HB4454eng 95TH GENERAL ASSEMBLY

HB4454 Engrossed LRB095 16946 BDD 42991 b

AN ACT concerning revenue.

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

Section 5. The Illinois Income Tax Act is amended by changing Section 404 as follows:

(35 ILCS 5/404) (from Ch. 120, par. 4-404)

Sec. 404. Reallocation of Items.

(a) If it appears to the Director determines that any agreement, understanding or arrangement exists between any persons which causes any person's base income allocable to this State to be improperly or inaccurately reflected, the Director may adjust such items of income and deduction, and any related apportionment factor taken into account in allocating that income to this State, to such extent as may reasonably be required to determine the base income of such person properly allocable to this State.

(b) Unless the principal purpose of the agreement, understanding, or arrangement is for the avoidance of a tax on or measured by net income imposed by any State, any adjustment under this Section must be made in accordance with Section 482 of the Internal Revenue Code, as amended, and any applicable federal regulations. For any taxable year, unless established by a preponderance of the evidence to the contrary, an agreement, understanding, or arrangement for the principal purpose of avoidance of a tax on or measured by net income imposed by any State is presumed to exist between one or more members of a unitary business group and a person who would be a member of that unitary business group if not for the prohibitions in item (27) of subsection (a) of Section 1501 of this Act against including in a unitary business group persons who apportion their business incomes under different subsections of Section 304 of this Act or against inclusion in any unitary business group of a person who conducts 80% or more of his or her business activity outside the United States, if that excluded person:

(1) has de minimis real or tangible personal property or payroll for the taxable year, as determined for purposes of subsection (a) of Section 304 of this Act;

(2) earns a return for the taxable year on all of its real and tangible personal property that is substantially more than the aggregate return earned by the members of the unitary business group on all of real and tangible personal property of the unitary business group; for purposes of this paragraph (2) the return on real and tangible personal property of a person for a taxable year is equal to the base income of that person for that taxable year, divided by that person's real and tangible personal property for that taxable year, as determined for purposes of subsection (a) of Section 304 of this Act; or

(3) conducts substantially all of its business activity, as shown by gross receipts for the taxable year, with one or more persons who are members of the unitary business group or who would be members of that unitary business group if not for the prohibitions in item (27) of subsection (a) of Section 1501 of this Act against including in a unitary business group persons who apportion their business incomes under different subsections of Section 304 of this Act or against inclusion in any unitary business group of a person that conducts 80% or more of its business activity outside the United States.

(c) The Director may not make an adjustment to base income under this Section that has the same effect as retroactively applying any amendments to this Act made by Public Act 93-0840, Public Act 95-0233, or Public Act 95-0707.

(d) Notwithstanding any other rulemaking authority that may exist, neither the Governor nor any agency or agency head under the jurisdiction of the Governor has any authority to make or promulgate rules to implement or enforce the provisions of this amendatory Act of the 95th General Assembly. If, however, the Governor believes that rules are necessary to implement or enforce the provisions of this amendatory Act of the 95th General Assembly, the Governor may suggest rules to the General Assembly by filing them with the Clerk of the House and the Secretary of the Senate and by requesting that the General Assembly authorize such rulemaking by law, enact those suggested rules into law, or take any other appropriate action in the General Assembly's discretion. Nothing contained in this amendatory Act of the 95th General Assembly shall be interpreted to grant rulemaking authority under any other Illinois statute where such authority is not otherwise explicitly given. For the purposes of this paragraph, "rules" is given the meaning contained in Section 1-70 of the Illinois Administrative Procedure Act, and "agency" and "agency head" are given the meanings contained in Sections 1-20 and 1-25 of the Illinois Administrative Procedure Act to the extent that such definitions apply to agencies or agency heads under the jurisdiction of the Governor.

(Source: P.A. 76-261.)

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