103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3429

 

Introduced 2/17/2023, by Rep. Michael T. Marron

 

SYNOPSIS AS INTRODUCED:
 
805 ILCS 5/15.35  from Ch. 32, par. 15.35
805 ILCS 5/15.65  from Ch. 32, par. 15.65

    Amends the Business Corporation Act of 1983. Provides for the reduction of franchise tax liabilities for domestic and foreign corporations beginning January 1, 2024. Repeals provisions concerning franchise taxes payable by domestic and foreign corporations on December 31, 2026. Effective immediately.


LRB103 27397 SPS 53769 b

 

 

A BILL FOR

 

HB3429LRB103 27397 SPS 53769 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Business Corporation Act of 1983 is amended
5by changing Sections 15.35 and 15.65 as follows:
 
6    (805 ILCS 5/15.35)  (from Ch. 32, par. 15.35)
7    (Text of Section from P.A. 102-16)
8    Sec. 15.35. Franchise taxes payable by domestic
9corporations. For the privilege of exercising its franchises
10in this State, each domestic corporation shall pay to the
11Secretary of State the following franchise taxes, computed on
12the basis, at the rates and for the periods prescribed in this
13Act:
14        (a) An initial franchise tax at the time of filing its
15    first report of issuance of shares.
16        (b) An additional franchise tax at the time of filing
17    (1) a report of the issuance of additional shares, or (2) a
18    report of an increase in paid-in capital without the
19    issuance of shares, or (3) an amendment to the articles of
20    incorporation or a report of cumulative changes in paid-in
21    capital, whenever any amendment or such report discloses
22    an increase in its paid-in capital over the amount thereof
23    last reported in any document, other than an annual

 

 

HB3429- 2 -LRB103 27397 SPS 53769 b

1    report, interim annual report or final transition annual
2    report required by this Act to be filed in the office of
3    the Secretary of State.
4        (c) An additional franchise tax at the time of filing
5    a report of paid-in capital following a statutory merger
6    or consolidation, which discloses that the paid-in capital
7    of the surviving or new corporation immediately after the
8    merger or consolidation is greater than the sum of the
9    paid-in capital of all of the merged or consolidated
10    corporations as last reported by them in any documents,
11    other than annual reports, required by this Act to be
12    filed in the office of the Secretary of State; and in
13    addition, the surviving or new corporation shall be liable
14    for a further additional franchise tax on the paid-in
15    capital of each of the merged or consolidated corporations
16    as last reported by them in any document, other than an
17    annual report, required by this Act to be filed with the
18    Secretary of State from their taxable year end to the next
19    succeeding anniversary month or, in the case of a
20    corporation which has established an extended filing
21    month, the extended filing month of the surviving or new
22    corporation; however if the taxable year ends within the
23    2-month period immediately preceding the anniversary month
24    or, in the case of a corporation which has established an
25    extended filing month, the extended filing month of the
26    surviving or new corporation the tax will be computed to

 

 

HB3429- 3 -LRB103 27397 SPS 53769 b

1    the anniversary month or, in the case of a corporation
2    which has established an extended filing month, the
3    extended filing month of the surviving or new corporation
4    in the next succeeding calendar year.
5        (d) An annual franchise tax payable each year with the
6    annual report which the corporation is required by this
7    Act to file.
8    (e) On or after January 1, 2020 and prior to January 1,
92021, the first $30 in liability is exempt from the tax imposed
10under this Section. On or after January 1, 2021 and prior to
11January 1, 2024, the first $1,000 in liability is exempt from
12the tax imposed under this Section. On or after January 1, 2024
13and prior to January 1, 2025, the first $10,000 in liability is
14exempt from the tax imposed under this Section. On or after
15January 1, 2025 and prior to January 1, 2026, the first
16$100,000 in liability is exempt from the tax imposed under
17this Section. The provisions of this Section shall not require
18the payment of any franchise tax that would otherwise have
19been due and payable on or after January 1, 2026. There shall
20be no refunds or proration of franchise tax for any taxes due
21and payable on or after January 1, 2026 on the basis that a
22portion of the corporation's taxable year extends beyond
23January 1, 2026. Public Act 101-9 shall not affect any right
24accrued or established, or any liability or penalty incurred
25prior to January 1, 2026.
26    (f) This Section is repealed on December 31, 2026.

 

 

HB3429- 4 -LRB103 27397 SPS 53769 b

1(Source: P.A. 101-9, eff. 6-5-19; 102-16, eff. 6-17-21.)
 
2    (Text of Section from P.A. 102-282)
3    Sec. 15.35. Franchise taxes payable by domestic
4corporations. For the privilege of exercising its franchises
5in this State, each domestic corporation shall pay to the
6Secretary of State the following franchise taxes, computed on
7the basis, at the rates and for the periods prescribed in this
8Act:
9        (a) An initial franchise tax at the time of filing its
10    first report of issuance of shares.
11        (b) An additional franchise tax at the time of filing
12    (1) a report of the issuance of additional shares, or (2) a
13    report of an increase in paid-in capital without the
14    issuance of shares, or (3) an amendment to the articles of
15    incorporation or a report of cumulative changes in paid-in
16    capital, whenever any amendment or such report discloses
17    an increase in its paid-in capital over the amount thereof
18    last reported in any document, other than an annual
19    report, interim annual report or final transition annual
20    report required by this Act to be filed in the office of
21    the Secretary of State.
22        (c) An additional franchise tax at the time of filing
23    a report of paid-in capital following a statutory merger
24    or consolidation, which discloses that the paid-in capital
25    of the surviving or new corporation immediately after the

 

 

HB3429- 5 -LRB103 27397 SPS 53769 b

1    merger or consolidation is greater than the sum of the
2    paid-in capital of all of the merged or consolidated
3    corporations as last reported by them in any documents,
4    other than annual reports, required by this Act to be
5    filed in the office of the Secretary of State; and in
6    addition, the surviving or new corporation shall be liable
7    for a further additional franchise tax on the paid-in
8    capital of each of the merged or consolidated corporations
9    as last reported by them in any document, other than an
10    annual report, required by this Act to be filed with the
11    Secretary of State from their taxable year end to the next
12    succeeding anniversary month or, in the case of a
13    corporation which has established an extended filing
14    month, the extended filing month of the surviving or new
15    corporation; however if the taxable year ends within the
16    2-month period immediately preceding the anniversary month
17    or, in the case of a corporation which has established an
18    extended filing month, the extended filing month of the
19    surviving or new corporation the tax will be computed to
20    the anniversary month or, in the case of a corporation
21    which has established an extended filing month, the
22    extended filing month of the surviving or new corporation
23    in the next succeeding calendar year.
24        (d) An annual franchise tax payable each year with the
25    annual report which the corporation is required by this
26    Act to file.

 

 

HB3429- 6 -LRB103 27397 SPS 53769 b

1    (e) On or after January 1, 2020 and prior to January 1,
22021, the first $30 in liability is exempt from the tax imposed
3under this Section. On or after January 1, 2021 and prior to
4January 1, 2024 2022, the first $1,000 in liability is exempt
5from the tax imposed under this Section. On or after January 1,
62024 2022 and prior to January 1, 2025 2023, the first $10,000
7in liability is exempt from the tax imposed under this
8Section. On or after January 1, 2025 2023 and prior to January
91, 2026 2024, the first $100,000 in liability is exempt from
10the tax imposed under this Section. The provisions of this
11Section shall not require the payment of any franchise tax
12that would otherwise have been due and payable on or after
13January 1, 2026 2024. There shall be no refunds or proration of
14franchise tax for any taxes due and payable on or after January
151, 2026 2024 on the basis that a portion of the corporation's
16taxable year extends beyond January 1, 2026 2024. Public Act
17101-9 shall not affect any right accrued or established, or
18any liability or penalty incurred prior to January 1, 2026
192024.
20    (f) This Section is repealed on December 31, 2026 2024.
21(Source: P.A. 101-9, eff. 6-5-19; 102-282, eff. 1-1-22.)
 
22    (Text of Section from P.A. 102-558)
23    Sec. 15.35. Franchise taxes payable by domestic
24corporations. For the privilege of exercising its franchises
25in this State, each domestic corporation shall pay to the

 

 

HB3429- 7 -LRB103 27397 SPS 53769 b

1Secretary of State the following franchise taxes, computed on
2the basis, at the rates and for the periods prescribed in this
3Act:
4        (a) An initial franchise tax at the time of filing its
5    first report of issuance of shares.
6        (b) An additional franchise tax at the time of filing
7    (1) a report of the issuance of additional shares, or (2) a
8    report of an increase in paid-in capital without the
9    issuance of shares, or (3) an amendment to the articles of
10    incorporation or a report of cumulative changes in paid-in
11    capital, whenever any amendment or such report discloses
12    an increase in its paid-in capital over the amount thereof
13    last reported in any document, other than an annual
14    report, interim annual report or final transition annual
15    report required by this Act to be filed in the office of
16    the Secretary of State.
17        (c) An additional franchise tax at the time of filing
18    a report of paid-in capital following a statutory merger
19    or consolidation, which discloses that the paid-in capital
20    of the surviving or new corporation immediately after the
21    merger or consolidation is greater than the sum of the
22    paid-in capital of all of the merged or consolidated
23    corporations as last reported by them in any documents,
24    other than annual reports, required by this Act to be
25    filed in the office of the Secretary of State; and in
26    addition, the surviving or new corporation shall be liable

 

 

HB3429- 8 -LRB103 27397 SPS 53769 b

1    for a further additional franchise tax on the paid-in
2    capital of each of the merged or consolidated corporations
3    as last reported by them in any document, other than an
4    annual report, required by this Act to be filed with the
5    Secretary of State from their taxable year end to the next
6    succeeding anniversary month or, in the case of a
7    corporation which has established an extended filing
8    month, the extended filing month of the surviving or new
9    corporation; however if the taxable year ends within the
10    2-month period immediately preceding the anniversary month
11    or, in the case of a corporation which has established an
12    extended filing month, the extended filing month of the
13    surviving or new corporation the tax will be computed to
14    the anniversary month or, in the case of a corporation
15    which has established an extended filing month, the
16    extended filing month of the surviving or new corporation
17    in the next succeeding calendar year.
18        (d) An annual franchise tax payable each year with the
19    annual report which the corporation is required by this
20    Act to file.
21    On or after January 1, 2020 and prior to January 1, 2021,
22the first $30 in liability is exempt from the tax imposed under
23this Section. On or after January 1, 2021 and prior to January
241, 2024 2022, the first $1,000 in liability is exempt from the
25tax imposed under this Section. On or after January 1, 2024
262022 and prior to January 1, 2025 2023, the first $10,000 in

 

 

HB3429- 9 -LRB103 27397 SPS 53769 b

1liability is exempt from the tax imposed under this Section.
2On or after January 1, 2025 2023 and prior to January 1, 2026
32024, the first $100,000 in liability is exempt from the tax
4imposed under this Section. The provisions of this Section
5shall not require the payment of any franchise tax that would
6otherwise have been due and payable on or after January 1, 2026
72024. There shall be no refunds or proration of franchise tax
8for any taxes due and payable on or after January 1, 2024 on
9the basis that a portion of the corporation's taxable year
10extends beyond January 1, 2026 2024. Public Act 101-9 shall
11not affect any right accrued or established, or any liability
12or penalty incurred prior to January 1, 2026 2024.
13    (f) This Section is repealed on December 31, 2026 2025.
14(Source: P.A. 101-9, eff. 6-5-19; 102-558, eff. 8-20-21.)
 
15    (805 ILCS 5/15.65)  (from Ch. 32, par. 15.65)
16    Sec. 15.65. Franchise taxes payable by foreign
17corporations. For the privilege of exercising its authority to
18transact such business in this State as set out in its
19application therefor or any amendment thereto, each foreign
20corporation shall pay to the Secretary of State the following
21franchise taxes, computed on the basis, at the rates and for
22the periods prescribed in this Act:
23        (a) An initial franchise tax at the time of filing its
24    application for authority to transact business in this
25    State.

 

 

HB3429- 10 -LRB103 27397 SPS 53769 b

1        (b) An additional franchise tax at the time of filing
2    (1) a report of the issuance of additional shares, or (2) a
3    report of an increase in paid-in capital without the
4    issuance of shares, or (3) a report of cumulative changes
5    in paid-in capital or a report of an exchange or
6    reclassification of shares, whenever any such report
7    discloses an increase in its paid-in capital over the
8    amount thereof last reported in any document, other than
9    an annual report, interim annual report or final
10    transition annual report, required by this Act to be filed
11    in the office of the Secretary of State.
12        (c) Whenever the corporation shall be a party to a
13    statutory merger and shall be the surviving corporation,
14    an additional franchise tax at the time of filing its
15    report following merger, if such report discloses that the
16    amount represented in this State of its paid-in capital
17    immediately after the merger is greater than the aggregate
18    of the amounts represented in this State of the paid-in
19    capital of such of the merged corporations as were
20    authorized to transact business in this State at the time
21    of the merger, as last reported by them in any documents,
22    other than annual reports, required by this Act to be
23    filed in the office of the Secretary of State; and in
24    addition, the surviving corporation shall be liable for a
25    further additional franchise tax on the paid-in capital of
26    each of the merged corporations as last reported by them

 

 

HB3429- 11 -LRB103 27397 SPS 53769 b

1    in any document, other than an annual report, required by
2    this Act to be filed with the Secretary of State, from
3    their taxable year end to the next succeeding anniversary
4    month or, in the case of a corporation which has
5    established an extended filing month, the extended filing
6    month of the surviving corporation; however if the taxable
7    year ends within the 2-month period immediately preceding
8    the anniversary month or the extended filing month of the
9    surviving corporation, the tax will be computed to the
10    anniversary or, extended filing month of the surviving
11    corporation in the next succeeding calendar year.
12        (d) An annual franchise tax payable each year with any
13    annual report which the corporation is required by this
14    Act to file.
15    On or after January 1, 2020 and prior to January 1, 2021,
16the first $30 in liability is exempt from the tax imposed under
17this Section. On or after January 1, 2021 and prior to January
181, 2024, the first $1,000 in liability is exempt from the tax
19imposed under this Section. On or after January 1, 2024 and
20prior to January 1, 2025, the first $10,000 in liability is
21exempt from the tax imposed under this Section. On or after
22January 1, 2025 and prior to January 1, 2026, the first
23$100,000 in liability is exempt from the tax imposed under
24this Section. The provisions of this Section shall not require
25the payment of any franchise tax that would otherwise have
26been due and payable on or after January 1, 2026. There shall

 

 

HB3429- 12 -LRB103 27397 SPS 53769 b

1be no refunds or proration of franchise tax for any taxes due
2and payable on or after January 1, 2026 on the basis that a
3portion of the corporation's taxable year extends beyond
4January 1, 2026. Public Act 101-9 shall not affect any right
5accrued or established, or any liability or penalty incurred
6prior to January 1, 2026.
7    (f) This Section is repealed on December 31, 2026.
8(Source: P.A. 101-9, eff. 6-5-19; 102-16, eff. 6-17-21;
9102-558, eff. 8-20-21; 102-813, eff. 5-13-22.)
 
10    Section 99. Effective date. This Act takes effect upon
11becoming law.