Sen. Win Stoller

Filed: 3/20/2023

 

 


 

 


 
10300SB1147sam001LRB103 05591 HLH 59063 a

1
AMENDMENT TO SENATE BILL 1147

2    AMENDMENT NO. ______. Amend Senate Bill 1147 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Income Tax Act is amended by
5changing Section 201 as follows:
 
6    (35 ILCS 5/201)
7    Sec. 201. Tax imposed.
8    (a) In general. A tax measured by net income is hereby
9imposed on every individual, corporation, trust and estate for
10each taxable year ending after July 31, 1969 on the privilege
11of earning or receiving income in or as a resident of this
12State. Such tax shall be in addition to all other occupation or
13privilege taxes imposed by this State or by any municipal
14corporation or political subdivision thereof.
15    (b) Rates. The tax imposed by subsection (a) of this
16Section shall be determined as follows, except as adjusted by

 

 

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1subsection (d-1):
2        (1) In the case of an individual, trust or estate, for
3    taxable years ending prior to July 1, 1989, an amount
4    equal to 2 1/2% of the taxpayer's net income for the
5    taxable year.
6        (2) In the case of an individual, trust or estate, for
7    taxable years beginning prior to July 1, 1989 and ending
8    after June 30, 1989, an amount equal to the sum of (i) 2
9    1/2% of the taxpayer's net income for the period prior to
10    July 1, 1989, as calculated under Section 202.3, and (ii)
11    3% of the taxpayer's net income for the period after June
12    30, 1989, as calculated under Section 202.3.
13        (3) In the case of an individual, trust or estate, for
14    taxable years beginning after June 30, 1989, and ending
15    prior to January 1, 2011, an amount equal to 3% of the
16    taxpayer's net income for the taxable year.
17        (4) In the case of an individual, trust, or estate,
18    for taxable years beginning prior to January 1, 2011, and
19    ending after December 31, 2010, an amount equal to the sum
20    of (i) 3% of the taxpayer's net income for the period prior
21    to January 1, 2011, as calculated under Section 202.5, and
22    (ii) 5% of the taxpayer's net income for the period after
23    December 31, 2010, as calculated under Section 202.5.
24        (5) In the case of an individual, trust, or estate,
25    for taxable years beginning on or after January 1, 2011,
26    and ending prior to January 1, 2015, an amount equal to 5%

 

 

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1    of the taxpayer's net income for the taxable year.
2        (5.1) In the case of an individual, trust, or estate,
3    for taxable years beginning prior to January 1, 2015, and
4    ending after December 31, 2014, an amount equal to the sum
5    of (i) 5% of the taxpayer's net income for the period prior
6    to January 1, 2015, as calculated under Section 202.5, and
7    (ii) 3.75% of the taxpayer's net income for the period
8    after December 31, 2014, as calculated under Section
9    202.5.
10        (5.2) In the case of an individual, trust, or estate,
11    for taxable years beginning on or after January 1, 2015,
12    and ending prior to July 1, 2017, an amount equal to 3.75%
13    of the taxpayer's net income for the taxable year.
14        (5.3) In the case of an individual, trust, or estate,
15    for taxable years beginning prior to July 1, 2017, and
16    ending after June 30, 2017, an amount equal to the sum of
17    (i) 3.75% of the taxpayer's net income for the period
18    prior to July 1, 2017, as calculated under Section 202.5,
19    and (ii) 4.95% of the taxpayer's net income for the period
20    after June 30, 2017, as calculated under Section 202.5.
21        (5.4) In the case of an individual, trust, or estate,
22    for taxable years beginning on or after July 1, 2017, an
23    amount equal to 4.95% of the taxpayer's net income for the
24    taxable year.
25        (6) In the case of a corporation, for taxable years
26    ending prior to July 1, 1989, an amount equal to 4% of the

 

 

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1    taxpayer's net income for the taxable year.
2        (7) In the case of a corporation, for taxable years
3    beginning prior to July 1, 1989 and ending after June 30,
4    1989, an amount equal to the sum of (i) 4% of the
5    taxpayer's net income for the period prior to July 1,
6    1989, as calculated under Section 202.3, and (ii) 4.8% of
7    the taxpayer's net income for the period after June 30,
8    1989, as calculated under Section 202.3.
9        (8) In the case of a corporation, for taxable years
10    beginning after June 30, 1989, and ending prior to January
11    1, 2011, an amount equal to 4.8% of the taxpayer's net
12    income for the taxable year.
13        (9) In the case of a corporation, for taxable years
14    beginning prior to January 1, 2011, and ending after
15    December 31, 2010, an amount equal to the sum of (i) 4.8%
16    of the taxpayer's net income for the period prior to
17    January 1, 2011, as calculated under Section 202.5, and
18    (ii) 7% of the taxpayer's net income for the period after
19    December 31, 2010, as calculated under Section 202.5.
20        (10) In the case of a corporation, for taxable years
21    beginning on or after January 1, 2011, and ending prior to
22    January 1, 2015, an amount equal to 7% of the taxpayer's
23    net income for the taxable year.
24        (11) In the case of a corporation, for taxable years
25    beginning prior to January 1, 2015, and ending after
26    December 31, 2014, an amount equal to the sum of (i) 7% of

 

 

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1    the taxpayer's net income for the period prior to January
2    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
3    of the taxpayer's net income for the period after December
4    31, 2014, as calculated under Section 202.5.
5        (12) In the case of a corporation, for taxable years
6    beginning on or after January 1, 2015, and ending prior to
7    July 1, 2017, an amount equal to 5.25% of the taxpayer's
8    net income for the taxable year.
9        (13) In the case of a corporation, for taxable years
10    beginning prior to July 1, 2017, and ending after June 30,
11    2017, an amount equal to the sum of (i) 5.25% of the
12    taxpayer's net income for the period prior to July 1,
13    2017, as calculated under Section 202.5, and (ii) 7% of
14    the taxpayer's net income for the period after June 30,
15    2017, as calculated under Section 202.5.
16        (14) In the case of a corporation, for taxable years
17    beginning on or after July 1, 2017, an amount equal to 7%
18    of the taxpayer's net income for the taxable year.
19    The rates under this subsection (b) are subject to the
20provisions of Section 201.5.
21    (b-5) Surcharge; sale or exchange of assets, properties,
22and intangibles of organization gaming licensees. For each of
23taxable years 2019 through 2027, a surcharge is imposed on all
24taxpayers on income arising from the sale or exchange of
25capital assets, depreciable business property, real property
26used in the trade or business, and Section 197 intangibles (i)

 

 

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1of an organization licensee under the Illinois Horse Racing
2Act of 1975 and (ii) of an organization gaming licensee under
3the Illinois Gambling Act. The amount of the surcharge is
4equal to the amount of federal income tax liability for the
5taxable year attributable to those sales and exchanges. The
6surcharge imposed shall not apply if:
7        (1) the organization gaming license, organization
8    license, or racetrack property is transferred as a result
9    of any of the following:
10            (A) bankruptcy, a receivership, or a debt
11        adjustment initiated by or against the initial
12        licensee or the substantial owners of the initial
13        licensee;
14            (B) cancellation, revocation, or termination of
15        any such license by the Illinois Gaming Board or the
16        Illinois Racing Board;
17            (C) a determination by the Illinois Gaming Board
18        that transfer of the license is in the best interests
19        of Illinois gaming;
20            (D) the death of an owner of the equity interest in
21        a licensee;
22            (E) the acquisition of a controlling interest in
23        the stock or substantially all of the assets of a
24        publicly traded company;
25            (F) a transfer by a parent company to a wholly
26        owned subsidiary; or

 

 

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1            (G) the transfer or sale to or by one person to
2        another person where both persons were initial owners
3        of the license when the license was issued; or
4        (2) the controlling interest in the organization
5    gaming license, organization license, or racetrack
6    property is transferred in a transaction to lineal
7    descendants in which no gain or loss is recognized or as a
8    result of a transaction in accordance with Section 351 of
9    the Internal Revenue Code in which no gain or loss is
10    recognized; or
11        (3) live horse racing was not conducted in 2010 at a
12    racetrack located within 3 miles of the Mississippi River
13    under a license issued pursuant to the Illinois Horse
14    Racing Act of 1975.
15    The transfer of an organization gaming license,
16organization license, or racetrack property by a person other
17than the initial licensee to receive the organization gaming
18license is not subject to a surcharge. The Department shall
19adopt rules necessary to implement and administer this
20subsection.
21    (c) Personal Property Tax Replacement Income Tax.
22Beginning on July 1, 1979 and thereafter, in addition to such
23income tax, there is also hereby imposed the Personal Property
24Tax Replacement Income Tax measured by net income on every
25corporation (including Subchapter S corporations), partnership
26and trust, for each taxable year ending after June 30, 1979.

 

 

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1Such taxes are imposed on the privilege of earning or
2receiving income in or as a resident of this State. The
3Personal Property Tax Replacement Income Tax shall be in
4addition to the income tax imposed by subsections (a) and (b)
5of this Section and in addition to all other occupation or
6privilege taxes imposed by this State or by any municipal
7corporation or political subdivision thereof.
8    (d) Additional Personal Property Tax Replacement Income
9Tax Rates. The personal property tax replacement income tax
10imposed by this subsection and subsection (c) of this Section
11in the case of a corporation, other than a Subchapter S
12corporation and except as adjusted by subsection (d-1), shall
13be an additional amount equal to 2.85% of such taxpayer's net
14income for the taxable year, except that beginning on January
151, 1981, and thereafter, the rate of 2.85% specified in this
16subsection shall be reduced to 2.5%, and in the case of a
17partnership, trust or a Subchapter S corporation shall be an
18additional amount equal to 1.5% of such taxpayer's net income
19for the taxable year.
20    (d-1) Rate reduction for certain foreign insurers. In the
21case of a foreign insurer, as defined by Section 35A-5 of the
22Illinois Insurance Code, whose state or country of domicile
23imposes on insurers domiciled in Illinois a retaliatory tax
24(excluding any insurer whose premiums from reinsurance assumed
25are 50% or more of its total insurance premiums as determined
26under paragraph (2) of subsection (b) of Section 304, except

 

 

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1that for purposes of this determination premiums from
2reinsurance do not include premiums from inter-affiliate
3reinsurance arrangements), beginning with taxable years ending
4on or after December 31, 1999, the sum of the rates of tax
5imposed by subsections (b) and (d) shall be reduced (but not
6increased) to the rate at which the total amount of tax imposed
7under this Act, net of all credits allowed under this Act,
8shall equal (i) the total amount of tax that would be imposed
9on the foreign insurer's net income allocable to Illinois for
10the taxable year by such foreign insurer's state or country of
11domicile if that net income were subject to all income taxes
12and taxes measured by net income imposed by such foreign
13insurer's state or country of domicile, net of all credits
14allowed or (ii) a rate of zero if no such tax is imposed on
15such income by the foreign insurer's state of domicile. For
16the purposes of this subsection (d-1), an inter-affiliate
17includes a mutual insurer under common management.
18        (1) For the purposes of subsection (d-1), in no event
19    shall the sum of the rates of tax imposed by subsections
20    (b) and (d) be reduced below the rate at which the sum of:
21            (A) the total amount of tax imposed on such
22        foreign insurer under this Act for a taxable year, net
23        of all credits allowed under this Act, plus
24            (B) the privilege tax imposed by Section 409 of
25        the Illinois Insurance Code, the fire insurance
26        company tax imposed by Section 12 of the Fire

 

 

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1        Investigation Act, and the fire department taxes
2        imposed under Section 11-10-1 of the Illinois
3        Municipal Code,
4    equals 1.25% for taxable years ending prior to December
5    31, 2003, or 1.75% for taxable years ending on or after
6    December 31, 2003, of the net taxable premiums written for
7    the taxable year, as described by subsection (1) of
8    Section 409 of the Illinois Insurance Code. This paragraph
9    will in no event increase the rates imposed under
10    subsections (b) and (d).
11        (2) Any reduction in the rates of tax imposed by this
12    subsection shall be applied first against the rates
13    imposed by subsection (b) and only after the tax imposed
14    by subsection (a) net of all credits allowed under this
15    Section other than the credit allowed under subsection (i)
16    has been reduced to zero, against the rates imposed by
17    subsection (d).
18    This subsection (d-1) is exempt from the provisions of
19Section 250.
20    (e) Investment credit. A taxpayer shall be allowed a
21credit against the Personal Property Tax Replacement Income
22Tax for investment in qualified property.
23        (1) A taxpayer shall be allowed a credit equal to .5%
24    of the basis of qualified property placed in service
25    during the taxable year, provided such property is placed
26    in service on or after July 1, 1984. There shall be allowed

 

 

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1    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 the
10    first year in which they file employment records with the
11    Illinois Department of Employment Security. The provisions
12    added to this Section by Public Act 85-1200 (and restored
13    by Public Act 87-895) shall be construed as declaratory of
14    existing law and not as a new enactment. If, in any year,
15    the increase in base employment within Illinois over the
16    preceding year is less than 1%, the additional credit
17    shall be limited to that percentage times a fraction, the
18    numerator of which is .5% and the denominator of which is
19    1%, but shall not exceed .5%. The investment credit shall
20    not be allowed to the extent that it would reduce a
21    taxpayer's liability in any tax year below zero, nor may
22    any credit for qualified property be allowed for any year
23    other than the year in which the property was placed in
24    service in Illinois. For tax years ending on or after
25    December 31, 1987, and on or before December 31, 1988, the
26    credit shall be allowed for the tax year in which the

 

 

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1    property is placed in service, or, if the amount of the
2    credit exceeds the tax liability for that year, whether it
3    exceeds the original liability or the liability as later
4    amended, such excess may be carried forward and applied to
5    the tax liability of the 5 taxable years following the
6    excess credit years if the taxpayer (i) makes investments
7    which cause the creation of a minimum of 2,000 full-time
8    equivalent jobs in Illinois, (ii) is located in an
9    enterprise zone established pursuant to the Illinois
10    Enterprise Zone Act and (iii) is certified by the
11    Department of Commerce and Community Affairs (now
12    Department of Commerce and Economic Opportunity) as
13    complying with the requirements specified in clause (i)
14    and (ii) by July 1, 1986. The Department of Commerce and
15    Community Affairs (now Department of Commerce and Economic
16    Opportunity) shall notify the Department of Revenue of all
17    such certifications immediately. For tax years ending
18    after December 31, 1988, the credit shall be allowed for
19    the tax year in which the property is placed in service,
20    or, if the amount of the credit exceeds the tax liability
21    for that year, whether it exceeds the original liability
22    or the liability as later amended, such excess may be
23    carried forward and applied to the tax liability of the 5
24    taxable years following the excess credit years. The
25    credit shall be applied to the earliest year for which
26    there is a liability. If there is credit from more than one

 

 

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1    tax year that is available to offset a liability, earlier
2    credit shall be applied first.
3        (2) The term "qualified property" means property
4    which:
5            (A) is tangible, whether new or used, including
6        buildings and structural components of buildings and
7        signs that are real property, but not including land
8        or improvements to real property that are not a
9        structural component of a building such as
10        landscaping, sewer lines, local access roads, fencing,
11        parking lots, and other appurtenances;
12            (B) is depreciable pursuant to Section 167 of the
13        Internal Revenue Code, except that "3-year property"
14        as defined in Section 168(c)(2)(A) of that Code is not
15        eligible for the credit provided by this subsection
16        (e);
17            (C) is acquired by purchase as defined in Section
18        179(d) of the Internal Revenue Code;
19            (D) is used in Illinois by a taxpayer who is
20        primarily engaged in manufacturing, or in mining coal
21        or fluorite, or in retailing, or was placed in service
22        on or after July 1, 2006 in a River Edge Redevelopment
23        Zone established pursuant to the River Edge
24        Redevelopment Zone Act; and
25            (E) has not previously been used in Illinois in
26        such a manner and by such a person as would qualify for

 

 

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1        the credit provided by this subsection (e) or
2        subsection (f).
3        (3) For purposes of this subsection (e),
4    "manufacturing" means the material staging and production
5    of tangible personal property by procedures commonly
6    regarded as manufacturing, processing, fabrication, or
7    assembling which changes some existing material into new
8    shapes, new qualities, or new combinations. For purposes
9    of this subsection (e) the term "mining" shall have the
10    same meaning as the term "mining" in Section 613(c) of the
11    Internal Revenue Code. For purposes of this subsection
12    (e), the term "retailing" means the sale of tangible
13    personal property for use or consumption and not for
14    resale, or services rendered in conjunction with the sale
15    of tangible personal property for use or consumption and
16    not for resale. For purposes of this subsection (e),
17    "tangible personal property" has the same meaning as when
18    that term is used in the Retailers' Occupation Tax Act,
19    and, for taxable years ending after December 31, 2008,
20    does not include the generation, transmission, or
21    distribution of electricity.
22        (4) The basis of qualified property shall be the basis
23    used to compute the depreciation deduction for federal
24    income tax purposes.
25        (5) If the basis of the property for federal income
26    tax depreciation purposes is increased after it has been

 

 

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1    placed in service in Illinois by the taxpayer, the amount
2    of such increase shall be deemed property placed in
3    service on the date of such increase in basis.
4        (6) The term "placed in service" shall have the same
5    meaning as under Section 46 of the Internal Revenue Code.
6        (7) If during any taxable year, any property ceases to
7    be qualified property in the hands of the taxpayer within
8    48 months after being placed in service, or the situs of
9    any qualified property is moved outside Illinois within 48
10    months after being placed in service, the Personal
11    Property Tax Replacement Income Tax for such taxable year
12    shall be increased. Such increase shall be determined by
13    (i) recomputing the investment credit which would have
14    been allowed for the year in which credit for such
15    property was originally allowed by eliminating such
16    property from such computation and, (ii) subtracting such
17    recomputed credit from the amount of credit previously
18    allowed. For the purposes of this paragraph (7), a
19    reduction of the basis of qualified property resulting
20    from a redetermination of the purchase price shall be
21    deemed a disposition of qualified property to the extent
22    of such reduction.
23        (8) Unless the investment credit is extended by law,
24    the basis of qualified property shall not include costs
25    incurred after December 31, 2018, except for costs
26    incurred pursuant to a binding contract entered into on or

 

 

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1    before December 31, 2018.
2        (9) Each taxable year ending before December 31, 2000,
3    a partnership may elect to pass through to its partners
4    the credits to which the partnership is entitled under
5    this subsection (e) for the taxable year. A partner may
6    use the credit allocated to him or her under this
7    paragraph only against the tax imposed in subsections (c)
8    and (d) of this Section. If the partnership makes that
9    election, those credits shall be allocated among the
10    partners in the partnership in accordance with the rules
11    set forth in Section 704(b) of the Internal Revenue Code,
12    and the rules promulgated under that Section, and the
13    allocated amount of the credits shall be allowed to the
14    partners for that taxable year. The partnership shall make
15    this election on its Personal Property Tax Replacement
16    Income Tax return for that taxable year. The election to
17    pass through the credits shall be irrevocable.
18        For taxable years ending on or after December 31,
19    2000, a partner that qualifies its partnership for a
20    subtraction under subparagraph (I) of paragraph (2) of
21    subsection (d) of Section 203 or a shareholder that
22    qualifies a Subchapter S corporation for a subtraction
23    under subparagraph (S) of paragraph (2) of subsection (b)
24    of Section 203 shall be allowed a credit under this
25    subsection (e) equal to its share of the credit earned
26    under this subsection (e) during the taxable year by the

 

 

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1    partnership or Subchapter S corporation, determined in
2    accordance with the determination of income and
3    distributive share of income under Sections 702 and 704
4    and Subchapter S of the Internal Revenue Code. This
5    paragraph is exempt from the provisions of Section 250.
6    (f) Investment credit; Enterprise Zone; River Edge
7Redevelopment Zone.
8        (1) A taxpayer shall be allowed a credit against the
9    tax imposed by subsections (a) and (b) of this Section for
10    investment in qualified property which is placed in
11    service in an Enterprise Zone created pursuant to the
12    Illinois Enterprise Zone Act or, for property placed in
13    service on or after July 1, 2006, a River Edge
14    Redevelopment Zone established pursuant to the River Edge
15    Redevelopment Zone Act. For partners, shareholders of
16    Subchapter S corporations, and owners of limited liability
17    companies, if the liability company is treated as a
18    partnership for purposes of federal and State income
19    taxation, there shall be allowed a credit under this
20    subsection (f) to be determined in accordance with the
21    determination of income and distributive share of income
22    under Sections 702 and 704 and Subchapter S of the
23    Internal Revenue Code. The credit shall be .5% of the
24    basis for such property. The credit shall be available
25    only in the taxable year in which the property is placed in
26    service in the Enterprise Zone or River Edge Redevelopment

 

 

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1    Zone and shall not be allowed to the extent that it would
2    reduce a taxpayer's liability for the tax imposed by
3    subsections (a) and (b) of this Section to below zero. For
4    tax years ending on or after December 31, 1985, the credit
5    shall be allowed for the tax year in which the property is
6    placed in service, or, if the amount of the credit exceeds
7    the tax liability for that year, whether it exceeds the
8    original liability or the liability as later amended, such
9    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 which:
17            (A) is tangible, whether new or used, including
18        buildings and structural components of buildings;
19            (B) is depreciable pursuant to Section 167 of the
20        Internal Revenue Code, except that "3-year property"
21        as defined in Section 168(c)(2)(A) of that Code is not
22        eligible for the credit provided by this subsection
23        (f);
24            (C) is acquired by purchase as defined in Section
25        179(d) of the Internal Revenue Code;
26            (D) is used in the Enterprise Zone or River Edge

 

 

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1        Redevelopment Zone by the taxpayer; and
2            (E) has not been previously used in Illinois in
3        such a manner and by such a person as would qualify for
4        the credit provided by this subsection (f) or
5        subsection (e).
6        (3) The basis of qualified property shall be the basis
7    used to compute the depreciation deduction for federal
8    income tax purposes.
9        (4) If the basis of the property for federal income
10    tax depreciation purposes is increased after it has been
11    placed in service in the Enterprise Zone or River Edge
12    Redevelopment Zone by the taxpayer, the amount of such
13    increase shall be deemed property placed in service on the
14    date of such increase in basis.
15        (5) The term "placed in service" shall have the same
16    meaning as under Section 46 of the Internal Revenue Code.
17        (6) If during any taxable year, any property ceases to
18    be qualified property in the hands of the taxpayer within
19    48 months after being placed in service, or the situs of
20    any qualified property is moved outside the Enterprise
21    Zone or River Edge Redevelopment Zone within 48 months
22    after being placed in service, the tax imposed under
23    subsections (a) and (b) of this Section for such taxable
24    year shall be increased. Such increase shall be determined
25    by (i) recomputing the investment credit which would have
26    been allowed for the year in which credit for such

 

 

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1    property was originally allowed by eliminating such
2    property from such computation, and (ii) subtracting such
3    recomputed credit from the amount of credit previously
4    allowed. For the purposes of this paragraph (6), a
5    reduction of the basis of qualified property resulting
6    from a redetermination of the purchase price shall be
7    deemed a disposition of qualified property to the extent
8    of such reduction.
9        (7) There shall be allowed an additional credit equal
10    to 0.5% of the basis of qualified property placed in
11    service during the taxable year in a River Edge
12    Redevelopment Zone, provided such property is placed in
13    service on or after July 1, 2006, and the taxpayer's base
14    employment within Illinois has increased by 1% or more
15    over the preceding year as determined by the taxpayer's
16    employment records filed with the Illinois Department of
17    Employment Security. Taxpayers who are new to Illinois
18    shall be deemed to have met the 1% growth in base
19    employment for the first year in which they file
20    employment records with the Illinois Department of
21    Employment Security. If, in any year, the increase in base
22    employment within Illinois over the preceding year is less
23    than 1%, the additional credit shall be limited to that
24    percentage times a fraction, the numerator of which is
25    0.5% and the denominator of which is 1%, but shall not
26    exceed 0.5%.

 

 

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1        (8) For taxable years beginning on or after January 1,
2    2021, there shall be allowed an Enterprise Zone
3    construction jobs credit against the taxes imposed under
4    subsections (a) and (b) of this Section as provided in
5    Section 13 of the Illinois Enterprise Zone Act.
6        The credit or credits may not reduce the taxpayer's
7    liability to less than zero. If the amount of the credit or
8    credits exceeds the taxpayer's liability, the excess may
9    be carried forward and applied against the taxpayer's
10    liability in succeeding calendar years in the same manner
11    provided under paragraph (4) of Section 211 of this Act.
12    The credit or credits shall be applied to the earliest
13    year for which there is a tax liability. If there are
14    credits from more than one taxable year that are available
15    to offset a liability, the earlier credit shall be applied
16    first.
17        For partners, shareholders of Subchapter S
18    corporations, and owners of limited liability companies,
19    if the liability company is treated as a partnership for
20    the purposes of federal and State income taxation, there
21    shall be allowed a credit under this Section to be
22    determined in accordance with the determination of income
23    and distributive share of income under Sections 702 and
24    704 and Subchapter S of the Internal Revenue Code.
25        The total aggregate amount of credits awarded under
26    the Blue Collar Jobs Act (Article 20 of Public Act 101-9)

 

 

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1    shall not exceed $20,000,000 in any State fiscal year.
2        This paragraph (8) is exempt from the provisions of
3    Section 250.
4    (g) (Blank).
5    (h) Investment credit; High Impact Business.
6        (1) Subject to subsections (b) and (b-5) of Section
7    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
8    be allowed a credit against the tax imposed by subsections
9    (a) and (b) of this Section for investment in qualified
10    property which is placed in service by a Department of
11    Commerce and Economic Opportunity designated High Impact
12    Business. The credit shall be .5% of the basis for such
13    property. The credit shall not be available (i) until the
14    minimum investments in qualified property set forth in
15    subdivision (a)(3)(A) of Section 5.5 of the Illinois
16    Enterprise Zone Act have been satisfied or (ii) until the
17    time authorized in subsection (b-5) of the Illinois
18    Enterprise Zone Act for entities designated as High Impact
19    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
20    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
21    Act, and shall not be allowed to the extent that it would
22    reduce a taxpayer's liability for the tax imposed by
23    subsections (a) and (b) of this Section to below zero. The
24    credit applicable to such investments shall be taken in
25    the taxable year in which such investments have been
26    completed. The credit for additional investments beyond

 

 

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1    the minimum investment by a designated high impact
2    business authorized under subdivision (a)(3)(A) of Section
3    5.5 of the Illinois Enterprise Zone Act shall be available
4    only in the taxable year in which the property is placed in
5    service and shall not be allowed to the extent that it
6    would reduce a taxpayer's liability for the tax imposed by
7    subsections (a) and (b) of this Section to below zero. For
8    tax years ending on or after December 31, 1987, the credit
9    shall be allowed for the tax year in which the property is
10    placed in service, or, if the amount of the credit exceeds
11    the tax liability for that year, whether it exceeds the
12    original liability or the liability as later amended, such
13    excess may be carried forward and applied to the tax
14    liability of the 5 taxable years following the excess
15    credit year. The credit shall be applied to the earliest
16    year for which there is a liability. If there is credit
17    from more than one tax year that is available to offset a
18    liability, the credit accruing first in time shall be
19    applied first.
20        Changes made in this subdivision (h)(1) by Public Act
21    88-670 restore changes made by Public Act 85-1182 and
22    reflect existing law.
23        (2) The term qualified property means property which:
24            (A) is tangible, whether new or used, including
25        buildings and structural components of buildings;
26            (B) is depreciable pursuant to Section 167 of the

 

 

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1        Internal Revenue Code, except that "3-year property"
2        as defined in Section 168(c)(2)(A) of that Code is not
3        eligible for the credit provided by this subsection
4        (h);
5            (C) is acquired by purchase as defined in Section
6        179(d) of the Internal Revenue Code; and
7            (D) is not eligible for the Enterprise Zone
8        Investment Credit provided by subsection (f) of this
9        Section.
10        (3) The basis of qualified property shall be the basis
11    used to compute the depreciation deduction for federal
12    income tax purposes.
13        (4) If the basis of the property for federal income
14    tax depreciation purposes is increased after it has been
15    placed in service in a federally designated Foreign Trade
16    Zone or Sub-Zone located in Illinois by the taxpayer, the
17    amount of such increase shall be deemed property placed in
18    service on the date of such increase in basis.
19        (5) The term "placed in service" shall have the same
20    meaning as under Section 46 of the Internal Revenue Code.
21        (6) If during any taxable year ending on or before
22    December 31, 1996, any property ceases to be qualified
23    property in the hands of the taxpayer within 48 months
24    after being placed in service, or the situs of any
25    qualified property is moved outside Illinois within 48
26    months after being placed in service, the tax imposed

 

 

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1    under subsections (a) and (b) of this Section for such
2    taxable year shall be increased. Such increase shall be
3    determined by (i) recomputing the investment credit which
4    would have been allowed for the year in which credit for
5    such property was originally allowed by eliminating such
6    property from such computation, and (ii) subtracting such
7    recomputed credit from the amount of credit previously
8    allowed. For the purposes of this paragraph (6), a
9    reduction of the basis of qualified property resulting
10    from a redetermination of the purchase price shall be
11    deemed a disposition of qualified property to the extent
12    of such reduction.
13        (7) Beginning with tax years ending after December 31,
14    1996, if a taxpayer qualifies for the credit under this
15    subsection (h) and thereby is granted a tax abatement and
16    the taxpayer relocates its entire facility in violation of
17    the explicit terms and length of the contract under
18    Section 18-183 of the Property Tax Code, the tax imposed
19    under subsections (a) and (b) of this Section shall be
20    increased for the taxable year in which the taxpayer
21    relocated its facility by an amount equal to the amount of
22    credit received by the taxpayer under this subsection (h).
23    (h-5) High Impact Business construction jobs credit. For
24taxable years beginning on or after January 1, 2021, there
25shall also be allowed a High Impact Business construction jobs
26credit against the tax imposed under subsections (a) and (b)

 

 

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1of this Section as provided in subsections (i) and (j) of
2Section 5.5 of the Illinois Enterprise Zone Act.
3    The credit or credits may not reduce the taxpayer's
4liability to less than zero. If the amount of the credit or
5credits exceeds the taxpayer's liability, the excess may be
6carried forward and applied against the taxpayer's liability
7in succeeding calendar years in the manner provided under
8paragraph (4) of Section 211 of this Act. The credit or credits
9shall be applied to the earliest year for which there is a tax
10liability. If there are credits from more than one taxable
11year that are available to offset a liability, the earlier
12credit shall be applied first.
13    For partners, shareholders of Subchapter S corporations,
14and owners of limited liability companies, if the liability
15company is treated as a partnership for the purposes of
16federal and State income taxation, there shall be allowed a
17credit under this Section to be determined in accordance with
18the determination of income and distributive share of income
19under Sections 702 and 704 and Subchapter S of the Internal
20Revenue Code.
21    The total aggregate amount of credits awarded under the
22Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
23exceed $20,000,000 in any State fiscal year.
24    This subsection (h-5) is exempt from the provisions of
25Section 250.
26    (i) Credit for Personal Property Tax Replacement Income

 

 

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1Tax. For tax years ending prior to December 31, 2003, a credit
2shall be allowed against the tax imposed by subsections (a)
3and (b) of this Section for the tax imposed by subsections (c)
4and (d) of this Section. This credit shall be computed by
5multiplying the tax imposed by subsections (c) and (d) of this
6Section by a fraction, the numerator of which is base income
7allocable to Illinois and the denominator of which is Illinois
8base income, and further multiplying the product by the tax
9rate imposed by subsections (a) and (b) of this Section.
10    Any credit earned on or after December 31, 1986 under this
11subsection which is unused in the year the credit is computed
12because it exceeds the tax liability imposed by subsections
13(a) and (b) for that year (whether it exceeds the original
14liability or the liability as later amended) may be carried
15forward and applied to the tax liability imposed by
16subsections (a) and (b) of the 5 taxable years following the
17excess credit year, provided that no credit may be carried
18forward to any year ending on or after December 31, 2003. This
19credit shall be applied first to the earliest year for which
20there is a liability. If there is a credit under this
21subsection from more than one tax year that is available to
22offset a liability the earliest credit arising under this
23subsection shall be applied first.
24    If, during any taxable year ending on or after December
2531, 1986, the tax imposed by subsections (c) and (d) of this
26Section for which a taxpayer has claimed a credit under this

 

 

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1subsection (i) is reduced, the amount of credit for such tax
2shall also be reduced. Such reduction shall be determined by
3recomputing the credit to take into account the reduced tax
4imposed by subsections (c) and (d). If any portion of the
5reduced amount of credit has been carried to a different
6taxable year, an amended return shall be filed for such
7taxable year to reduce the amount of credit claimed.
8    (j) Training expense credit. Beginning with tax years
9ending on or after December 31, 1986 and prior to December 31,
102003, a taxpayer shall be allowed a credit against the tax
11imposed by subsections (a) and (b) under this Section for all
12amounts paid or accrued, on behalf of all persons employed by
13the taxpayer in Illinois or Illinois residents employed
14outside of Illinois by a taxpayer, for educational or
15vocational training in semi-technical or technical fields or
16semi-skilled or skilled fields, which were deducted from gross
17income in the computation of taxable income. The credit
18against the tax imposed by subsections (a) and (b) shall be
191.6% of such training expenses. For partners, shareholders of
20subchapter S corporations, and owners of limited liability
21companies, if the liability company is treated as a
22partnership for purposes of federal and State income taxation,
23there shall be allowed a credit under this subsection (j) to be
24determined in accordance with the determination of income and
25distributive share of income under Sections 702 and 704 and
26subchapter S of the Internal Revenue Code.

 

 

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1    Any credit allowed under this subsection which is unused
2in the year the credit is earned may be carried forward to each
3of the 5 taxable years following the year for which the credit
4is first computed until it is used. This credit shall be
5applied first to the earliest year for which there is a
6liability. If there is a credit under this subsection from
7more than one tax year that is available to offset a liability,
8the earliest credit arising under this subsection shall be
9applied first. No carryforward credit may be claimed in any
10tax year ending on or after December 31, 2003.
11    (k) Research and development credit. For tax years ending
12after July 1, 1990 and prior to December 31, 2003, and
13beginning again for tax years ending on or after December 31,
142004, and ending prior to January 1, 2027, a taxpayer shall be
15allowed a credit against the tax imposed by subsections (a)
16and (b) of this Section for increasing research activities in
17this State. The credit allowed against the tax imposed by
18subsections (a) and (b) shall be equal to 6 1/2% of the
19qualifying expenditures for increasing research activities in
20this State. For partners, shareholders of subchapter S
21corporations, and owners of limited liability companies, if
22the liability company is treated as a partnership for purposes
23of federal and State income taxation, there shall be allowed a
24credit under this subsection to be determined in accordance
25with the determination of income and distributive share of
26income under Sections 702 and 704 and subchapter S of the

 

 

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1Internal Revenue Code.
2    For purposes of this subsection, "qualifying expenditures"
3means the qualifying expenditures as defined for the federal
4credit for increasing research activities which would be
5allowable under Section 41 of the Internal Revenue Code and
6which are conducted in this State, "qualifying expenditures
7for increasing research activities in this State" means the
8excess of qualifying expenditures for the taxable year in
9which incurred over qualifying expenditures for the base
10period, "qualifying expenditures for the base period" means
11the average of the qualifying expenditures for each year in
12the base period, and "base period" means the 3 taxable years
13immediately preceding the taxable year for which the
14determination is being made.
15    Any credit in excess of the tax liability for the taxable
16year may be carried forward. A taxpayer may elect to have the
17unused credit shown on its final completed return carried over
18as a credit against the tax liability for the following 5
19taxable years or until it has been fully used, whichever
20occurs first; provided that no credit earned in a tax year
21ending prior to December 31, 2003 may be carried forward to any
22year ending on or after December 31, 2003.
23    If an unused credit is carried forward to a given year from
242 or more earlier years, that credit arising in the earliest
25year will be applied first against the tax liability for the
26given year. If a tax liability for the given year still

 

 

10300SB1147sam001- 31 -LRB103 05591 HLH 59063 a

1remains, the credit from the next earliest year will then be
2applied, and so on, until all credits have been used or no tax
3liability for the given year remains. Any remaining unused
4credit or credits then will be carried forward to the next
5following year in which a tax liability is incurred, except
6that no credit can be carried forward to a year which is more
7than 5 years after the year in which the expense for which the
8credit is given was incurred.
9    No inference shall be drawn from Public Act 91-644 in
10construing this Section for taxable years beginning before
11January 1, 1999.
12    It is the intent of the General Assembly that the research
13and development credit under this subsection (k) shall apply
14continuously for all tax years ending on or after December 31,
152004 and ending prior to January 1, 2027, including, but not
16limited to, the period beginning on January 1, 2016 and ending
17on July 6, 2017 (the effective date of Public Act 100-22). All
18actions taken in reliance on the continuation of the credit
19under this subsection (k) by any taxpayer are hereby
20validated.
21    (l) Environmental Remediation Tax Credit.
22        (i) For tax years ending after December 31, 1997 and
23    on or before December 31, 2001, a taxpayer shall be
24    allowed a credit against the tax imposed by subsections
25    (a) and (b) of this Section for certain amounts paid for
26    unreimbursed eligible remediation costs, as specified in

 

 

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1    this subsection. For purposes of this Section,
2    "unreimbursed eligible remediation costs" means costs
3    approved by the Illinois Environmental Protection Agency
4    ("Agency") under Section 58.14 of the Environmental
5    Protection Act that were paid in performing environmental
6    remediation at a site for which a No Further Remediation
7    Letter was issued by the Agency and recorded under Section
8    58.10 of the Environmental Protection Act. The credit must
9    be claimed for the taxable year in which Agency approval
10    of the eligible remediation costs is granted. The credit
11    is not available to any taxpayer if the taxpayer or any
12    related party caused or contributed to, in any material
13    respect, a release of regulated substances on, in, or
14    under the site that was identified and addressed by the
15    remedial action pursuant to the Site Remediation Program
16    of the Environmental Protection Act. After the Pollution
17    Control Board rules are adopted pursuant to the Illinois
18    Administrative Procedure Act for the administration and
19    enforcement of Section 58.9 of the Environmental
20    Protection Act, determinations as to credit availability
21    for purposes of this Section shall be made consistent with
22    those rules. For purposes of this Section, "taxpayer"
23    includes a person whose tax attributes the taxpayer has
24    succeeded to under Section 381 of the Internal Revenue
25    Code and "related party" includes the persons disallowed a
26    deduction for losses by paragraphs (b), (c), and (f)(1) of

 

 

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1    Section 267 of the Internal Revenue Code by virtue of
2    being a related taxpayer, as well as any of its partners.
3    The credit allowed against the tax imposed by subsections
4    (a) and (b) shall be equal to 25% of the unreimbursed
5    eligible remediation costs in excess of $100,000 per site,
6    except that the $100,000 threshold shall not apply to any
7    site contained in an enterprise zone as determined by the
8    Department of Commerce and Community Affairs (now
9    Department of Commerce and Economic Opportunity). The
10    total credit allowed shall not exceed $40,000 per year
11    with a maximum total of $150,000 per site. For partners
12    and shareholders of subchapter S corporations, there shall
13    be allowed a credit under this subsection to be determined
14    in 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.
17        (ii) A credit allowed under this subsection that is
18    unused in the year the credit is earned may be carried
19    forward to each of the 5 taxable years following the year
20    for which the credit is first earned until it is used. The
21    term "unused credit" does not include any amounts of
22    unreimbursed eligible remediation costs in excess of the
23    maximum credit per site authorized under paragraph (i).
24    This credit shall be applied first to the earliest year
25    for which there is a liability. If there is a credit under
26    this subsection from more than one tax year that is

 

 

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1    available to offset a liability, the earliest credit
2    arising under this subsection shall be applied first. A
3    credit allowed under this subsection may be sold to a
4    buyer as part of a sale of all or part of the remediation
5    site for which the credit was granted. The purchaser of a
6    remediation site and the tax credit shall succeed to the
7    unused credit and remaining carry-forward period of the
8    seller. To perfect the transfer, the assignor shall record
9    the transfer in the chain of title for the site and provide
10    written notice to the Director of the Illinois Department
11    of Revenue of the assignor's intent to sell the
12    remediation site and the amount of the tax credit to be
13    transferred as a portion of the sale. In no event may a
14    credit be transferred to any taxpayer if the taxpayer or a
15    related party would not be eligible under the provisions
16    of subsection (i).
17        (iii) For purposes of this Section, the term "site"
18    shall have the same meaning as under Section 58.2 of the
19    Environmental Protection Act.
20    (m) Education expense credit. Beginning with tax years
21ending after December 31, 1999, a taxpayer who is the
22custodian of one or more qualifying pupils shall be allowed a
23credit against the tax imposed by subsections (a) and (b) of
24this Section for qualified education expenses incurred on
25behalf of the qualifying pupils. The credit shall be equal to
2625% of qualified education expenses, but in no event may the

 

 

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1total credit under this subsection claimed by a family that is
2the custodian of qualifying pupils exceed (i) $500 for tax
3years ending prior to December 31, 2017, and (ii) $750 for tax
4years ending on or after December 31, 2017. In no event shall a
5credit under this subsection reduce the taxpayer's liability
6under this Act to less than zero. Notwithstanding any other
7provision of law, for taxable years beginning on or after
8January 1, 2017, no taxpayer may claim a credit under this
9subsection (m) if the taxpayer's adjusted gross income for the
10taxable year exceeds (i) $500,000, in the case of spouses
11filing a joint federal tax return or (ii) $250,000, in the case
12of all other taxpayers. This subsection is exempt from the
13provisions of Section 250 of this Act.
14    For purposes of this subsection:
15    "Qualifying pupils" means individuals who (i) are
16residents of the State of Illinois, (ii) are under the age of
1721 at the close of the school year for which a credit is
18sought, and (iii) during the school year for which a credit is
19sought were full-time pupils enrolled in a kindergarten
20through twelfth grade education program at any school, as
21defined in this subsection.
22    "Qualified education expense" means the amount incurred on
23behalf of a qualifying pupil in excess of $250 for tuition,
24book fees, and lab fees at the school in which the pupil is
25enrolled during the regular school year.
26    "School" means any public or nonpublic elementary or

 

 

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1secondary school in Illinois that is in compliance with Title
2VI of the Civil Rights Act of 1964 and attendance at which
3satisfies the requirements of Section 26-1 of the School Code,
4except that nothing shall be construed to require a child to
5attend any particular public or nonpublic school to qualify
6for the credit under this Section.
7    "Custodian" means, with respect to qualifying pupils, an
8Illinois resident who is a parent, the parents, a legal
9guardian, or the legal guardians of the qualifying pupils.
10    (n) River Edge Redevelopment Zone site remediation tax
11credit.
12        (i) For tax years ending on or after December 31,
13    2006, a taxpayer shall be allowed a credit against the tax
14    imposed by subsections (a) and (b) of this Section for
15    certain amounts paid for unreimbursed eligible remediation
16    costs, as specified in this subsection. For purposes of
17    this Section, "unreimbursed eligible remediation costs"
18    means costs approved by the Illinois Environmental
19    Protection Agency ("Agency") under Section 58.14a of the
20    Environmental Protection Act that were paid in performing
21    environmental remediation at a site within a River Edge
22    Redevelopment Zone for which a No Further Remediation
23    Letter was issued by the Agency and recorded under Section
24    58.10 of the Environmental Protection Act. The credit must
25    be claimed for the taxable year in which Agency approval
26    of the eligible remediation costs is granted. The credit

 

 

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1    is not available to any taxpayer if the taxpayer or any
2    related party caused or contributed to, in any material
3    respect, a release of regulated substances on, in, or
4    under the site that was identified and addressed by the
5    remedial action pursuant to the Site Remediation Program
6    of the Environmental Protection Act. Determinations as to
7    credit availability for purposes of this Section shall be
8    made consistent with rules adopted by the Pollution
9    Control Board pursuant to the Illinois Administrative
10    Procedure Act for the administration and enforcement of
11    Section 58.9 of the Environmental Protection Act. For
12    purposes of this Section, "taxpayer" includes a person
13    whose tax attributes the taxpayer has succeeded to under
14    Section 381 of the Internal Revenue Code and "related
15    party" includes the persons disallowed a deduction for
16    losses by paragraphs (b), (c), and (f)(1) of Section 267
17    of the Internal Revenue Code by virtue of being a related
18    taxpayer, as well as any of its partners. The credit
19    allowed against the tax imposed by subsections (a) and (b)
20    shall be equal to 25% of the unreimbursed eligible
21    remediation costs in excess of $100,000 per site.
22        (ii) A credit allowed under this subsection that is
23    unused in the year the credit is earned may be carried
24    forward to each of the 5 taxable years following the year
25    for which the credit is first earned until it is used. This
26    credit shall be applied first to the earliest year for

 

 

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1    which there is a liability. If there is a credit under this
2    subsection from more than one tax year that is available
3    to offset a liability, the earliest credit arising under
4    this subsection shall be applied first. A credit allowed
5    under this subsection may be sold to a buyer as part of a
6    sale of all or part of the remediation site for which the
7    credit was granted. The purchaser of a remediation site
8    and the tax credit shall succeed to the unused credit and
9    remaining carry-forward period of the seller. To perfect
10    the transfer, the assignor shall record the transfer in
11    the chain of title for the site and provide written notice
12    to the Director of the Illinois Department of Revenue of
13    the assignor's intent to sell the remediation site and the
14    amount of the tax credit to be transferred as a portion of
15    the sale. In no event may a credit be transferred to any
16    taxpayer if the taxpayer or a related party would not be
17    eligible under the provisions of subsection (i).
18        (iii) For purposes of this Section, the term "site"
19    shall have the same meaning as under Section 58.2 of the
20    Environmental Protection Act.
21    (o) For each of taxable years during the Compassionate Use
22of Medical Cannabis Program, a surcharge is imposed on all
23taxpayers on income arising from the sale or exchange of
24capital assets, depreciable business property, real property
25used in the trade or business, and Section 197 intangibles of
26an organization registrant under the Compassionate Use of

 

 

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1Medical Cannabis Program Act. The amount of the surcharge is
2equal to the amount of federal income tax liability for the
3taxable year attributable to those sales and exchanges. The
4surcharge imposed does not apply if:
5        (1) the medical cannabis cultivation center
6    registration, medical cannabis dispensary registration, or
7    the property of a registration is transferred as a result
8    of any of the following:
9            (A) bankruptcy, a receivership, or a debt
10        adjustment initiated by or against the initial
11        registration or the substantial owners of the initial
12        registration;
13            (B) cancellation, revocation, or termination of
14        any registration by the Illinois Department of Public
15        Health;
16            (C) a determination by the Illinois Department of
17        Public Health that transfer of the registration is in
18        the best interests of Illinois qualifying patients as
19        defined by the Compassionate Use of Medical Cannabis
20        Program Act;
21            (D) the death of an owner of the equity interest in
22        a registrant;
23            (E) the acquisition of a controlling interest in
24        the stock or substantially all of the assets of a
25        publicly traded company;
26            (F) a transfer by a parent company to a wholly

 

 

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1        owned subsidiary; or
2            (G) the transfer or sale to or by one person to
3        another person where both persons were initial owners
4        of the registration when the registration was issued;
5        or
6        (2) the cannabis cultivation center registration,
7    medical cannabis dispensary registration, or the
8    controlling interest in a registrant's property is
9    transferred in a transaction to lineal descendants in
10    which no gain or loss is recognized or as a result of a
11    transaction in accordance with Section 351 of the Internal
12    Revenue Code in which no gain or loss is recognized.
13    (p) Pass-through entity tax.
14        (1) For taxable years ending on or after December 31,
15    2021 and beginning prior to January 1, 2026, a partnership
16    (other than a publicly traded partnership under Section
17    7704 of the Internal Revenue Code) or Subchapter S
18    corporation may elect to apply the provisions of this
19    subsection. A separate election shall be made for each
20    taxable year. Such election shall be made at such time,
21    and in such form and manner as prescribed by the
22    Department, and, once made, is irrevocable.
23        (2) Entity-level tax. A partnership or Subchapter S
24    corporation electing to apply the provisions of this
25    subsection shall be subject to a tax for the privilege of
26    earning or receiving income in this State in an amount

 

 

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1    equal to 4.95% of the taxpayer's net income for the
2    taxable year.
3        (3) Net income defined.
4            (A) In general. For purposes of paragraph (2), the
5        term net income has the same meaning as defined in
6        Section 202 of this Act, except that, for tax years
7        ending on or after December 31, 2023, a deduction
8        shall be allowed in computing base income for
9        distributions to a retired partner to the extent that
10        the partner's distributions are exempt from tax under
11        Section 201(a)(2)(F) of this Act. In addition, the
12        following modifications provisions shall not apply:
13                (i) the standard exemption allowed under
14            Section 204;
15                (ii) the deduction for net losses allowed
16            under Section 207;
17                (iii) in the case of an S corporation, the
18            modification under Section 203(b)(2)(S); and
19                (iv) in the case of a partnership, the
20            modifications under Section 203(d)(2)(H) and
21            Section 203(d)(2)(I).
22            (B) Special rule for tiered partnerships. If a
23        taxpayer making the election under paragraph (1) is a
24        partner of another taxpayer making the election under
25        paragraph (1), net income shall be computed as
26        provided in subparagraph (A), except that the taxpayer

 

 

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1        shall subtract its distributive share of the net
2        income of the electing partnership (including its
3        distributive share of the net income of the electing
4        partnership derived as a distributive share from
5        electing partnerships in which it is a partner).
6        (4) Credit for entity level tax. Each partner or
7    shareholder of a taxpayer making the election under this
8    Section shall be allowed a credit against the tax imposed
9    under subsections (a) and (b) of Section 201 of this Act
10    for the taxable year of the partnership or Subchapter S
11    corporation for which an election is in effect ending
12    within or with the taxable year of the partner or
13    shareholder in an amount equal to 4.95% times the partner
14    or shareholder's distributive share of the net income of
15    the electing partnership or Subchapter S corporation, but
16    not to exceed the partner's or shareholder's share of the
17    tax imposed under paragraph (1) which is actually paid by
18    the partnership or Subchapter S corporation. If the
19    taxpayer is a partnership or Subchapter S corporation that
20    is itself a partner of a partnership making the election
21    under paragraph (1), the credit under this paragraph shall
22    be allowed to the taxpayer's partners or shareholders (or
23    if the partner is a partnership or Subchapter S
24    corporation then its partners or shareholders) in
25    accordance with the determination of income and
26    distributive share of income under Sections 702 and 704

 

 

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1    and Subchapter S of the Internal Revenue Code. If the
2    amount of the credit allowed under this paragraph exceeds
3    the partner's or shareholder's liability for tax imposed
4    under subsections (a) and (b) of Section 201 of this Act
5    for the taxable year, such excess shall be treated as an
6    overpayment for purposes of Section 909 of this Act.
7        (5) Nonresidents. A nonresident individual who is a
8    partner or shareholder of a partnership or Subchapter S
9    corporation for a taxable year for which an election is in
10    effect under paragraph (1) shall not be required to file
11    an income tax return under this Act for such taxable year
12    if the only source of net income of the individual (or the
13    individual and the individual's spouse in the case of a
14    joint return) is from an entity making the election under
15    paragraph (1) and the credit allowed to the partner or
16    shareholder under paragraph (4) equals or exceeds the
17    individual's liability for the tax imposed under
18    subsections (a) and (b) of Section 201 of this Act for the
19    taxable year.
20        (6) Liability for tax. Except as provided in this
21    paragraph, a partnership or Subchapter S making the
22    election under paragraph (1) is liable for the
23    entity-level tax imposed under paragraph (2). If the
24    electing partnership or corporation fails to pay the full
25    amount of tax deemed assessed under paragraph (2), the
26    partners or shareholders shall be liable to pay the tax

 

 

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1    assessed (including penalties and interest). Each partner
2    or shareholder shall be liable for the unpaid assessment
3    based on the ratio of the partner's or shareholder's share
4    of the net income of the partnership over the total net
5    income of the partnership. If the partnership or
6    Subchapter S corporation fails to pay the tax assessed
7    (including penalties and interest) and thereafter an
8    amount of such tax is paid by the partners or
9    shareholders, such amount shall not be collected from the
10    partnership or corporation.
11        (7) Foreign tax. For purposes of the credit allowed
12    under Section 601(b)(3) of this Act, tax paid by a
13    partnership or Subchapter S corporation to another state
14    which, as determined by the Department, is substantially
15    similar to the tax imposed under this subsection, shall be
16    considered tax paid by the partner or shareholder to the
17    extent that the partner's or shareholder's share of the
18    income of the partnership or Subchapter S corporation
19    allocated and apportioned to such other state bears to the
20    total income of the partnership or Subchapter S
21    corporation allocated or apportioned to such other state.
22        (8) Suspension of withholding. The provisions of
23    Section 709.5 of this Act shall not apply to a partnership
24    or Subchapter S corporation for the taxable year for which
25    an election under paragraph (1) is in effect.
26        (9) Requirement to pay estimated tax. For each taxable

 

 

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1    year for which an election under paragraph (1) is in
2    effect, a partnership or Subchapter S corporation is
3    required to pay estimated tax for such taxable year under
4    Sections 803 and 804 of this Act if the amount payable as
5    estimated tax can reasonably be expected to exceed $500.
6        (10) The provisions of this subsection shall apply
7    only with respect to taxable years for which the
8    limitation on individual deductions applies under Section
9    164(b)(6) of the Internal Revenue Code.
10(Source: P.A. 101-9, eff. 6-5-19; 101-31, eff. 6-28-19;
11101-207, eff. 8-2-19; 101-363, eff. 8-9-19; 102-558, eff.
128-20-21; 102-658, eff. 8-27-21.)
 
13    Section 99. Effective date. This Act takes effect upon
14becoming law.".