093_SB1634enr SB1634 Enrolled LRB093 02897 SJM 02913 b 1 AN ACT concerning taxes. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Illinois Income Tax Act is amended by 5 changing Sections 201, 204, and 207 as follows: 6 (35 ILCS 5/201) (from Ch. 120, par. 2-201) 7 Sec. 201. Tax Imposed. 8 (a) In general. A tax measured by net income is hereby 9 imposed on every individual, corporation, trust and estate 10 for each taxable year ending after July 31, 1969 on the 11 privilege of earning or receiving income in or as a resident 12 of this State. Such tax shall be in addition to all other 13 occupation or privilege taxes imposed by this State or by any 14 municipal corporation or political subdivision thereof. 15 (b) Rates. The tax imposed by subsection (a) of this 16 Section shall be determined as follows, except as adjusted by 17 subsection (d-1): 18 (1) In the case of an individual, trust or estate, 19 for taxable years ending prior to July 1, 1989, an amount 20 equal to 2 1/2% of the taxpayer's net income for the 21 taxable year. 22 (2) In the case of an individual, trust or estate, 23 for taxable years beginning prior to July 1, 1989 and 24 ending after June 30, 1989, an amount equal to the sum of 25 (i) 2 1/2% of the taxpayer's net income for the period 26 prior to July 1, 1989, as calculated under Section 202.3, 27 and (ii) 3% of the taxpayer's net income for the period 28 after June 30, 1989, as calculated under Section 202.3. 29 (3) In the case of an individual, trust or estate, 30 for taxable years beginning after June 30, 1989, an 31 amount equal to 3% of the taxpayer's net income for the SB1634 Enrolled -2- LRB093 02897 SJM 02913 b 1 taxable year. 2 (4) (Blank). 3 (5) (Blank). 4 (6) In the case of a corporation, for taxable years 5 ending prior to July 1, 1989, an amount equal to 4% of 6 the taxpayer's net income for the taxable year. 7 (7) In the case of a corporation, for taxable years 8 beginning prior to July 1, 1989 and ending after June 30, 9 1989, an amount equal to the sum of (i) 4% of the 10 taxpayer's net income for the period prior to July 1, 11 1989, as calculated under Section 202.3, and (ii) 4.8% of 12 the taxpayer's net income for the period after June 30, 13 1989, as calculated under Section 202.3. 14 (8) In the case of a corporation, for taxable years 15 beginning after June 30, 1989, an amount equal to 4.8% of 16 the taxpayer's net income for the taxable year. 17 (c) Personal Property Tax Replacement Income Tax. 18 Beginning on July 1, 1979 and thereafter, in addition to such 19 income tax, there is also hereby imposed the Personal 20 Property Tax Replacement Income Tax measured by net income on 21 every corporation (including Subchapter S corporations), 22 partnership and trust, for each taxable year ending after 23 June 30, 1979. Such taxes are imposed on the privilege of 24 earning or receiving income in or as a resident of this 25 State. The Personal Property Tax Replacement Income Tax 26 shall be in addition to the income tax imposed by subsections 27 (a) and (b) of this Section and in addition to all other 28 occupation or privilege taxes imposed by this State or by any 29 municipal corporation or political subdivision thereof. 30 (d) Additional Personal Property Tax Replacement Income 31 Tax Rates. The personal property tax replacement income tax 32 imposed by this subsection and subsection (c) of this Section 33 in the case of a corporation, other than a Subchapter S 34 corporation and except as adjusted by subsection (d-1), shall SB1634 Enrolled -3- LRB093 02897 SJM 02913 b 1 be an additional amount equal to 2.85% of such taxpayer's net 2 income for the taxable year, except that beginning on January 3 1, 1981, and thereafter, the rate of 2.85% specified in this 4 subsection shall be reduced to 2.5%, and in the case of a 5 partnership, trust or a Subchapter S corporation shall be an 6 additional amount equal to 1.5% of such taxpayer's net income 7 for the taxable year. 8 (d-1) Rate reduction for certain foreign insurers. In 9 the case of a foreign insurer, as defined by Section 35A-5 of 10 the Illinois Insurance Code, whose state or country of 11 domicile imposes on insurers domiciled in Illinois a 12 retaliatory tax (excluding any insurer whose premiums from 13 reinsurance assumed are 50% or more of its total insurance 14 premiums as determined under paragraph (2) of subsection (b) 15 of Section 304, except that for purposes of this 16 determination premiums from reinsurance do not include 17 premiums from inter-affiliate reinsurance arrangements), 18 beginning with taxable years ending on or after December 31, 19 1999, the sum of the rates of tax imposed by subsections (b) 20 and (d) shall be reduced (but not increased) to the rate at 21 which the total amount of tax imposed under this Act, net of 22 all credits allowed under this Act, shall equal (i) the total 23 amount of tax that would be imposed on the foreign insurer's 24 net income allocable to Illinois for the taxable year by such 25 foreign insurer's state or country of domicile if that net 26 income were subject to all income taxes and taxes measured by 27 net income imposed by such foreign insurer's state or country 28 of domicile, net of all credits allowed or (ii) a rate of 29 zero if no such tax is imposed on such income by the foreign 30 insurer's state of domicile. For the purposes of this 31 subsection (d-1), an inter-affiliate includes a mutual 32 insurer under common management. 33 (1) For the purposes of subsection (d-1), in no 34 event shall the sum of the rates of tax imposed by SB1634 Enrolled -4- LRB093 02897 SJM 02913 b 1 subsections (b) and (d) be reduced below the rate at 2 which the sum of: 3 (A) the total amount of tax imposed on such 4 foreign insurer under this Act for a taxable year, 5 net of all credits allowed under this Act, plus 6 (B) the privilege tax imposed by Section 409 7 of the Illinois Insurance Code, the fire insurance 8 company tax imposed by Section 12 of the Fire 9 Investigation Act, and the fire department taxes 10 imposed under Section 11-10-1 of the Illinois 11 Municipal Code, 12 equals 1.25% for taxable years ending prior to December 13 31, 2003, or 1.75% for taxable years ending on or after 14 December 31, 2003, of the net taxable premiums written 15 for the taxable year, as described by subsection (1) of 16 Section 409 of the Illinois Insurance Code. This 17 paragraph will in no event increase the rates imposed 18 under subsections (b) and (d). 19 (2) Any reduction in the rates of tax imposed by 20 this subsection shall be applied first against the rates 21 imposed by subsection (b) and only after the tax imposed 22 by subsection (a) net of all credits allowed under this 23 Section other than the credit allowed under subsection 24 (i) has been reduced to zero, against the rates imposed 25 by subsection (d). 26 This subsection (d-1) is exempt from the provisions of 27 Section 250. 28 (e) Investment credit. A taxpayer shall be allowed a 29 credit against the Personal Property Tax Replacement Income 30 Tax for investment in qualified property. 31 (1) A taxpayer shall be allowed a credit equal to 32 .5% of the basis of qualified property placed in service 33 during the taxable year, provided such property is placed 34 in service on or after July 1, 1984. There shall be SB1634 Enrolled -5- LRB093 02897 SJM 02913 b 1 allowed an additional credit equal to .5% of the basis of 2 qualified property placed in service during the taxable 3 year, provided such property is placed in service on or 4 after July 1, 1986, and the taxpayer's base employment 5 within Illinois has increased by 1% or more over the 6 preceding year as determined by the taxpayer's employment 7 records filed with the Illinois Department of Employment 8 Security. Taxpayers who are new to Illinois shall be 9 deemed to have met the 1% growth in base employment for 10 the first year in which they file employment records with 11 the Illinois Department of Employment Security. The 12 provisions added to this Section by Public Act 85-1200 13 (and restored by Public Act 87-895) shall be construed as 14 declaratory of existing law and not as a new enactment. 15 If, in any year, the increase in base employment within 16 Illinois over the preceding year is less than 1%, the 17 additional credit shall be limited to that percentage 18 times a fraction, the numerator of which is .5% and the 19 denominator of which is 1%, but shall not exceed .5%. 20 The investment credit shall not be allowed to the extent 21 that it would reduce a taxpayer's liability in any tax 22 year below zero, nor may any credit for qualified 23 property be allowed for any year other than the year in 24 which the property was placed in service in Illinois. For 25 tax years ending on or after December 31, 1987, and on or 26 before December 31, 1988, the credit shall be allowed for 27 the tax year in which the property is placed in service, 28 or, if the amount of the credit exceeds the tax liability 29 for that year, whether it exceeds the original liability 30 or the liability as later amended, such excess may be 31 carried forward and applied to the tax liability of the 5 32 taxable years following the excess credit years if the 33 taxpayer (i) makes investments which cause the creation 34 of a minimum of 2,000 full-time equivalent jobs in SB1634 Enrolled -6- LRB093 02897 SJM 02913 b 1 Illinois, (ii) is located in an enterprise zone 2 established pursuant to the Illinois Enterprise Zone Act 3 and (iii) is certified by the Department of Commerce and 4 Community Affairs as complying with the requirements 5 specified in clause (i) and (ii) by July 1, 1986. The 6 Department of Commerce and Community Affairs shall notify 7 the Department of Revenue of all such certifications 8 immediately. For tax years ending after December 31, 9 1988, the credit shall be allowed for the tax year in 10 which the property is placed in service, or, if the 11 amount of the credit exceeds the tax liability for that 12 year, whether it exceeds the original liability or the 13 liability as later amended, such excess may be carried 14 forward and applied to the tax liability of the 5 taxable 15 years following the excess credit years. The credit shall 16 be applied to the earliest year for which there is a 17 liability. If there is credit from more than one tax year 18 that is available to offset a liability, earlier credit 19 shall be applied first. 20 (2) The term "qualified property" means property 21 which: 22 (A) is tangible, whether new or used, 23 including buildings and structural components of 24 buildings and signs that are real property, but not 25 including land or improvements to real property that 26 are not a structural component of a building such as 27 landscaping, sewer lines, local access roads, 28 fencing, parking lots, and other appurtenances; 29 (B) is depreciable pursuant to Section 167 of 30 the Internal Revenue Code, except that "3-year 31 property" as defined in Section 168(c)(2)(A) of that 32 Code is not eligible for the credit provided by this 33 subsection (e); 34 (C) is acquired by purchase as defined in SB1634 Enrolled -7- LRB093 02897 SJM 02913 b 1 Section 179(d) of the Internal Revenue Code; 2 (D) is used in Illinois by a taxpayer who is 3 primarily engaged in manufacturing, or in mining 4 coal or fluorite, or in retailing; and 5 (E) has not previously been used in Illinois 6 in such a manner and by such a person as would 7 qualify for the credit provided by this subsection 8 (e) or subsection (f). 9 (3) For purposes of this subsection (e), 10 "manufacturing" means the material staging and production 11 of tangible personal property by procedures commonly 12 regarded as manufacturing, processing, fabrication, or 13 assembling which changes some existing material into new 14 shapes, new qualities, or new combinations. For purposes 15 of this subsection (e) the term "mining" shall have the 16 same meaning as the term "mining" in Section 613(c) of 17 the Internal Revenue Code. For purposes of this 18 subsection (e), the term "retailing" means the sale of 19 tangible personal property or services rendered in 20 conjunction with the sale of tangible consumer goods or 21 commodities. 22 (4) The basis of qualified property shall be the 23 basis used to compute the depreciation deduction for 24 federal income tax purposes. 25 (5) If the basis of the property for federal income 26 tax depreciation purposes is increased after it has been 27 placed in service in Illinois by the taxpayer, the amount 28 of such increase shall be deemed property placed in 29 service on the date of such increase in basis. 30 (6) The term "placed in service" shall have the 31 same meaning as under Section 46 of the Internal Revenue 32 Code. 33 (7) If during any taxable year, any property ceases 34 to be qualified property in the hands of the taxpayer SB1634 Enrolled -8- LRB093 02897 SJM 02913 b 1 within 48 months after being placed in service, or the 2 situs of any qualified property is moved outside Illinois 3 within 48 months after being placed in service, the 4 Personal Property Tax Replacement Income Tax for such 5 taxable year shall be increased. Such increase shall be 6 determined by (i) recomputing the investment credit which 7 would have been allowed for the year in which credit for 8 such property was originally allowed by eliminating such 9 property from such computation and, (ii) subtracting such 10 recomputed credit from the amount of credit previously 11 allowed. For the purposes of this paragraph (7), a 12 reduction of the basis of qualified property resulting 13 from a redetermination of the purchase price shall be 14 deemed a disposition of qualified property to the extent 15 of such reduction. 16 (8) Unless the investment credit is extended by 17 law, the basis of qualified property shall not include 18 costs incurred after December 31, 2003, except for costs 19 incurred pursuant to a binding contract entered into on 20 or before December 31, 2003. 21 (9) Each taxable year ending before December 31, 22 2000, a partnership may elect to pass through to its 23 partners the credits to which the partnership is entitled 24 under this subsection (e) for the taxable year. A 25 partner may use the credit allocated to him or her under 26 this paragraph only against the tax imposed in 27 subsections (c) and (d) of this Section. If the 28 partnership makes that election, those credits shall be 29 allocated among the partners in the partnership in 30 accordance with the rules set forth in Section 704(b) of 31 the Internal Revenue Code, and the rules promulgated 32 under that Section, and the allocated amount of the 33 credits shall be allowed to the partners for that taxable 34 year. The partnership shall make this election on its SB1634 Enrolled -9- LRB093 02897 SJM 02913 b 1 Personal Property Tax Replacement Income Tax return for 2 that taxable year. The election to pass through the 3 credits shall be irrevocable. 4 For taxable years ending on or after December 31, 5 2000, a partner that qualifies its partnership for a 6 subtraction under subparagraph (I) of paragraph (2) of 7 subsection (d) of Section 203 or a shareholder that 8 qualifies a Subchapter S corporation for a subtraction 9 under subparagraph (S) of paragraph (2) of subsection (b) 10 of Section 203 shall be allowed a credit under this 11 subsection (e) equal to its share of the credit earned 12 under this subsection (e) during the taxable year by the 13 partnership or Subchapter S corporation, determined in 14 accordance with the determination of income and 15 distributive share of income under Sections 702 and 704 16 and Subchapter S of the Internal Revenue Code. This 17 paragraph is exempt from the provisions of Section 250. 18 (f) Investment credit; Enterprise Zone. 19 (1) A taxpayer shall be allowed a credit against 20 the tax imposed by subsections (a) and (b) of this 21 Section for investment in qualified property which is 22 placed in service in an Enterprise Zone created pursuant 23 to the Illinois Enterprise Zone Act. For partners, 24 shareholders of Subchapter S corporations, and owners of 25 limited liability companies, if the liability company is 26 treated as a partnership for purposes of federal and 27 State income taxation, there shall be allowed a credit 28 under this subsection (f) to be determined in accordance 29 with the determination of income and distributive share 30 of income under Sections 702 and 704 and Subchapter S of 31 the Internal Revenue Code. The credit shall be .5% of 32 the basis for such property. The credit shall be 33 available only in the taxable year in which the property 34 is placed in service in the Enterprise Zone and shall not SB1634 Enrolled -10- LRB093 02897 SJM 02913 b 1 be allowed to the extent that it would reduce a 2 taxpayer's liability for the tax imposed by subsections 3 (a) and (b) of this Section to below zero. For tax years 4 ending on or after December 31, 1985, the credit shall be 5 allowed for the tax year in which the property is placed 6 in service, or, if the amount of the credit exceeds the 7 tax liability for that year, whether it exceeds the 8 original liability or the liability as later amended, 9 such excess may be carried forward and applied to the tax 10 liability of the 5 taxable years following the excess 11 credit year. The credit shall be applied to the earliest 12 year for which there is a liability. If there is credit 13 from more than one tax year that is available to offset a 14 liability, the credit accruing first in time shall be 15 applied first. 16 (2) The term qualified property means property 17 which: 18 (A) is tangible, whether new or used, 19 including buildings and structural components of 20 buildings; 21 (B) is depreciable pursuant to Section 167 of 22 the Internal Revenue Code, except that "3-year 23 property" as defined in Section 168(c)(2)(A) of that 24 Code is not eligible for the credit provided by this 25 subsection (f); 26 (C) is acquired by purchase as defined in 27 Section 179(d) of the Internal Revenue Code; 28 (D) is used in the Enterprise Zone by the 29 taxpayer; and 30 (E) has not been previously used in Illinois 31 in such a manner and by such a person as would 32 qualify for the credit provided by this subsection 33 (f) or subsection (e). 34 (3) The basis of qualified property shall be the SB1634 Enrolled -11- LRB093 02897 SJM 02913 b 1 basis used to compute the depreciation deduction for 2 federal income tax purposes. 3 (4) If the basis of the property for federal income 4 tax depreciation purposes is increased after it has been 5 placed in service in the Enterprise Zone by the taxpayer, 6 the amount of such increase shall be deemed property 7 placed in service on the date of such increase in basis. 8 (5) The term "placed in service" shall have the 9 same meaning as under Section 46 of the Internal Revenue 10 Code. 11 (6) If during any taxable year, any property ceases 12 to be qualified property in the hands of the taxpayer 13 within 48 months after being placed in service, or the 14 situs of any qualified property is moved outside the 15 Enterprise Zone within 48 months after being placed in 16 service, the tax imposed under subsections (a) and (b) of 17 this Section for such taxable year shall be increased. 18 Such increase shall be determined by (i) recomputing the 19 investment credit which would have been allowed for the 20 year in which credit for such property was originally 21 allowed by eliminating such property from such 22 computation, and (ii) subtracting such recomputed credit 23 from the amount of credit previously allowed. For the 24 purposes of this paragraph (6), a reduction of the basis 25 of qualified property resulting from a redetermination of 26 the purchase price shall be deemed a disposition of 27 qualified property to the extent of such reduction. 28 (g) Jobs Tax Credit; Enterprise Zone and Foreign Trade 29 Zone or Sub-Zone. 30 (1) A taxpayer conducting a trade or business in an 31 enterprise zone or a High Impact Business designated by 32 the Department of Commerce and Community Affairs 33 conducting a trade or business in a federally designated 34 Foreign Trade Zone or Sub-Zone shall be allowed a credit SB1634 Enrolled -12- LRB093 02897 SJM 02913 b 1 against the tax imposed by subsections (a) and (b) of 2 this Section in the amount of $500 per eligible employee 3 hired to work in the zone during the taxable year. 4 (2) To qualify for the credit: 5 (A) the taxpayer must hire 5 or more eligible 6 employees to work in an enterprise zone or federally 7 designated Foreign Trade Zone or Sub-Zone during the 8 taxable year; 9 (B) the taxpayer's total employment within the 10 enterprise zone or federally designated Foreign 11 Trade Zone or Sub-Zone must increase by 5 or more 12 full-time employees beyond the total employed in 13 that zone at the end of the previous tax year for 14 which a jobs tax credit under this Section was 15 taken, or beyond the total employed by the taxpayer 16 as of December 31, 1985, whichever is later; and 17 (C) the eligible employees must be employed 18 180 consecutive days in order to be deemed hired for 19 purposes of this subsection. 20 (3) An "eligible employee" means an employee who 21 is: 22 (A) Certified by the Department of Commerce 23 and Community Affairs as "eligible for services" 24 pursuant to regulations promulgated in accordance 25 with Title II of the Job Training Partnership Act, 26 Training Services for the Disadvantaged or Title III 27 of the Job Training Partnership Act, Employment and 28 Training Assistance for Dislocated Workers Program. 29 (B) Hired after the enterprise zone or 30 federally designated Foreign Trade Zone or Sub-Zone 31 was designated or the trade or business was located 32 in that zone, whichever is later. 33 (C) Employed in the enterprise zone or Foreign 34 Trade Zone or Sub-Zone. An employee is employed in SB1634 Enrolled -13- LRB093 02897 SJM 02913 b 1 an enterprise zone or federally designated Foreign 2 Trade Zone or Sub-Zone if his services are rendered 3 there or it is the base of operations for the 4 services performed. 5 (D) A full-time employee working 30 or more 6 hours per week. 7 (4) For tax years ending on or after December 31, 8 1985 and prior to December 31, 1988, the credit shall be 9 allowed for the tax year in which the eligible employees 10 are hired. For tax years ending on or after December 31, 11 1988, the credit shall be allowed for the tax year 12 immediately following the tax year in which the eligible 13 employees are hired. If the amount of the credit exceeds 14 the tax liability for that year, whether it exceeds the 15 original liability or the liability as later amended, 16 such excess may be carried forward and applied to the tax 17 liability of the 5 taxable years following the excess 18 credit year. The credit shall be applied to the earliest 19 year for which there is a liability. If there is credit 20 from more than one tax year that is available to offset a 21 liability, earlier credit shall be applied first. 22 (5) The Department of Revenue shall promulgate such 23 rules and regulations as may be deemed necessary to carry 24 out the purposes of this subsection (g). 25 (6) The credit shall be available for eligible 26 employees hired on or after January 1, 1986. 27 (h) Investment credit; High Impact Business. 28 (1) Subject to subsections (b) and (b-5) of Section 29 5.5 of the Illinois Enterprise Zone Act, a taxpayer shall 30 be allowed a credit against the tax imposed by 31 subsections (a) and (b) of this Section for investment in 32 qualified property which is placed in service by a 33 Department of Commerce and Community Affairs designated 34 High Impact Business. The credit shall be .5% of the SB1634 Enrolled -14- LRB093 02897 SJM 02913 b 1 basis for such property. The credit shall not be 2 available (i) until the minimum investments in qualified 3 property set forth in subdivision (a)(3)(A) of Section 4 5.5 of the Illinois Enterprise Zone Act have been 5 satisfied or (ii) until the time authorized in subsection 6 (b-5) of the Illinois Enterprise Zone Act for entities 7 designated as High Impact Businesses under subdivisions 8 (a)(3)(B), (a)(3)(C), and (a)(3)(D) of Section 5.5 of the 9 Illinois Enterprise Zone Act, and shall not be allowed to 10 the extent that it would reduce a taxpayer's liability 11 for the tax imposed by subsections (a) and (b) of this 12 Section to below zero. The credit applicable to such 13 investments shall be taken in the taxable year in which 14 such investments have been completed. The credit for 15 additional investments beyond the minimum investment by a 16 designated high impact business authorized under 17 subdivision (a)(3)(A) of Section 5.5 of the Illinois 18 Enterprise Zone Act shall be available only in the 19 taxable year in which the property is placed in service 20 and shall not be allowed to the extent that it would 21 reduce a taxpayer's liability for the tax imposed by 22 subsections (a) and (b) of this Section to below zero. 23 For tax years ending on or after December 31, 1987, the 24 credit shall be allowed for the tax year in which the 25 property is placed in service, or, if the amount of the 26 credit exceeds the tax liability for that year, whether 27 it exceeds the original liability or the liability as 28 later amended, such excess may be carried forward and 29 applied to the tax liability of the 5 taxable years 30 following the excess credit year. The credit shall be 31 applied to the earliest year for which there is a 32 liability. If there is credit from more than one tax 33 year that is available to offset a liability, the credit 34 accruing first in time shall be applied first. SB1634 Enrolled -15- LRB093 02897 SJM 02913 b 1 Changes made in this subdivision (h)(1) by Public 2 Act 88-670 restore changes made by Public Act 85-1182 and 3 reflect existing law. 4 (2) The term qualified property means property 5 which: 6 (A) is tangible, whether new or used, 7 including buildings and structural components of 8 buildings; 9 (B) is depreciable pursuant to Section 167 of 10 the Internal Revenue Code, except that "3-year 11 property" as defined in Section 168(c)(2)(A) of that 12 Code is not eligible for the credit provided by this 13 subsection (h); 14 (C) is acquired by purchase as defined in 15 Section 179(d) of the Internal Revenue Code; and 16 (D) is not eligible for the Enterprise Zone 17 Investment Credit provided by subsection (f) of this 18 Section. 19 (3) The basis of qualified property shall be the 20 basis used to compute the depreciation deduction for 21 federal income tax purposes. 22 (4) If the basis of the property for federal income 23 tax depreciation purposes is increased after it has been 24 placed in service in a federally designated Foreign Trade 25 Zone or Sub-Zone located in Illinois by the taxpayer, the 26 amount of such increase shall be deemed property placed 27 in service on the date of such increase in basis. 28 (5) The term "placed in service" shall have the 29 same meaning as under Section 46 of the Internal Revenue 30 Code. 31 (6) If during any taxable year ending on or before 32 December 31, 1996, any property ceases to be qualified 33 property in the hands of the taxpayer within 48 months 34 after being placed in service, or the situs of any SB1634 Enrolled -16- LRB093 02897 SJM 02913 b 1 qualified property is moved outside Illinois within 48 2 months after being placed in service, the tax imposed 3 under subsections (a) and (b) of this Section for such 4 taxable year shall be increased. Such increase shall be 5 determined by (i) recomputing the investment credit which 6 would have been allowed for the year in which credit for 7 such property was originally allowed by eliminating such 8 property from such computation, and (ii) subtracting such 9 recomputed credit from the amount of credit previously 10 allowed. For the purposes of this paragraph (6), a 11 reduction of the basis of qualified property resulting 12 from a redetermination of the purchase price shall be 13 deemed a disposition of qualified property to the extent 14 of such reduction. 15 (7) Beginning with tax years ending after December 16 31, 1996, if a taxpayer qualifies for the credit under 17 this subsection (h) and thereby is granted a tax 18 abatement and the taxpayer relocates its entire facility 19 in violation of the explicit terms and length of the 20 contract under Section 18-183 of the Property Tax Code, 21 the tax imposed under subsections (a) and (b) of this 22 Section shall be increased for the taxable year in which 23 the taxpayer relocated its facility by an amount equal to 24 the amount of credit received by the taxpayer under this 25 subsection (h). 26 (i) Credit for Personal Property Tax Replacement Income 27 Tax. For tax years ending prior to December 31, 2003, a 28 credit shall be allowed against the tax imposed by 29 subsections (a) and (b) of this Section for the tax imposed 30 by subsections (c) and (d) of this Section. This credit 31 shall be computed by multiplying the tax imposed by 32 subsections (c) and (d) of this Section by a fraction, the 33 numerator of which is base income allocable to Illinois and 34 the denominator of which is Illinois base income, and further SB1634 Enrolled -17- LRB093 02897 SJM 02913 b 1 multiplying the product by the tax rate imposed by 2 subsections (a) and (b) of this Section. 3 Any credit earned on or after December 31, 1986 under 4 this subsection which is unused in the year the credit is 5 computed because it exceeds the tax liability imposed by 6 subsections (a) and (b) for that year (whether it exceeds the 7 original liability or the liability as later amended) may be 8 carried forward and applied to the tax liability imposed by 9 subsections (a) and (b) of the 5 taxable years following the 10 excess credit year, provided that no credit may be carried 11 forward to any year ending on or after December 31, 2003. 12 This credit shall be applied first to the earliest year for 13 which there is a liability. If there is a credit under this 14 subsection from more than one tax year that is available to 15 offset a liability the earliest credit arising under this 16 subsection shall be applied first. 17 If, during any taxable year ending on or after December 18 31, 1986, the tax imposed by subsections (c) and (d) of this 19 Section for which a taxpayer has claimed a credit under this 20 subsection (i) is reduced, the amount of credit for such tax 21 shall also be reduced. Such reduction shall be determined by 22 recomputing the credit to take into account the reduced tax 23 imposed by subsections (c) and (d). If any portion of the 24 reduced amount of credit has been carried to a different 25 taxable year, an amended return shall be filed for such 26 taxable year to reduce the amount of credit claimed. 27 (j) Training expense credit. Beginning with tax years 28 ending on or after December 31, 1986 and prior to December 29 31, 2003, a taxpayer shall be allowed a credit against the 30 tax imposed by subsections (a) and (b) under this Section for 31 all amounts paid or accrued, on behalf of all persons 32 employed by the taxpayer in Illinois or Illinois residents 33 employed outside of Illinois by a taxpayer, for educational 34 or vocational training in semi-technical or technical fields SB1634 Enrolled -18- LRB093 02897 SJM 02913 b 1 or semi-skilled or skilled fields, which were deducted from 2 gross income in the computation of taxable income. The 3 credit against the tax imposed by subsections (a) and (b) 4 shall be 1.6% of such training expenses. For partners, 5 shareholders of subchapter S corporations, and owners of 6 limited liability companies, if the liability company is 7 treated as a partnership for purposes of federal and State 8 income taxation, there shall be allowed a credit under this 9 subsection (j) to be determined in accordance with the 10 determination of income and distributive share of income 11 under Sections 702 and 704 and subchapter S of the Internal 12 Revenue Code. 13 Any credit allowed under this subsection which is unused 14 in the year the credit is earned may be carried forward to 15 each of the 5 taxable years following the year for which the 16 credit is first computed until it is used. This credit shall 17 be applied first to the earliest year for which there is a 18 liability. If there is a credit under this subsection from 19 more than one tax year that is available to offset a 20 liability the earliest credit arising under this subsection 21 shall be applied first. No carryforward credit may be 22 claimed in any tax year ending on or after December 31, 2003. 23 (k) Research and development credit. 24 ForBeginning withtax years ending after July 1, 1990 25 and prior to December 31, 2003, a taxpayer shall be allowed a 26 credit against the tax imposed by subsections (a) and (b) of 27 this Section for increasing research activities in this 28 State. The credit allowed against the tax imposed by 29 subsections (a) and (b) shall be equal to 6 1/2% of the 30 qualifying expenditures for increasing research activities in 31 this State. For partners, shareholders of subchapter S 32 corporations, and owners of limited liability companies, if 33 the liability company is treated as a partnership for 34 purposes of federal and State income taxation, there shall be SB1634 Enrolled -19- LRB093 02897 SJM 02913 b 1 allowed a credit under this subsection to be determined in 2 accordance with the determination of income and distributive 3 share of income under Sections 702 and 704 and subchapter S 4 of the Internal Revenue Code. 5 For purposes of this subsection, "qualifying 6 expenditures" means the qualifying expenditures as defined 7 for the federal credit for increasing research activities 8 which would be allowable under Section 41 of the Internal 9 Revenue Code and which are conducted in this State, 10 "qualifying expenditures for increasing research activities 11 in this State" means the excess of qualifying expenditures 12 for the taxable year in which incurred over qualifying 13 expenditures for the base period, "qualifying expenditures 14 for the base period" means the average of the qualifying 15 expenditures for each year in the base period, and "base 16 period" means the 3 taxable years immediately preceding the 17 taxable year for which the determination is being made. 18 Any credit in excess of the tax liability for the taxable 19 year may be carried forward. A taxpayer may elect to have the 20 unused credit shown on its final completed return carried 21 over as a credit against the tax liability for the following 22 5 taxable years or until it has been fully used, whichever 23 occurs first; provided that no credit may be carried forward 24 to any year ending on or after December 31, 2003. 25 If an unused credit is carried forward to a given year 26 from 2 or more earlier years, that credit arising in the 27 earliest year will be applied first against the tax liability 28 for the given year. If a tax liability for the given year 29 still remains, the credit from the next earliest year will 30 then be applied, and so on, until all credits have been used 31 or no tax liability for the given year remains. Any 32 remaining unused credit or credits then will be carried 33 forward to the next following year in which a tax liability 34 is incurred, except that no credit can be carried forward to SB1634 Enrolled -20- LRB093 02897 SJM 02913 b 1 a year which is more than 5 years after the year in which the 2 expense for which the credit is given was incurred. 3Unless extended by law, the credit shall not include4costs incurred after December 31, 2004, except for costs5incurred pursuant to a binding contract entered into on or6before December 31, 2004.7 No inference shall be drawn from this amendatory Act of 8 the 91st General Assembly in construing this Section for 9 taxable years beginning before January 1, 1999. 10 (l) Environmental Remediation Tax Credit. 11 (i) For tax years ending after December 31, 1997 12 and on or before December 31, 2001, a taxpayer shall be 13 allowed a credit against the tax imposed by subsections 14 (a) and (b) of this Section for certain amounts paid for 15 unreimbursed eligible remediation costs, as specified in 16 this subsection. For purposes of this Section, 17 "unreimbursed eligible remediation costs" means costs 18 approved by the Illinois Environmental Protection Agency 19 ("Agency") under Section 58.14 of the Environmental 20 Protection Act that were paid in performing environmental 21 remediation at a site for which a No Further Remediation 22 Letter was issued by the Agency and recorded under 23 Section 58.10 of the Environmental Protection Act. The 24 credit must be claimed for the taxable year in which 25 Agency approval of the eligible remediation costs is 26 granted. The credit is not available to any taxpayer if 27 the taxpayer or any related party caused or contributed 28 to, in any material respect, a release of regulated 29 substances on, in, or under the site that was identified 30 and addressed by the remedial action pursuant to the Site 31 Remediation Program of the Environmental Protection Act. 32 After the Pollution Control Board rules are adopted 33 pursuant to the Illinois Administrative Procedure Act for 34 the administration and enforcement of Section 58.9 of the SB1634 Enrolled -21- LRB093 02897 SJM 02913 b 1 Environmental Protection Act, determinations as to credit 2 availability for purposes of this Section shall be made 3 consistent with those rules. For purposes of this 4 Section, "taxpayer" includes a person whose tax 5 attributes the taxpayer has succeeded to under Section 6 381 of the Internal Revenue Code and "related party" 7 includes the persons disallowed a deduction for losses by 8 paragraphs (b), (c), and (f)(1) of Section 267 of the 9 Internal Revenue Code by virtue of being a related 10 taxpayer, as well as any of its partners. The credit 11 allowed against the tax imposed by subsections (a) and 12 (b) shall be equal to 25% of the unreimbursed eligible 13 remediation costs in excess of $100,000 per site, except 14 that the $100,000 threshold shall not apply to any site 15 contained in an enterprise zone as determined by the 16 Department of Commerce and Community Affairs. The total 17 credit allowed shall not exceed $40,000 per year with a 18 maximum total of $150,000 per site. For partners and 19 shareholders of subchapter S corporations, there shall be 20 allowed a credit under this subsection to be determined 21 in accordance with the determination of income and 22 distributive share of income under Sections 702 and 704 23 and subchapter S of the Internal Revenue Code. 24 (ii) A credit allowed under this subsection that is 25 unused in the year the credit is earned may be carried 26 forward to each of the 5 taxable years following the year 27 for which the credit is first earned until it is used. 28 The term "unused credit" does not include any amounts of 29 unreimbursed eligible remediation costs in excess of the 30 maximum credit per site authorized under paragraph (i). 31 This credit shall be applied first to the earliest year 32 for which there is a liability. If there is a credit 33 under this subsection from more than one tax year that is 34 available to offset a liability, the earliest credit SB1634 Enrolled -22- LRB093 02897 SJM 02913 b 1 arising under this subsection shall be applied first. A 2 credit allowed under this subsection may be sold to a 3 buyer as part of a sale of all or part of the remediation 4 site for which the credit was granted. The purchaser of 5 a remediation site and the tax credit shall succeed to 6 the unused credit and remaining carry-forward period of 7 the seller. To perfect the transfer, the assignor shall 8 record the transfer in the chain of title for the site 9 and provide written notice to the Director of the 10 Illinois Department of Revenue of the assignor's intent 11 to sell the remediation site and the amount of the tax 12 credit to be transferred as a portion of the sale. In no 13 event may a credit be transferred to any taxpayer if the 14 taxpayer or a related party would not be eligible under 15 the provisions of subsection (i). 16 (iii) For purposes of this Section, the term "site" 17 shall have the same meaning as under Section 58.2 of the 18 Environmental Protection Act. 19 (m) Education expense credit. Beginning with tax years 20 ending after December 31, 1999, a taxpayer who is the 21 custodian of one or more qualifying pupils shall be allowed a 22 credit against the tax imposed by subsections (a) and (b) of 23 this Section for qualified education expenses incurred on 24 behalf of the qualifying pupils. The credit shall be equal 25 to 25% of qualified education expenses, but in no event may 26 the total credit under this subsection claimed by a family 27 that is the custodian of qualifying pupils exceed $500. In 28 no event shall a credit under this subsection reduce the 29 taxpayer's liability under this Act to less than zero. This 30 subsection is exempt from the provisions of Section 250 of 31 this Act. 32 For purposes of this subsection: 33 "Qualifying pupils" means individuals who (i) are 34 residents of the State of Illinois, (ii) are under the age of SB1634 Enrolled -23- LRB093 02897 SJM 02913 b 1 21 at the close of the school year for which a credit is 2 sought, and (iii) during the school year for which a credit 3 is sought were full-time pupils enrolled in a kindergarten 4 through twelfth grade education program at any school, as 5 defined in this subsection. 6 "Qualified education expense" means the amount incurred 7 on behalf of a qualifying pupil in excess of $250 for 8 tuition, book fees, and lab fees at the school in which the 9 pupil is enrolled during the regular school year. 10 "School" means any public or nonpublic elementary or 11 secondary school in Illinois that is in compliance with Title 12 VI of the Civil Rights Act of 1964 and attendance at which 13 satisfies the requirements of Section 26-1 of the School 14 Code, except that nothing shall be construed to require a 15 child to attend any particular public or nonpublic school to 16 qualify for the credit under this Section. 17 "Custodian" means, with respect to qualifying pupils, an 18 Illinois resident who is a parent, the parents, a legal 19 guardian, or the legal guardians of the qualifying pupils. 20 (Source: P.A. 91-9, eff. 1-1-00; 91-357, eff. 7-29-99; 21 91-643, eff. 8-20-99; 91-644, eff. 8-20-99; 91-860, eff. 22 6-22-00; 91-913, eff. 1-1-01; 92-12, eff. 7-1-01; 92-16, eff. 23 6-28-01; 92-651, eff. 7-11-02; 92-846, eff. 8-23-02.) 24 (35 ILCS 5/204) (from Ch. 120, par. 2-204) 25 Sec. 204. Standard Exemption. 26 (a) Allowance of exemption. In computing net income 27 under this Act, there shall be allowed as an exemption the 28 sum of the amounts determined under subsections (b), (c) and 29 (d), multiplied by a fraction the numerator of which is the 30 amount of the taxpayer's base income allocable to this State 31 for the taxable year and the denominator of which is the 32 taxpayer's total base income for the taxable year. 33 (b) Basic amount. For the purpose of subsection (a) of SB1634 Enrolled -24- LRB093 02897 SJM 02913 b 1 this Section, except as provided by subsection (a) of Section 2 205 and in this subsection, each taxpayer shall be allowed a 3 basic amount of $1000, except that for corporations the basic 4 amount shall be zero for tax years ending on or after 5 December 31, 2003, and for individuals the basic amount shall 6 be: 7 (1) for taxable years ending on or after December 8 31, 1998 and prior to December 31, 1999, $1,300; 9 (2) for taxable years ending on or after December 10 31, 1999 and prior to December 31, 2000, $1,650; 11 (3) for taxable years ending on or after December 12 31, 2000, $2,000. 13 For taxable years ending on or after December 31, 1992, a 14 taxpayer whose Illinois base income exceeds the basic amount 15 and who is claimed as a dependent on another person's tax 16 return under the Internal Revenue Code of 1986 shall not be 17 allowed any basic amount under this subsection. 18 (c) Additional amount for individuals. In the case of an 19 individual taxpayer, there shall be allowed for the purpose 20 of subsection (a), in addition to the basic amount provided 21 by subsection (b), an additional exemption equal to the basic 22 amount for each exemption in excess of one allowable to such 23 individual taxpayer for the taxable year under Section 151 of 24 the Internal Revenue Code. 25 (d) Additional exemptions for an individual taxpayer and 26 his or her spouse. In the case of an individual taxpayer and 27 his or her spouse, he or she shall each be allowed additional 28 exemptions as follows: 29 (1) Additional exemption for taxpayer or spouse 65 30 years of age or older. 31 (A) For taxpayer. An additional exemption of 32 $1,000 for the taxpayer if he or she has attained 33 the age of 65 before the end of the taxable year. 34 (B) For spouse when a joint return is not SB1634 Enrolled -25- LRB093 02897 SJM 02913 b 1 filed. An additional exemption of $1,000 for the 2 spouse of the taxpayer if a joint return is not made 3 by the taxpayer and his spouse, and if the spouse 4 has attained the age of 65 before the end of such 5 taxable year, and, for the calendar year in which 6 the taxable year of the taxpayer begins, has no 7 gross income and is not the dependent of another 8 taxpayer. 9 (2) Additional exemption for blindness of taxpayer 10 or spouse. 11 (A) For taxpayer. An additional exemption of 12 $1,000 for the taxpayer if he or she is blind at the 13 end of the taxable year. 14 (B) For spouse when a joint return is not 15 filed. An additional exemption of $1,000 for the 16 spouse of the taxpayer if a separate return is made 17 by the taxpayer, and if the spouse is blind and, for 18 the calendar year in which the taxable year of the 19 taxpayer begins, has no gross income and is not the 20 dependent of another taxpayer. For purposes of this 21 paragraph, the determination of whether the spouse 22 is blind shall be made as of the end of the taxable 23 year of the taxpayer; except that if the spouse dies 24 during such taxable year such determination shall be 25 made as of the time of such death. 26 (C) Blindness defined. For purposes of this 27 subsection, an individual is blind only if his or 28 her central visual acuity does not exceed 20/200 in 29 the better eye with correcting lenses, or if his or 30 her visual acuity is greater than 20/200 but is 31 accompanied by a limitation in the fields of vision 32 such that the widest diameter of the visual fields 33 subtends an angle no greater than 20 degrees. 34 (e) Cross reference. See Article 3 for the manner of SB1634 Enrolled -26- LRB093 02897 SJM 02913 b 1 determining base income allocable to this State. 2 (f) Application of Section 250. Section 250 does not 3 apply to the amendments to this Section made by Public Act 4 90-613. 5 (Source: P.A. 90-613, eff. 7-9-98; 91-357, eff. 7-29-99.) 6 (35 ILCS 5/207) (from Ch. 120, par. 2-207) 7 Sec. 207. Net Losses. 8 (a) If after applying all of the modifications provided 9 for in paragraph (2) of Section 203(b), paragraph (2) of 10 Section 203(c) and paragraph (2) of Section 203(d) and the 11 allocation and apportionment provisions of Article 3 of this 12 Act, the taxpayer's net income results in a loss; 13 (1) for any taxable year ending prior to December 14 31, 1999, such loss shall be allowed as a carryover or 15 carryback deduction in the manner allowed under Section 16 172 of the Internal Revenue Code;and17 (2) for any taxable year ending on or after 18 December 31, 1999 and prior to December 31, 2003, such 19 loss shall be allowed as a carryback to each of the 2 20 taxable years preceding the taxable year of such loss and 21 shall be a net operating carryover to each of the 20 22 taxable years following the taxable year of such loss; 23 and 24 (3) for any taxable year ending on or after 25 December 31, 2003, such loss shall be allowed as a net 26 operating carryover to each of the 12 taxable years 27 following the taxable year of such loss. 28 (a-5) Election to relinquish carryback and order of 29 application of losses. 30 (A) For losses incurred in tax years ending 31 prior to December 31, 2003, the taxpayer may elect 32 to relinquish the entire carryback period with 33 respect to such loss. Such election shall be made SB1634 Enrolled -27- LRB093 02897 SJM 02913 b 1 in the form and manner prescribed by the Department 2 and shall be made by the due date (including 3 extensions of time) for filing the taxpayer's return 4 for the taxable year in which such loss is incurred, 5 and such election, once made, shall be irrevocable. 6 (B) The entire amount of such loss shall be 7 carried to the earliest taxable year to which such 8 loss may be carried. The amount of such loss which 9 shall be carried to each of the other taxable years 10 shall be the excess, if any, of the amount of such 11 loss over the sum of the deductions for carryback or 12 carryover of such loss allowable for each of the 13 prior taxable years to which such loss may be 14 carried. 15 (b) Any loss determined under subsection (a) of this 16 Section must be carried back or carried forward in the same 17 manner for purposes of subsections (a) and (b) of Section 201 18 of this Act as for purposes of subsections (c) and (d) of 19 Section 201 of this Act. 20 (Source: P.A. 91-541, eff. 8-13-99.) 21 Section 10. The Illinois Insurance Code is amended by 22 changing Sections 445 and 531.13 as follows: 23 (215 ILCS 5/445) (from Ch. 73, par. 1057) 24 Sec. 445. Surplus line. 25 (1) Surplus line defined; surplus line insurer 26 requirements. Surplus line insurance is insurance on an 27 Illinois risk of the kinds specified in Classes 2 and 3 of 28 Section 4 of this Code procured from an unauthorized insurer 29 or a domestic surplus line insurer as defined in Section 445a 30 after the insurance producer representing the insured or the 31 surplus line producer is unable, after diligent effort, to 32 procure said insurance from insurers which are authorized to SB1634 Enrolled -28- LRB093 02897 SJM 02913 b 1 transact business in this State other than domestic surplus 2 line insurers as defined in Section 445a. 3 Insurance producers may procure surplus line insurance 4 only if licensed as a surplus line producer under this 5 Section and may procure that insurance only from an 6 unauthorized insurer or from a domestic surplus line insurer 7 as defined in Section 445a: 8 (a) that based upon information available to the 9 surplus line producer has a policyholders surplus of not 10 less than $15,000,000 determined in accordance with 11 accounting rules that are applicable to authorized 12 insurers; and 13 (b) that has standards of solvency and management 14 that are adequate for the protection of policyholders; 15 and 16 (c) where an unauthorized insurer does not meet the 17 standards set forth in (a) and (b) above, a surplus line 18 producer may, if necessary, procure insurance from that 19 insurer only if prior written warning of such fact or 20 condition is given to the insured by the insurance 21 producer or surplus line producer. 22 (2) Surplus line producer; license. Any licensed 23 producer who is a resident of this State, or any nonresident 24 who qualifies under Section 500-40, may be licensed as a 25 surplus line producer upon: 26 (a) completing a prelicensing course of study. The 27 course provided for by this Section shall be conducted 28 under rules and regulations prescribed by the Director. 29 The Director may administer the course or may make 30 arrangements, including contracting with an outside 31 educational service, for administering the course and 32 collecting the non-refundable application fee provided 33 for in this subsection. Any charges assessed by the 34 Director or the educational service for administering the SB1634 Enrolled -29- LRB093 02897 SJM 02913 b 1 course shall be paid directly by the individual 2 applicants. Each applicant required to take the course 3 shall enclose with the application a non-refundable $10 4 application fee payable to the Director plus a separate 5 course administration fee. An applicant who fails to 6 appear for the course as scheduled, or appears but fails 7 to complete the course, shall not be entitled to any 8 refund, and shall be required to submit a new request to 9 attend the course together with all the requisite fees 10 before being rescheduled for another course at a later 11 date; and 12 (b) payment of an annual license fee of $200; and 13 (c) procurement of the surety bond required in 14 subsection (4) of this Section. 15 A surplus line producer so licensed shall keep a separate 16 account of the business transacted thereunder which shall be 17 open at all times to the inspection of the Director or his 18 representative. 19 The prelicensing course of study requirement in (a) above 20 shall not apply to insurance producers who were licensed 21 under the Illinois surplus line law on or before the 22 effective date of this amendatory Act of the 92nd General 23 Assembly. 24 (3) Taxes and reports. 25 (a) Surplus line tax and penalty for late payment. 26 A surplus line producer shall file with the Director 27 on or before February 1 and August 1 of each year a 28 report in the form prescribed by the Director on all 29 surplus line insurance procured from unauthorized 30 insurers during the preceding 6 month period ending 31 December 31 or June 30 respectively, and on the filing of 32 such report shall pay to the Director for the use and 33 benefit of the State a sum equal to 3.5%3%of the gross 34 premiums less returned premiums upon all surplus line SB1634 Enrolled -30- LRB093 02897 SJM 02913 b 1 insurance procured or cancelled during the preceding 6 2 months. 3 Any surplus line producer who fails to pay the full 4 amount due under this subsection is liable, in addition 5 to the amount due, for such penalty and interest charges 6 as are provided for under Section 412 of this Code. The 7 Director, through the Attorney General, may institute an 8 action in the name of the People of the State of 9 Illinois, in any court of competent jurisdiction, for the 10 recovery of the amount of such taxes and penalties due, 11 and prosecute the same to final judgment, and take such 12 steps as are necessary to collect the same. 13 (b) Fire Marshal Tax. 14 Each surplus line producer shall file with the 15 Director on or before March 31 of each year a report in 16 the form prescribed by the Director on all fire insurance 17 procured from unauthorized insurers subject to tax under 18 Section 12 of the Fire Investigation Act and shall pay to 19 the Director the fire marshal tax required thereunder. 20 (c) Taxes and fees charged to insured. The taxes 21 imposed under this subsection and the countersigning fees 22 charged by the Surplus Line Association of Illinois may 23 be charged to and collected from surplus line insureds. 24 (4) Bond. Each surplus line producer, as a condition to 25 receiving a surplus line producer's license, shall execute 26 and deliver to the Director a surety bond to the People of 27 the State in the penal sum of $20,000, with a surety which is 28 authorized to transact business in this State, conditioned 29 that the surplus line producer will pay to the Director the 30 tax, interest and penalties levied under subsection (3) of 31 this Section. 32 (5) Submission of documents to Surplus Line Association 33 of Illinois. A surplus line producer shall submit every 34 insurance contract issued under his or her license to the SB1634 Enrolled -31- LRB093 02897 SJM 02913 b 1 Surplus Line Association of Illinois for recording and 2 countersignature. The submission and countersignature may be 3 effected through electronic means. The submission shall set 4 forth: 5 (a) the name of the insured; 6 (b) the description and location of the insured 7 property or risk; 8 (c) the amount insured; 9 (d) the gross premiums charged or returned; 10 (e) the name of the unauthorized insurer or 11 domestic surplus line insurer as defined in Section 445a 12 from whom coverage has been procured; 13 (f) the kind or kinds of insurance procured; and 14 (g) amount of premium subject to tax required by 15 Section 12 of the Fire Investigation Act. 16 Proposals, endorsements, and other documents which 17 are incidental to the insurance but which do not affect 18 the premium charged are exempted from filing and 19 countersignature. 20 The submission of insuring contracts to the Surplus 21 Line Association of Illinois constitutes a certification 22 by the surplus line producer or by the insurance producer 23 who presented the risk to the surplus line producer for 24 placement as a surplus line risk that after diligent 25 effort the required insurance could not be procured from 26 insurers which are authorized to transact business in 27 this State other than domestic surplus line insurers as 28 defined in Section 445a and that such procurement was 29 otherwise in accordance with the surplus line law. 30 (6) Countersignature required. It shall be unlawful for 31 an insurance producer to deliver any unauthorized insurer 32 contract or domestic surplus line insurer contract unless 33 such insurance contract is countersigned by the Surplus Line 34 Association of Illinois. SB1634 Enrolled -32- LRB093 02897 SJM 02913 b 1 (7) Inspection of records. A surplus line producer 2 shall maintain separate records of the business transacted 3 under his or her license, including complete copies of 4 surplus line insurance contracts maintained on paper or by 5 electronic means, which records shall be open at all times 6 for inspection by the Director and by the Surplus Line 7 Association of Illinois. 8 (8) Violations and penalties. The Director may suspend 9 or revoke or refuse to renew a surplus line producer license 10 for any violation of this Code. In addition to or in lieu of 11 suspension or revocation, the Director may subject a surplus 12 line producer to a civil penalty of up to $1,000 for each 13 cause for suspension or revocation. Such penalty is 14 enforceable under subsection (5) of Section 403A of this 15 Code. 16 (9) Director may declare insurer ineligible. If the 17 Director determines that the further assumption of risks 18 might be hazardous to the policyholders of an unauthorized 19 insurer, the Director may order the Surplus Line Association 20 of Illinois not to countersign insurance contracts evidencing 21 insurance in such insurer and order surplus line producers to 22 cease procuring insurance from such insurer. 23 (10) Service of process upon Director. Insurance 24 contracts delivered under this Section from unauthorized 25 insurers shall contain a provision designating the Director 26 and his successors in office the true and lawful attorney of 27 the insurer upon whom may be served all lawful process in any 28 action, suit or proceeding arising out of such insurance. 29 Service of process made upon the Director to be valid 30 hereunder must state the name of the insured, the name of the 31 unauthorized insurer and identify the contract of insurance. 32 The Director at his option is authorized to forward a copy of 33 the process to the Surplus Line Association of Illinois for 34 delivery to the unauthorized insurer or the Director may SB1634 Enrolled -33- LRB093 02897 SJM 02913 b 1 deliver the process to the unauthorized insurer by other 2 means which he considers to be reasonably prompt and certain. 3 (11) The Illinois Surplus Line law does not apply to 4 insurance of property and operations of railroads or aircraft 5 engaged in interstate or foreign commerce, insurance of 6 vessels, crafts or hulls, cargoes, marine builder's risks, 7 marine protection and indemnity, or other risks including 8 strikes and war risks insured under ocean or wet marine forms 9 of policies. 10 (12) Surplus line insurance procured under this Section, 11 including insurance procured from a domestic surplus line 12 insurer, is not subject to the provisions of the Illinois 13 Insurance Code other than Sections 123, 123.1, 401, 401.1, 14 402, 403, 403A, 408, 412, 445, 445.1, 445.2, 445.3, 445.4, 15 and all of the provisions of Article XXXI to the extent that 16 the provisions of Article XXXI are not inconsistent with the 17 terms of this Act. 18 (Source: P.A. 92-386, eff. 1-1-02.) 19 (215 ILCS 5/531.13) (from Ch. 73, par. 1065.80-13) 20 Sec. 531.13. Tax offset. In the event the aggregate 21 Class A, B and C assessments for all member insurers do not 22 exceed $3,000,000 in any one calendar year, no member insurer 23 shall receive a tax offset. However, for any one calendar 24 year before 1998 in which the total of such assessments 25 exceeds $3,000,000, the amount in excess of $3,000,000 shall 26 be subject to a tax offset to the extent of 20% of the amount 27 of such assessment for each of the 5 calendar years following 28 the year in which such assessment was paid, and ending prior 29 to January 1, 2003, and each member insurer may offset the 30 proportionate amount of such excess paid by the insurer 31 against its liabilities for the tax imposed by subsections 32 (a) and (b) of Section 201 of the Illinois Income Tax Act. 33 The provisions of this Section shall expire and be given no SB1634 Enrolled -34- LRB093 02897 SJM 02913 b 1 effect for any tax period commencing on and after January 1, 2 2003. 3 (Source: P.A. 90-583, eff. 5-29-98.) 4 Section 15. The Health Maintenance Organization Act is 5 amended by changing Section 6-13 as follows: 6 (215 ILCS 125/6-13) (from Ch. 111 1/2, par. 1418.13) 7 Sec. 6-13. Tax offset. In the event the aggregate Class 8 A and B assessments for all member organizations do not 9 exceed $3,000,000 in any one calendar year, no member 10 organization shall receive a tax offset. However, in any one 11 calendar year in which the total of such assessments exceeds 12 $3,000,000, the amount in excess of $3,000,000 shall be 13 subject to a tax offset to the extent of 20% of the amount of 14 such assessment for each of the five calendar years following 15 the year in which such assessment was paid, and ending prior 16 to January 1, 2003, and each member organization may offset 17 the proportionate amount of such excess paid by the 18 organization against its liabilities for the tax imposed by 19 subsections (a) and (b) of Section 201 of the Illinois Income 20 Tax Act. The provisions of this Section shall expire and be 21 given no effect on and after January 1, 2004. 22 (Source: P.A. 85-20.) 23 Section 99. Effective date. This Act takes effect upon 24 becoming law.