103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5490

 

Introduced 2/9/2024, by Rep. Kimberly Du Buclet

 

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
805 ILCS 5/15.97  from Ch. 32, par. 15.97

    Amends the Business Corporation Act of 1983. Provides that, in the case of a domestic or foreign corporation, no payment is required for a franchise tax that would have been due and payable on or after January 1, 2025. Provides that all amounts remaining in the Corporate Franchise Tax Refund Fund shall be transferred to the General Revenue Fund no later than December 31, 2025. Repeals provisions concerning franchise taxes payable by domestic and foreign corporations on January 1, 2026. Effective immediately.


LRB103 37755 SPS 67883 b

 

 

A BILL FOR

 

HB5490LRB103 37755 SPS 67883 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, 15.65, and 15.97 as follows:
 
6    (805 ILCS 5/15.35)  (from Ch. 32, par. 15.35)
7    (Text of Section from P.A. 102-16 and 103-8)
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

 

 

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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

 

 

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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    On or after January 1, 2020 and prior to January 1, 2021,
9the first $30 in liability is exempt from the tax imposed under
10this Section. On or after January 1, 2021, and prior to January
111, 2024, the first $1,000 in liability is exempt from the tax
12imposed under this Section. On or after January 1, 2024 and
13prior to January 1, 2025, the first $5,000 in liability is
14exempt from the tax imposed under this Section. The provisions
15of this Section shall not require the payment of any franchise
16tax that would otherwise have been due and payable on or after
17January 1, 2025. There shall be no refunds or proration of
18franchise tax for any taxes due and payable on or after January
191, 2025 on the basis that a portion of the corporation's
20taxable year extends beyond January 1, 2025.
21    This Section is repealed on January 1, 2026.
22(Source: P.A. 102-16, eff. 6-17-21; 103-8, eff. 6-7-23.)
 
23    (Text of Section from P.A. 102-282, 102-558, and 103-8)
24    Sec. 15.35. Franchise taxes payable by domestic
25corporations. For the privilege of exercising its franchises

 

 

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

 

 

HB5490- 5 -LRB103 37755 SPS 67883 b

1    addition, the surviving or new corporation shall be liable
2    for a further additional franchise tax on the paid-in
3    capital of each of the merged or consolidated corporations
4    as last reported by them in any document, other than an
5    annual report, required by this Act to be filed with the
6    Secretary of State from their taxable year end to the next
7    succeeding anniversary month or, in the case of a
8    corporation which has established an extended filing
9    month, the extended filing month of the surviving or new
10    corporation; however if the taxable year ends within the
11    2-month period immediately preceding the anniversary month
12    or, in the case of a corporation which has established an
13    extended filing month, the extended filing month of the
14    surviving or new corporation the tax will be computed to
15    the anniversary month or, in the case of a corporation
16    which has established an extended filing month, the
17    extended filing month of the surviving or new corporation
18    in the next succeeding calendar year.
19        (d) An annual franchise tax payable each year with the
20    annual report which the corporation is required by this
21    Act to file.
22    On or after January 1, 2020 and prior to January 1, 2021,
23the first $30 in liability is exempt from the tax imposed under
24this Section. On or after January 1, 2021 and prior to January
251, 2024, the first $1,000 in liability is exempt from the tax
26imposed under this Section. On or after January 1, 2024 and

 

 

HB5490- 6 -LRB103 37755 SPS 67883 b

1prior to January 1, 2025, the first $5,000 in liability is
2exempt from the tax imposed under this Section. The provisions
3of this Section shall not require the payment of any franchise
4tax that would otherwise have been due and payable on or after
5January 1, 2025. There shall be no refunds or proration of
6franchise tax for any taxes due and payable on or after January
71, 2025 on the basis that a portion of the corporation's
8taxable year extends beyond January 1, 2025.
9    This Section is repealed on January 1, 2026.
10(Source: P.A. 102-282, eff. 1-1-22; 102-558, eff. 8-20-21;
11103-8, eff. 6-7-23.)
 
12    (805 ILCS 5/15.65)  (from Ch. 32, par. 15.65)
13    Sec. 15.65. Franchise taxes payable by foreign
14corporations. For the privilege of exercising its authority to
15transact such business in this State as set out in its
16application therefor or any amendment thereto, each foreign
17corporation shall pay to the Secretary of State the following
18franchise taxes, computed on the basis, at the rates and for
19the periods prescribed in this Act:
20        (a) An initial franchise tax at the time of filing its
21    application for authority to transact business in this
22    State.
23        (b) An additional franchise tax at the time of filing
24    (1) a report of the issuance of additional shares, or (2) a
25    report of an increase in paid-in capital without the

 

 

HB5490- 7 -LRB103 37755 SPS 67883 b

1    issuance of shares, or (3) a report of cumulative changes
2    in paid-in capital or a report of an exchange or
3    reclassification of shares, whenever any such report
4    discloses an increase in its paid-in capital over the
5    amount thereof last reported in any document, other than
6    an annual report, interim annual report or final
7    transition annual report, required by this Act to be filed
8    in the office of the Secretary of State.
9        (c) Whenever the corporation shall be a party to a
10    statutory merger and shall be the surviving corporation,
11    an additional franchise tax at the time of filing its
12    report following merger, if such report discloses that the
13    amount represented in this State of its paid-in capital
14    immediately after the merger is greater than the aggregate
15    of the amounts represented in this State of the paid-in
16    capital of such of the merged corporations as were
17    authorized to transact business in this State at the time
18    of the merger, as last reported by them in any documents,
19    other than annual reports, required by this Act to be
20    filed in the office of the Secretary of State; and in
21    addition, the surviving corporation shall be liable for a
22    further additional franchise tax on the paid-in capital of
23    each of the merged corporations as last reported by them
24    in any document, other than an annual report, required by
25    this Act to be filed with the Secretary of State, from
26    their taxable year end to the next succeeding anniversary

 

 

HB5490- 8 -LRB103 37755 SPS 67883 b

1    month or, in the case of a corporation which has
2    established an extended filing month, the extended filing
3    month of the surviving corporation; however if the taxable
4    year ends within the 2-month period immediately preceding
5    the anniversary month or the extended filing month of the
6    surviving corporation, the tax will be computed to the
7    anniversary or, extended filing month of the surviving
8    corporation in the next succeeding calendar year.
9        (d) An annual franchise tax payable each year with any
10    annual report which the corporation is required by this
11    Act to file.
12    On or after January 1, 2020 and prior to January 1, 2021,
13the first $30 in liability is exempt from the tax imposed under
14this Section. On or after January 1, 2021 and prior to January
151, 2025, the first $1,000 in liability is exempt from the tax
16imposed under this Section.The provisions of this Section
17shall not require the payment of any franchise tax that would
18otherwise have been due and payable on or after January 1,
192025. There shall be no refunds or proration of franchise tax
20for any taxes due and payable on or after January 1, 2025 on
21the basis that a portion of the corporation's taxable year
22extends beyond January 1, 2025.
23    This Section is repealed on January 1, 2026.
24(Source: P.A. 101-9, eff. 6-5-19; 102-16, eff. 6-17-21;
25102-558, eff. 8-20-21; 102-813, eff. 5-13-22.)
 

 

 

HB5490- 9 -LRB103 37755 SPS 67883 b

1    (805 ILCS 5/15.97)  (from Ch. 32, par. 15.97)
2    Sec. 15.97. Corporate Franchise Tax Refund Fund.
3    (a) Beginning July 1, 1993, a percentage of the amounts
4collected under Sections 15.35, 15.45, 15.65, and 15.75 of
5this Act shall be deposited into the Corporate Franchise Tax
6Refund Fund, a special Fund hereby created in the State
7treasury. From July 1, 1993, until December 31, 1994, there
8shall be deposited into the Fund 3% of the amounts received
9under those Sections. Beginning January 1, 1995, and for each
10fiscal year beginning thereafter, 2% of the amounts collected
11under those Sections during the preceding fiscal year shall be
12deposited into the Fund.
13    (b) Beginning July 1, 1993, moneys in the Fund shall be
14expended exclusively for the purpose of paying refunds payable
15because of overpayment of franchise taxes, penalties, or
16interest under Sections 13.70, 15.35, 15.45, 15.65, 15.75, and
1716.05 of this Act and making transfers authorized under this
18Section. Refunds in accordance with the provisions of
19subsections (f) and (g) of Section 1.15 and Section 1.17 of
20this Act may be made from the Fund only to the extent that
21amounts collected under Sections 15.35, 15.45, 15.65, and
2215.75 of this Act have been deposited in the Fund and remain
23available. On or before August 31 of each year, the balance in
24the Fund in excess of $100,000 shall be transferred to the
25General Revenue Fund. Notwithstanding the provisions of this
26subsection, for the period commencing on or after July 1,

 

 

HB5490- 10 -LRB103 37755 SPS 67883 b

12022, amounts in the fund shall not be transferred to the
2General Revenue Fund and shall be used to pay refunds in
3accordance with the provisions of this Act. Within a
4reasonable time after December 31, 2024, but no later than
5December 31, 2025, the Secretary of State shall direct and the
6Comptroller shall order transferred to the General Revenue
7Fund all amounts remaining in the fund.
8    (c) This Act shall constitute an irrevocable and
9continuing appropriation from the Corporate Franchise Tax
10Refund Fund for the purpose of paying refunds upon the order of
11the Secretary of State in accordance with the provisions of
12this Section.
13    (d) This Section is repealed on January 1, 2026.
14(Source: P.A. 102-282, eff. 1-1-22; 103-8, eff. 6-7-23.)
 
15    Section 99. Effective date. This Act takes effect upon
16becoming law.