103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5616

 

Introduced 2/9/2024, by Rep. Jenn Ladisch Douglass

 

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 5/15.90  from Ch. 32, par. 15.90
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. Makes changes in provisions concerning the statute of limitations. Repeals provisions concerning franchise taxes payable by domestic and foreign corporations on January 1, 2026. Effective immediately.


LRB103 38799 SPS 68936 b

 

 

A BILL FOR

 

HB5616LRB103 38799 SPS 68936 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, 15.90, and 15.97 as
6follows:
 
7    (805 ILCS 5/15.35)  (from Ch. 32, par. 15.35)
8    (Text of Section from P.A. 102-16 and 103-8)
9    Sec. 15.35. Franchise taxes payable by domestic
10corporations. For the privilege of exercising its franchises
11in this State, each domestic corporation shall pay to the
12Secretary of State the following franchise taxes, computed on
13the basis, at the rates and for the periods prescribed in this
14Act:
15        (a) An initial franchise tax at the time of filing its
16    first report of issuance of shares.
17        (b) An additional franchise tax at the time of filing
18    (1) a report of the issuance of additional shares, or (2) a
19    report of an increase in paid-in capital without the
20    issuance of shares, or (3) an amendment to the articles of
21    incorporation or a report of cumulative changes in paid-in
22    capital, whenever any amendment or such report discloses
23    an increase in its paid-in capital over the amount thereof

 

 

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

 

 

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1    surviving or new corporation the tax will be computed to
2    the anniversary month or, in the case of a corporation
3    which has established an extended filing month, the
4    extended filing month of the surviving or new corporation
5    in the next succeeding calendar year.
6        (d) An annual franchise tax payable each year with the
7    annual report which the corporation is required by this
8    Act to file.
9    On or after January 1, 2020 and prior to January 1, 2021,
10the first $30 in liability is exempt from the tax imposed under
11this Section. On or after January 1, 2021, and prior to January
121, 2024, the first $1,000 in liability is exempt from the tax
13imposed under this Section. On or after January 1, 2024 and
14prior to January 1, 2025, the first $5,000 in liability is
15exempt from the tax imposed under this Section. The provisions
16of this Section shall not require the payment of any franchise
17tax that would otherwise have been due and payable on or after
18January 1, 2025. There shall be no refunds or proration of
19franchise tax for any taxes due and payable on or after January
201, 2025 on the basis that a portion of the corporation's
21taxable year extends beyond January 1, 2025.
22    This Section is repealed on January 1, 2026.
23(Source: P.A. 102-16, eff. 6-17-21; 103-8, eff. 6-7-23.)
 
24    (Text of Section from P.A. 102-282, 102-558, and 103-8)
25    Sec. 15.35. Franchise taxes payable by domestic

 

 

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

 

 

HB5616- 5 -LRB103 38799 SPS 68936 b

1    filed in the office of the Secretary of State; and in
2    addition, the surviving or new corporation shall be liable
3    for a further additional franchise tax on the paid-in
4    capital of each of the merged or consolidated corporations
5    as last reported by them in any document, other than an
6    annual report, required by this Act to be filed with the
7    Secretary of State from their taxable year end to the next
8    succeeding anniversary month or, in the case of a
9    corporation which has established an extended filing
10    month, the extended filing month of the surviving or new
11    corporation; however if the taxable year ends within the
12    2-month period immediately preceding the anniversary month
13    or, in the case of a corporation which has established an
14    extended filing month, the extended filing month of the
15    surviving or new corporation the tax will be computed to
16    the anniversary month or, in the case of a corporation
17    which has established an extended filing month, the
18    extended filing month of the surviving or new corporation
19    in the next succeeding calendar year.
20        (d) An annual franchise tax payable each year with the
21    annual report which the corporation is required by this
22    Act to file.
23    On or after January 1, 2020 and prior to January 1, 2021,
24the first $30 in liability is exempt from the tax imposed under
25this Section. On or after January 1, 2021 and prior to January
261, 2024, the first $1,000 in liability is exempt from the tax

 

 

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1imposed under this Section. On or after January 1, 2024 and
2prior to January 1, 2025, the first $5,000 in liability is
3exempt from the tax imposed under this Section. The provisions
4of this Section shall not require the payment of any franchise
5tax that would otherwise have been due and payable on or after
6January 1, 2025. There shall be no refunds or proration of
7franchise tax for any taxes due and payable on or after January
81, 2025 on the basis that a portion of the corporation's
9taxable year extends beyond January 1, 2025.
10    This Section is repealed on January 1, 2026.
11(Source: P.A. 102-282, eff. 1-1-22; 102-558, eff. 8-20-21;
12103-8, eff. 6-7-23.)
 
13    (805 ILCS 5/15.65)  (from Ch. 32, par. 15.65)
14    Sec. 15.65. Franchise taxes payable by foreign
15corporations. For the privilege of exercising its authority to
16transact such business in this State as set out in its
17application therefor or any amendment thereto, each foreign
18corporation shall pay to the Secretary of State the following
19franchise taxes, computed on the basis, at the rates and for
20the periods prescribed in this Act:
21        (a) An initial franchise tax at the time of filing its
22    application for authority to transact business in this
23    State.
24        (b) An additional franchise tax at the time of filing
25    (1) a report of the issuance of additional shares, or (2) a

 

 

HB5616- 7 -LRB103 38799 SPS 68936 b

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

 

 

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1    their taxable year end to the next succeeding anniversary
2    month or, in the case of a corporation which has
3    established an extended filing month, the extended filing
4    month of the surviving corporation; however if the taxable
5    year ends within the 2-month period immediately preceding
6    the anniversary month or the extended filing month of the
7    surviving corporation, the tax will be computed to the
8    anniversary or, extended filing month of the surviving
9    corporation in the next succeeding calendar year.
10        (d) An annual franchise tax payable each year with any
11    annual report which the corporation is required by this
12    Act to file.
13    On or after January 1, 2020 and prior to January 1, 2021,
14the first $30 in liability is exempt from the tax imposed under
15this Section. On or after January 1, 2021 and prior to January
161, 2025, the first $1,000 in liability is exempt from the tax
17imposed under this Section. The provisions of this Section
18shall not require the payment of any franchise tax that would
19otherwise have been due and payable on or after January 1,
202025. There shall be no refunds or proration of franchise tax
21for any taxes due and payable on or after January 1, 2025 on
22the basis that a portion of the corporation's taxable year
23extends beyond January 1, 2025.
24    This Section is repealed on January 1, 2026.
25(Source: P.A. 101-9, eff. 6-5-19; 102-16, eff. 6-17-21;
26102-558, eff. 8-20-21; 102-813, eff. 5-13-22.)
 

 

 

HB5616- 9 -LRB103 38799 SPS 68936 b

1    (805 ILCS 5/15.90)  (from Ch. 32, par. 15.90)
2    Sec. 15.90. Statute of limitations.
3    (a) Except as otherwise provided in this Section and
4notwithstanding anything to the contrary contained in any
5other Section of this Act, prior to January 1, 2025, no
6domestic corporation or foreign corporation shall be obligated
7to pay any annual franchise tax, fee, or penalty or interest
8thereon imposed under this Act, nor shall any administrative
9or judicial sanction (including dissolution) be imposed or
10enforced nor access to the courts of this State be denied based
11upon nonpayment thereof more than 7 years after the date of
12filing the annual report with respect to the period during
13which the obligation for the tax, fee, penalty or interest
14arose, unless (1) within that 7 year period the Secretary of
15State sends a written notice to the corporation to the effect
16that (A) administrative or judicial action to dissolve the
17corporation or revoke its authority for nonpayment of a tax,
18fee, penalty or interest has been commenced; or (B) the
19corporation has submitted a report but has failed to pay a tax,
20fee, penalty or interest required to be paid therewith; or (C)
21a report with respect to an event or action giving rise to an
22obligation to pay a tax, fee, penalty or interest is required
23but has not been filed, or has been filed and is in error or
24incomplete; or (2) the annual report by the corporation was
25filed with fraudulent intent to evade taxes payable under this

 

 

HB5616- 10 -LRB103 38799 SPS 68936 b

1Act. A corporation nonetheless shall be required to pay all
2taxes that would have been payable during the most recent 7
3year period due to a previously unreported increase in paid-in
4capital that occurred prior to that 7 year period and interest
5and penalties thereon for that period, except that, from
6February 1, 2008 through March 15, 2008, with respect to any
7corporation that participates in the Franchise Tax and License
8Fee Amnesty Act of 2007, the corporation shall be only
9required to pay all taxes that would have been payable during
10the most recent 4 year period due to a previously unreported
11increase in paid-in capital that occurred prior to that 7 year
12period. Beginning January 1, 2025, no domestic corporation or
13foreign corporation shall be obligated to pay any annual
14franchise tax, fee, or penalty or interest thereon imposed
15under this Act, nor shall any administrative or judicial
16sanction (including dissolution) be imposed or enforced nor
17access to the courts of this State be denied based upon
18nonpayment thereof more than 7 years after the date of filing
19the annual report with respect to the period during which the
20obligation for the tax, fee, penalty or interest arose.
21    (b) If within 2 years following a change in control of a
22corporation the corporation voluntarily pays in good faith all
23known obligations of the corporation imposed by this Article
2415 with respect to reports that were required to have been
25filed since the beginning of the 7 year period ending on the
26effective date of the change in control, no action shall be

 

 

HB5616- 11 -LRB103 38799 SPS 68936 b

1taken to enforce or collect obligations of that corporation
2imposed by this Article 15 with respect to reports that were
3required to have been filed prior to that 7 year period
4regardless of whether the limitation period set forth in
5subsection (a) is otherwise applicable. For purposes of this
6subsection (b), a change in control means a transaction, or a
7series of transactions consummated within a period of 180
8consecutive days, as a result of which a person which owned
9less than 10% of the shares having the power to elect directors
10of the corporation acquires shares such that the person
11becomes the holder of 80% or more of the shares having such
12power. For purposes of this subsection (b) a person means any
13natural person, corporation, partnership, trust or other
14entity together with all other persons controlled by,
15controlling or under common control with such person.
16    (c) Except as otherwise provided in this Section and
17notwithstanding anything to the contrary contained in any
18other Section of this Act, no foreign corporation that has not
19previously obtained authority under this Act shall, upon
20voluntary application for authority filed with the Secretary
21of State prior to January 1, 2001, be obligated to pay any tax,
22fee, penalty, or interest imposed under this Act, nor shall
23any administrative or judicial sanction be imposed or enforced
24based upon nonpayment thereof with respect to a period during
25which the obligation arose that is prior to January 1, 1993
26unless (1) prior to receipt of the application for authority

 

 

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1the Secretary of State had sent written notice to the
2corporation regarding its failure to obtain an application for
3authority, (2) the corporation had submitted an application
4for authority previously but had failed to pay any tax, fee,
5penalty or interest to be paid therewith, or (3) the
6application for authority was submitted by the corporation
7with fraudulent intent to evade taxes payable under this Act.
8A corporation nonetheless shall be required to pay all taxes
9and fees due under this Act that would have been payable since
10January 1, 1993 as a result of commencing the transaction of
11its business in this State and interest thereon for that
12period.
13(Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08;
1496-66, eff. 1-1-10.)
 
15    (805 ILCS 5/15.97)  (from Ch. 32, par. 15.97)
16    Sec. 15.97. Corporate Franchise Tax Refund Fund.
17    (a) Beginning July 1, 1993, a percentage of the amounts
18collected under Sections 15.35, 15.45, 15.65, and 15.75 of
19this Act shall be deposited into the Corporate Franchise Tax
20Refund Fund, a special Fund hereby created in the State
21treasury. From July 1, 1993, until December 31, 1994, there
22shall be deposited into the Fund 3% of the amounts received
23under those Sections. Beginning January 1, 1995, and for each
24fiscal year beginning thereafter, 2% of the amounts collected
25under those Sections during the preceding fiscal year shall be

 

 

HB5616- 13 -LRB103 38799 SPS 68936 b

1deposited into the Fund.
2    (b) Beginning July 1, 1993, moneys in the Fund shall be
3expended exclusively for the purpose of paying refunds payable
4because of overpayment of franchise taxes, penalties, or
5interest under Sections 13.70, 15.35, 15.45, 15.65, 15.75, and
616.05 of this Act and making transfers authorized under this
7Section. Refunds in accordance with the provisions of
8subsections (f) and (g) of Section 1.15 and Section 1.17 of
9this Act may be made from the Fund only to the extent that
10amounts collected under Sections 15.35, 15.45, 15.65, and
1115.75 of this Act have been deposited in the Fund and remain
12available. On or before August 31 of each year, the balance in
13the Fund in excess of $100,000 shall be transferred to the
14General Revenue Fund. Notwithstanding the provisions of this
15subsection, for the period commencing on or after July 1,
162022, amounts in the fund shall not be transferred to the
17General Revenue Fund and shall be used to pay refunds in
18accordance with the provisions of this Act. Within a
19reasonable time after December 31, 2024, but no later than
20December 31, 2025, the Secretary of State shall direct and the
21Comptroller shall order transferred to the General Revenue
22Fund all amounts remaining in the fund.
23    (c) This Act shall constitute an irrevocable and
24continuing appropriation from the Corporate Franchise Tax
25Refund Fund for the purpose of paying refunds upon the order of
26the Secretary of State in accordance with the provisions of

 

 

HB5616- 14 -LRB103 38799 SPS 68936 b

1this Section.
2    (d) This Section is repealed on January 1, 2026.
3(Source: P.A. 102-282, eff. 1-1-22; 103-8, eff. 6-7-23.)
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.