SB3488 103RD GENERAL ASSEMBLY

LRB103 37894 HLH 68025 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3488

Introduced 2/9/2024, by Sen. Win Stoller

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 5/15.98 new

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. Repeals on January 1, 2026 the provisions in the Act that establish the corporate franchise tax. Directs the Legislative Reference Bureau to prepare a bill effecting necessary changes to conform the statutes to the changes made by the amendatory Act. Effective immediately.

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Business Corporation Act of 1983 is amended by changing Sections 15.35 and 15.65 and by adding Section 15.98 as follows:

(805 ILCS 5/15.35) (from Ch. 32, par. 15.35)

(Text of Section from P.A. 102-16 and 103-8)

Sec. 15.35. Franchise taxes payable by domestic corporations. For the privilege of exercising its franchises in this State, each domestic corporation shall pay to the Secretary of State the following franchise taxes, computed on the basis, at the rates and for the periods prescribed in this Act:

(a) An initial franchise tax at the time of filing its first report of issuance of shares.

(b) An additional franchise tax at the time of filing (1) a report of the issuance of additional shares, or (2) a report of an increase in paid-in capital without the issuance of shares, or (3) an amendment to the articles of incorporation or a report of cumulative changes in paid-in capital, whenever any amendment or such report discloses an increase in its paid-in capital over the amount thereof last reported in any document, other than an annual report, interim annual report or final transition annual report required by this Act to be filed in the office of the Secretary of State.

(c) An additional franchise tax at the time of filing a report of paid-in capital following a statutory merger or consolidation, which discloses that the paid-in capital of the surviving or new corporation immediately after the merger or consolidation is greater than the sum of the paid-in capital of all of the merged or consolidated corporations as last reported by them in any documents, other than annual reports, required by this Act to be filed in the office of the Secretary of State; and in addition, the surviving or new corporation shall be liable for a further additional franchise tax on the paid-in capital of each of the merged or consolidated corporations as last reported by them in any document, other than an annual report, required by this Act to be filed with the Secretary of State from their taxable year end to the next succeeding anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving or new corporation; however if the taxable year ends within the 2-month period immediately preceding the anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving or new corporation the tax will be computed to the anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving or new corporation in the next succeeding calendar year.

(d) An annual franchise tax payable each year with the annual report which the corporation is required by this Act to file.

On or after January 1, 2020 and before prior to January 1, 2021, the first $30 in liability is exempt from the tax imposed under this Section. On or after January 1, 2021, and before prior to January 1, 2024, the first $1,000 in liability is exempt from the tax imposed under this Section. On or after January 1, 2024 and before January 1, 2025, the first $5,000 in liability is exempt from the tax imposed under this Section. The provisions of this Section shall not require the payment of any franchise tax that would otherwise have been due and payable on or after January 1, 2025. There shall be no refunds or proration of franchise tax for any taxes due and payable on or after January 1, 2025 on the basis that a portion of the corporation's taxable year extends beyond January 1, 2025.

This Section is repealed on January 1, 2026.

(Source: P.A. 102-16, eff. 6-17-21; 103-8, eff. 6-7-23.)

(Text of Section from P.A. 102-282, 102-558, and 103-8)

Sec. 15.35. Franchise taxes payable by domestic corporations. For the privilege of exercising its franchises in this State, each domestic corporation shall pay to the Secretary of State the following franchise taxes, computed on the basis, at the rates and for the periods prescribed in this Act:

(a) An initial franchise tax at the time of filing its first report of issuance of shares.

(b) An additional franchise tax at the time of filing (1) a report of the issuance of additional shares, or (2) a report of an increase in paid-in capital without the issuance of shares, or (3) an amendment to the articles of incorporation or a report of cumulative changes in paid-in capital, whenever any amendment or such report discloses an increase in its paid-in capital over the amount thereof last reported in any document, other than an annual report, interim annual report or final transition annual report required by this Act to be filed in the office of the Secretary of State.

(c) An additional franchise tax at the time of filing a report of paid-in capital following a statutory merger or consolidation, which discloses that the paid-in capital of the surviving or new corporation immediately after the merger or consolidation is greater than the sum of the paid-in capital of all of the merged or consolidated corporations as last reported by them in any documents, other than annual reports, required by this Act to be filed in the office of the Secretary of State; and in addition, the surviving or new corporation shall be liable for a further additional franchise tax on the paid-in capital of each of the merged or consolidated corporations as last reported by them in any document, other than an annual report, required by this Act to be filed with the Secretary of State from their taxable year end to the next succeeding anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving or new corporation; however if the taxable year ends within the 2-month period immediately preceding the anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving or new corporation the tax will be computed to the anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving or new corporation in the next succeeding calendar year.

(d) An annual franchise tax payable each year with the annual report which the corporation is required by this Act to file.

On or after January 1, 2020 and before prior to January 1, 2021, the first $30 in liability is exempt from the tax imposed under this Section. On or after January 1, 2021 and before prior to January 1, 2024, the first $1,000 in liability is exempt from the tax imposed under this Section. On or after January 1, 2024 and before January 1, 2025, the first $5,000 in liability is exempt from the tax imposed under this Section. The provisions of this Section shall not require the payment of any franchise tax that would otherwise have been due and payable on or after January 1, 2025. There shall be no refunds or proration of franchise tax for any taxes due and payable on or after January 1, 2025 on the basis that a portion of the corporation's taxable year extends beyond January 1, 2025.

This Section is repealed on January 1, 2026.

(Source: P.A. 102-282, eff. 1-1-22; 102-558, eff. 8-20-21; 103-8, eff. 6-7-23.)

(805 ILCS 5/15.65) (from Ch. 32, par. 15.65)

Sec. 15.65. Franchise taxes payable by foreign corporations. For the privilege of exercising its authority to transact such business in this State as set out in its application therefor or any amendment thereto, each foreign corporation shall pay to the Secretary of State the following franchise taxes, computed on the basis, at the rates and for the periods prescribed in this Act:

(a) An initial franchise tax at the time of filing its application for authority to transact business in this State.

(b) An additional franchise tax at the time of filing (1) a report of the issuance of additional shares, or (2) a report of an increase in paid-in capital without the issuance of shares, or (3) a report of cumulative changes in paid-in capital or a report of an exchange or reclassification of shares, whenever any such report discloses an increase in its paid-in capital over the amount thereof last reported in any document, other than an annual report, interim annual report or final transition annual report, required by this Act to be filed in the office of the Secretary of State.

(c) Whenever the corporation shall be a party to a statutory merger and shall be the surviving corporation, an additional franchise tax at the time of filing its report following merger, if such report discloses that the amount represented in this State of its paid-in capital immediately after the merger is greater than the aggregate of the amounts represented in this State of the paid-in capital of such of the merged corporations as were authorized to transact business in this State at the time of the merger, as last reported by them in any documents, other than annual reports, required by this Act to be filed in the office of the Secretary of State; and in addition, the surviving corporation shall be liable for a further additional franchise tax on the paid-in capital of each of the merged corporations as last reported by them in any document, other than an annual report, required by this Act to be filed with the Secretary of State, from their taxable year end to the next succeeding anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the surviving corporation; however if the taxable year ends within the 2-month period immediately preceding the anniversary month or the extended filing month of the surviving corporation, the tax will be computed to the anniversary or, extended filing month of the surviving corporation in the next succeeding calendar year.

(d) An annual franchise tax payable each year with any annual report which the corporation is required by this Act to file.

On or after January 1, 2020 and before prior to January 1, 2021, the first $30 in liability is exempt from the tax imposed under this Section. On or after January 1, 2021 and before January 1, 2025, the first $1,000 in liability is exempt from the tax imposed under this Section. The provisions of this Section shall not require the payment of any franchise tax that would otherwise have been due and payable on or after January 1, 2025. There shall be no refunds or proration of franchise tax for any taxes due and payable on or after January 1, 2025 on the basis that a portion of the corporation's taxable year extends beyond January 1, 2025. This amendatory Act of the 103rd General Assembly shall not affect any right accrued or established, or any liability or penalty incurred prior to January 1, 2025.

This Section is repealed on January 1, 2026.

(Source: P.A. 101-9, eff. 6-5-19; 102-16, eff. 6-17-21; 102-558, eff. 8-20-21; 102-813, eff. 5-13-22.)

(805 ILCS 5/15.98 new)

Sec. 15.98. Preparation of bill. The Legislative Reference Bureau shall prepare for introduction in the 2025 spring session of the General Assembly a bill effecting such changes in the statutes as may be necessary to conform the statutes to the changes in law made by this amendatory Act of the 103rd General Assembly.

Section 99. Effective date. This Act takes effect upon becoming law.