ending on or after December 31,
19    2008, receipts from the sale of broadcasting services are
20    in this State if the broadcasting services are received in
21    this State. For purposes of this paragraph (B-7), the
22    following terms have the following meanings:
23            "Advertising revenue" means consideration received
24        by the taxpayer in exchange for broadcasting services
25        or allowing the broadcasting of commercials or
26        announcements in connection with the broadcasting of

 

 

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1        film or radio programming, from sponsorships of the
2        programming, or from product placements in the
3        programming.
4            "Audience factor" means the ratio that the
5        audience or subscribers located in this State of a
6        station, a network, or a cable system bears to the
7        total audience or total subscribers for that station,
8        network, or cable system. The audience factor for film
9        or radio programming shall be determined by reference
10        to the books and records of the taxpayer or by
11        reference to published rating statistics provided the
12        method used by the taxpayer is consistently used from
13        year to year for this purpose and fairly represents the
14        taxpayer's activity in this State.
15            "Broadcast" or "broadcasting" or "broadcasting
16        services" means the transmission or provision of film
17        or radio programming, whether through the public
18        airwaves, by cable, by direct or indirect satellite
19        transmission, or by any other means of communication,
20        either through a station, a network, or a cable system.
21            "Film" or "film programming" means the broadcast
22        on television of any and all performances, events, or
23        productions, including, but not limited to, news,
24        sporting events, plays, stories, or other literary,
25        commercial, educational, or artistic works, either
26        live or through the use of video tape, disc, or any

 

 

HB5061- 26 -LRB101 19282 HLH 68748 b

1        other type of format or medium. Each episode of a
2        series of films produced for television shall
3        constitute separate "film" notwithstanding that the
4        series relates to the same principal subject and is
5        produced during one or more tax periods.
6            "Radio" or "radio programming" means the broadcast
7        on radio 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 an audio tape, disc, or any
12        other format or medium. Each episode in a series of
13        radio programming produced for radio broadcast shall
14        constitute a separate "radio programming"
15        notwithstanding that the series relates to the same
16        principal subject and is produced during one or more
17        tax periods.
18                (i) In the case of advertising revenue from
19            broadcasting, the customer is the advertiser and
20            the service is received in this State if the
21            commercial domicile of the advertiser is in this
22            State.
23                (ii) In the case where film or radio
24            programming is broadcast by a station, a network,
25            or a cable system for a fee or other remuneration
26            received from the recipient of the broadcast, the

 

 

HB5061- 27 -LRB101 19282 HLH 68748 b

1            portion of the service that is received in this
2            State is measured by the portion of the recipients
3            of the broadcast located in this State.
4            Accordingly, the fee or other remuneration for
5            such service that is included in the Illinois
6            numerator of the sales factor is the total of those
7            fees or other remuneration received from
8            recipients in Illinois. For purposes of this
9            paragraph, a taxpayer may determine the location
10            of the recipients of its broadcast using the
11            address of the recipient shown in its contracts
12            with the recipient or using the billing address of
13            the recipient in the taxpayer's records.
14                (iii) In the case where film or radio
15            programming is broadcast by a station, a network,
16            or a cable system for a fee or other remuneration
17            from the person providing the programming, the
18            portion of the broadcast service that is received
19            by such station, network, or cable system in this
20            State is measured by the portion of recipients of
21            the broadcast located in this State. Accordingly,
22            the amount of revenue related to such an
23            arrangement that is included in the Illinois
24            numerator of the sales factor is the total fee or
25            other total remuneration from the person providing
26            the programming related to that broadcast

 

 

HB5061- 28 -LRB101 19282 HLH 68748 b

1            multiplied by the Illinois audience factor for
2            that broadcast.
3                (iv) In the case where film or radio
4            programming is provided by a taxpayer that is a
5            network or station to a customer for broadcast in
6            exchange for a fee or other remuneration from that
7            customer the broadcasting service is received at
8            the location of the office of the customer from
9            which the services were ordered in the regular
10            course of the customer's trade or business.
11            Accordingly, in such a case the revenue derived by
12            the taxpayer that is included in the taxpayer's
13            Illinois numerator of the sales factor is the
14            revenue from such customers who receive the
15            broadcasting service in Illinois.
16                (v) In the case where film or radio programming
17            is provided by a taxpayer that is not a network or
18            station to another person for broadcasting in
19            exchange for a fee or other remuneration from that
20            person, the broadcasting service is received at
21            the location of the office of the customer from
22            which the services were ordered in the regular
23            course of the customer's trade or business.
24            Accordingly, in such a case the revenue derived by
25            the taxpayer that is included in the taxpayer's
26            Illinois numerator of the sales factor is the

 

 

HB5061- 29 -LRB101 19282 HLH 68748 b

1            revenue from such customers who receive the
2            broadcasting service in Illinois.
3        (B-8) Gross receipts from winnings under the Illinois
4    Lottery Law from the assignment of a prize under Section
5    13.1 of the Illinois Lottery Law are received in this
6    State. This paragraph (B-8) applies only to taxable years
7    ending on or after December 31, 2013.
8        (B-9) For taxable years ending on or after December 31,
9    2019, gross receipts from winnings from pari-mutuel
10    wagering conducted at a wagering facility licensed under
11    the Illinois Horse Racing Act of 1975 or from winnings from
12    gambling games conducted on a riverboat or in a casino or
13    organization gaming facility licensed under the Illinois
14    Gambling Act are in this State.
15        (C) For taxable years ending before December 31, 2008,
16    sales, other than sales governed by paragraphs (B), (B-1),
17    (B-2), and (B-8) are in this State if:
18            (i) The income-producing activity is performed in
19        this State; or
20            (ii) The income-producing activity is performed
21        both within and without this State and a greater
22        proportion of the income-producing activity is
23        performed within this State than without this State,
24        based on performance costs.
25        (C-5) For taxable years ending on or after December 31,
26    2008, sales, other than sales governed by paragraphs (B),

 

 

HB5061- 30 -LRB101 19282 HLH 68748 b

1    (B-1), (B-2), (B-5), and (B-7), are in this State if any of
2    the following criteria are met:
3            (i) Sales from the sale or lease of real property
4        are in this State if the property is located in this
5        State.
6            (ii) Sales from the lease or rental of tangible
7        personal property are in this State if the property is
8        located in this State during the rental period. Sales
9        from the lease or rental of tangible personal property
10        that is characteristically moving property, including,
11        but not limited to, motor vehicles, rolling stock,
12        aircraft, vessels, or mobile equipment are in this
13        State to the extent that the property is used in this
14        State.
15            (iii) In the case of interest, net gains (but not
16        less than zero) and other items of income from
17        intangible personal property, the sale is in this State
18        if:
19                (a) in the case of a taxpayer who is a dealer
20            in the item of intangible personal property within
21            the meaning of Section 475 of the Internal Revenue
22            Code, the income or gain is received from a
23            customer in this State. For purposes of this
24            subparagraph, a customer is in this State if the
25            customer is an individual, trust or estate who is a
26            resident of this State and, for all other

 

 

HB5061- 31 -LRB101 19282 HLH 68748 b

1            customers, if the customer's commercial domicile
2            is in this State. Unless the dealer has actual
3            knowledge of the residence or commercial domicile
4            of a customer during a taxable year, the customer
5            shall be deemed to be a customer in this State if
6            the billing address of the customer, as shown in
7            the records of the dealer, is in this State; or
8                (b) in all other cases, if the
9            income-producing activity of the taxpayer is
10            performed in this State or, if the
11            income-producing activity of the taxpayer is
12            performed both within and without this State, if a
13            greater proportion of the income-producing
14            activity of the taxpayer is performed within this
15            State than in any other state, based on performance
16            costs.
17            (iv) Sales of services are in this State if the
18        services are received in this State. For the purposes
19        of this section, gross receipts from the performance of
20        services provided to a corporation, partnership, or
21        trust may only be attributed to a state where that
22        corporation, partnership, or trust has a fixed place of
23        business. If the state where the services are received
24        is not readily determinable or is a state where the
25        corporation, partnership, or trust receiving the
26        service does not have a fixed place of business, the

 

 

HB5061- 32 -LRB101 19282 HLH 68748 b

1        services shall be deemed to be received at the location
2        of the office of the customer from which the services
3        were ordered in the regular course of the customer's
4        trade or business. If the ordering office cannot be
5        determined, the services shall be deemed to be received
6        at the office of the customer to which the services are
7        billed. If the taxpayer is not taxable in the state in
8        which the services are received, the sale must be
9        excluded from both the numerator and the denominator of
10        the sales factor. The Department shall adopt rules
11        prescribing where specific types of service are
12        received, including, but not limited to, publishing,
13        and utility service.
14        (D) For taxable years ending on or after December 31,
15    1995, the following items of income shall not be included
16    in the numerator or denominator of the sales factor:
17    dividends; amounts included under Section 78 of the
18    Internal Revenue Code; and Subpart F income as defined in
19    Section 952 of the Internal Revenue Code. No inference
20    shall be drawn from the enactment of this paragraph (D) in
21    construing this Section for taxable years ending before
22    December 31, 1995.
23        (E) Paragraphs (B-1) and (B-2) shall apply to tax years
24    ending on or after December 31, 1999, provided that a
25    taxpayer may elect to apply the provisions of these
26    paragraphs to prior tax years. Such election shall be made

 

 

HB5061- 33 -LRB101 19282 HLH 68748 b

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

 

 

HB5061- 34 -LRB101 19282 HLH 68748 b

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

 

 

HB5061- 35 -LRB101 19282 HLH 68748 b

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

 

 

HB5061- 36 -LRB101 19282 HLH 68748 b

1        customers, which are received within this State;
2            (D) Interest charged to customers at places of
3        business maintained within this State for carrying
4        debit balances of margin accounts, without deduction
5        of any costs incurred in carrying such accounts; and
6            (E) Any other gross income resulting from the
7        operation as a financial organization within this
8        State.
9        In computing the amounts referred to in paragraphs (A)
10    through (E) of this subsection, any amount received by a
11    member of an affiliated group (determined under Section
12    1504(a) of the Internal Revenue Code but without reference
13    to whether any such corporation is an "includible
14    corporation" under Section 1504(b) of the Internal Revenue
15    Code) from another member of such group shall be included
16    only to the extent such amount exceeds expenses of the
17    recipient directly related thereto.
18        (2) International Banking Facility. For taxable years
19    ending before December 31, 2008:
20            (A) Adjusted Income. The adjusted income of an
21        international banking facility is its income reduced
22        by the amount of the floor amount.
23            (B) Floor Amount. The floor amount shall be the
24        amount, if any, determined by multiplying the income of
25        the international banking facility by a fraction, not
26        greater than one, which is determined as follows:

 

 

HB5061- 37 -LRB101 19282 HLH 68748 b

1                (i) The numerator shall be:
2                The average aggregate, determined on a
3            quarterly basis, of the financial organization's
4            loans to banks in foreign countries, to foreign
5            domiciled borrowers (except where secured
6            primarily by real estate) and to foreign
7            governments and other foreign official
8            institutions, as reported for its branches,
9            agencies and offices within the state on its
10            "Consolidated Report of Condition", Schedule A,
11            Lines 2.c., 5.b., and 7.a., which was filed with
12            the Federal Deposit Insurance Corporation and
13            other regulatory authorities, for the year 1980,
14            minus
15                The average aggregate, determined on a
16            quarterly basis, of such loans (other than loans of
17            an international banking facility), as reported by
18            the financial institution for its branches,
19            agencies and offices within the state, on the
20            corresponding Schedule and lines of the
21            Consolidated Report of Condition for the current
22            taxable year, provided, however, that in no case
23            shall the amount determined in this clause (the
24            subtrahend) exceed the amount determined in the
25            preceding clause (the minuend); and
26                (ii) the denominator shall be the average

 

 

HB5061- 38 -LRB101 19282 HLH 68748 b

1            aggregate, determined on a quarterly basis, of the
2            international banking facility's loans to banks in
3            foreign countries, to foreign domiciled borrowers
4            (except where secured primarily by real estate)
5            and to foreign governments and other foreign
6            official institutions, which were recorded in its
7            financial accounts for the current taxable year.
8            (C) Change to Consolidated Report of Condition and
9        in Qualification. In the event the Consolidated Report
10        of Condition which is filed with the Federal Deposit
11        Insurance Corporation and other regulatory authorities
12        is altered so that the information required for
13        determining the floor amount is not found on Schedule
14        A, lines 2.c., 5.b. and 7.a., the financial institution
15        shall notify the Department and the Department may, by
16        regulations or otherwise, prescribe or authorize the
17        use of an alternative source for such information. The
18        financial institution shall also notify the Department
19        should its international banking facility fail to
20        qualify as such, in whole or in part, or should there
21        be any amendment or change to the Consolidated Report
22        of Condition, as originally filed, to the extent such
23        amendment or change alters the information used in
24        determining the floor amount.
25        (3) For taxable years ending on or after December 31,
26    2008, the business income of a financial organization shall

 

 

HB5061- 39 -LRB101 19282 HLH 68748 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1                assets and activities in the matched book, in
2                the arbitrage book and foreign currency
3                transactions (but excluding amounts described
4                in subparagraphs (A) or (B) of this paragraph),
5                attributable to this State and included in the
6                numerator is determined by multiplying the
7                amount described in subparagraph (B) of
8                paragraph (1) of this subsection by a fraction,
9                the numerator of which is the gross income from
10                such trading assets and activities which are
11                properly assigned to a fixed place of business
12                of the taxpayer within this State and the
13                denominator of which is the gross income from
14                all such assets and activities.
15                    (D) Properly assigned, for purposes of
16                this paragraph (2) of this subsection, means
17                the investment or trading asset or activity is
18                assigned to the fixed place of business with
19                which it has a preponderance of substantive
20                contacts. An investment or trading asset or
21                activity assigned by the taxpayer to a fixed
22                place of business without the State shall be
23                presumed to have been properly assigned if:
24                        (i) the taxpayer has assigned, in the
25                    regular course of its business, such asset
26                    or activity on its records to a fixed place

 

 

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

 

 

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

 

 

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1this State of a federally regulated exchange is the sum of the
2following:
3        (1) Receipts attributable to transactions executed on
4    a physical trading floor if that physical trading floor is
5    located in this State.
6        (2) Receipts attributable to all other matching,
7    execution, or clearing transactions, including without
8    limitation receipts from the provision of matching,
9    execution, or clearing services to another entity,
10    multiplied by (i) for taxable years ending on or after
11    December 31, 2012 but before December 31, 2013, 63.77%; and
12    (ii) for taxable years ending on or after December 31,
13    2013, 27.54%.
14        (3) All other receipts not governed by subparagraphs
15    (1) or (2) of this subsection (c-1), to the extent the
16    receipts would be characterized as "sales in this State"
17    under item (3) of subsection (a) of this Section.
18    "Federally regulated exchange" means (i) a "registered
19entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B),
20or (C), (ii) an "exchange" or "clearing agency" within the
21meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such
22entities regulated under any successor regulatory structure to
23the foregoing, and (iv) all taxpayers who are members of the
24same unitary business group as a federally regulated exchange,
25determined without regard to the prohibition in Section
261501(a)(27) of this Act against including in a unitary business

 

 

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1group taxpayers who are ordinarily required to apportion
2business income under different subsections of this Section;
3provided that this subparagraph (iv) shall apply only if 50% or
4more of the business receipts of the unitary business group
5determined by application of this subparagraph (iv) for the
6taxable year are attributable to the matching, execution, or
7clearing of transactions conducted by an entity described in
8subparagraph (i), (ii), or (iii) of this paragraph.
9    In no event shall the Illinois apportionment percentage
10computed in accordance with this subsection (c-1) for any
11taxpayer for any tax year be less than the Illinois
12apportionment percentage computed under this subsection (c-1)
13for that taxpayer for the first full tax year ending on or
14after December 31, 2013 for which this subsection (c-1) applied
15to the taxpayer.
16    (d) Transportation services. For taxable years ending
17before December 31, 2008, business income derived from
18furnishing transportation services shall be apportioned to
19this State in accordance with paragraphs (1) and (2):
20        (1) Such business income (other than that derived from
21    transportation by pipeline) shall be apportioned to this
22    State by multiplying such income by a fraction, the
23    numerator of which is the revenue miles of the person in
24    this State, and the denominator of which is the revenue
25    miles of the person everywhere. For purposes of this
26    paragraph, a revenue mile is the transportation of 1

 

 

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1    passenger or 1 net ton of freight the distance of 1 mile
2    for a consideration. Where a person is engaged in the
3    transportation of both passengers and freight, the
4    fraction above referred to shall be determined by means of
5    an average of the passenger revenue mile fraction and the
6    freight revenue mile fraction, weighted to reflect the
7    person's
8            (A) relative railway operating income from total
9        passenger and total freight service, as reported to the
10        Interstate Commerce Commission, in the case of
11        transportation by railroad, and
12            (B) relative gross receipts from passenger and
13        freight transportation, in case of transportation
14        other than by railroad.
15        (2) Such business income derived from transportation
16    by pipeline shall be apportioned to this State by
17    multiplying such income by a fraction, the numerator of
18    which is the revenue miles of the person in this State, and
19    the denominator of which is the revenue miles of the person
20    everywhere. For the purposes of this paragraph, a revenue
21    mile is the transportation by pipeline of 1 barrel of oil,
22    1,000 cubic feet of gas, or of any specified quantity of
23    any other substance, the distance of 1 mile for a
24    consideration.
25        (3) For taxable years ending on or after December 31,
26    2008, business income derived from providing

 

 

HB5061- 50 -LRB101 19282 HLH 68748 b

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

 

 

HB5061- 51 -LRB101 19282 HLH 68748 b

1        freight transportation, in case of transportation
2        other than by railroad.
3        (4) For taxable years ending on or after December 31,
4    2008, business income derived from furnishing airline
5    transportation services shall be apportioned to this State
6    by multiplying such income by a fraction, the numerator of
7    which is the revenue miles of the person in this State, and
8    the denominator of which is the revenue miles of the person
9    everywhere. For purposes of this paragraph, a revenue mile
10    is the transportation of one passenger or one net ton of
11    freight the distance of one mile for a consideration. If a
12    person is engaged in the transportation of both passengers
13    and freight, the fraction above referred to shall be
14    determined by means of an average of the passenger revenue
15    mile fraction and the freight revenue mile fraction,
16    weighted to reflect the person's relative gross receipts
17    from passenger and freight airline transportation.
18    (e) Combined apportionment. Where 2 or more persons are
19engaged in a unitary business as described in subsection
20(a)(27) of Section 1501, a part of which is conducted in this
21State by one or more members of the group, the business income
22attributable to this State by any such member or members shall
23be apportioned by means of the combined apportionment method.
24    (f) Alternative allocation. If the allocation and
25apportionment provisions of subsections (a) through (e) and of
26subsection (h) do not, for taxable years ending before December

 

 

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131, 2008, fairly represent the extent of a person's business
2activity in this State, or, for taxable years ending on or
3after December 31, 2008, fairly represent the market for the
4person's goods, services, or other sources of business income,
5the person may petition for, or the Director may, without a
6petition, permit or require, in respect of all or any part of
7the person's business activity, if reasonable:
8        (1) Separate accounting;
9        (2) The exclusion of any one or more factors;
10        (3) The inclusion of one or more additional factors
11    which will fairly represent the person's business
12    activities or market in this State; or
13        (4) The employment of any other method to effectuate an
14    equitable allocation and apportionment of the person's
15    business income.
16    (g) Cross reference. For allocation of business income by
17residents, see Section 301(a).
18    (h) For tax years ending on or after December 31, 1998, the
19apportionment factor of persons who apportion their business
20income to this State under subsection (a) shall be equal to:
21        (1) for tax years ending on or after December 31, 1998
22    and before December 31, 1999, 16 2/3% of the property
23    factor plus 16 2/3% of the payroll factor plus 66 2/3% of
24    the sales factor;
25        (2) for tax years ending on or after December 31, 1999
26    and before December 31, 2000, 8 1/3% of the property factor

 

 

HB5061- 53 -LRB101 19282 HLH 68748 b

1    plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
2    factor;
3        (3) for tax years ending on or after December 31, 2000,
4    the sales factor.
5If, in any tax year ending on or after December 31, 1998 and
6before December 31, 2000, the denominator of the payroll,
7property, or sales factor is zero, the apportionment factor
8computed in paragraph (1) or (2) of this subsection for that
9year shall be divided by an amount equal to 100% minus the
10percentage weight given to each factor whose denominator is
11equal to zero.
12(Source: P.A. 100-201, eff. 8-18-17; 101-31, eff. 6-28-19;
13101-585, eff. 8-26-19; revised 9-12-19.)