103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB1627

 

Introduced 2/8/2023, by Sen. David Koehler

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 405/2  from Ch. 120, par. 405A-2

    Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Provides that, for persons dying on or after January 1, 2024, the person's adjusted taxable estate shall not include the value of the decedent's ownership interest in qualified farm property. Provides that certain donations must be made to food banks for property to be considered qualified farm property. Effective immediately.


LRB103 04678 HLH 52509 b

 

 

A BILL FOR

 

SB1627LRB103 04678 HLH 52509 b

1    AN ACT concerning State government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Estate and Generation-Skipping
5Transfer Tax Act is amended by changing Section 2 as follows:
 
6    (35 ILCS 405/2)  (from Ch. 120, par. 405A-2)
7    Sec. 2. Definitions.
8    "Farm property" means real property used primarily for
9raising or harvesting agricultural or horticultural
10commodities for commercial sale.
11    "Federal estate tax" means the tax due to the United
12States with respect to a taxable transfer under Chapter 11 of
13the Internal Revenue Code.
14    "Federal generation-skipping transfer tax" means the tax
15due to the United States with respect to a taxable transfer
16under Chapter 13 of the Internal Revenue Code.
17    "Federal return" means the federal estate tax return with
18respect to the federal estate tax and means the federal
19generation-skipping transfer tax return with respect to the
20federal generation-skipping transfer tax.
21    "Federal transfer tax" means the federal estate tax or the
22federal generation-skipping transfer tax.
23    "Food bank" means a food bank in Illinois that received

 

 

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1funding from The Emergency Food Assistance Program (TEFAP) in
2the year in which it received the qualified donation.
3    "Illinois estate tax" means the tax due to this State with
4respect to a taxable transfer.
5    "Illinois generation-skipping transfer tax" means the tax
6due to this State with respect to a taxable transfer that gives
7rise to a federal generation-skipping transfer tax.
8    "Illinois transfer tax" means the Illinois estate tax or
9the Illinois generation-skipping transfer tax.
10    "Internal Revenue Code" means, unless otherwise provided,
11the Internal Revenue Code of 1986, as amended from time to
12time.
13    "Non-resident trust" means a trust that is not a resident
14of this State for purposes of the Illinois Income Tax Act, as
15amended from time to time.
16    "Person" means and includes any individual, trust, estate,
17partnership, association, company or corporation.
18    "Qualified heir" means a qualified heir as defined in
19Section 2032A(e)(1) of the Internal Revenue Code.
20    "Qualified donation" means a donation to a food bank of an
21agricultural or horticultural commodity that is suitable for
22human consumption and is produced on qualified farm property,
23a cash equivalent donation to a food bank, or some combination
24of those types of donations.
25    "Qualified farm property" means farm property:
26        (1) that the decedent had an ownership interest in at

 

 

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1    the time of the decedent's death and for at least 5 years
2    before the decedent's death; and
3        (2) from which the decedent made qualified donations
4    in at least 5 separate calendar years before the
5    decedent's death totaling at least 1% of the farm property
6    yield for the calendar year in which the donation was
7    made, as determined by the federally reported Farm Service
8    Agency acreage.
9    "Resident trust" means a trust that is a resident of this
10State for purposes of the Illinois Income Tax Act, as amended
11from time to time.
12    "State" means any state, territory or possession of the
13United States and the District of Columbia.
14    "State tax credit" means:
15    (a) For persons dying on or after January 1, 2003 and
16through December 31, 2005, an amount equal to the full credit
17calculable under Section 2011 or Section 2604 of the Internal
18Revenue Code as the credit would have been computed and
19allowed under the Internal Revenue Code as in effect on
20December 31, 2001, without the reduction in the State Death
21Tax Credit as provided in Section 2011(b)(2) or the
22termination of the State Death Tax Credit as provided in
23Section 2011(f) as enacted by the Economic Growth and Tax
24Relief Reconciliation Act of 2001, but recognizing the
25increased applicable exclusion amount through December 31,
262005.

 

 

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1    (b) For persons dying after December 31, 2005 and on or
2before December 31, 2009, and for persons dying after December
331, 2010, an amount equal to the full credit calculable under
4Section 2011 or 2604 of the Internal Revenue Code as the credit
5would have been computed and allowed under the Internal
6Revenue Code as in effect on December 31, 2001, without the
7reduction in the State Death Tax Credit as provided in Section
82011(b)(2) or the termination of the State Death Tax Credit as
9provided in Section 2011(f) as enacted by the Economic Growth
10and Tax Relief Reconciliation Act of 2001, but recognizing the
11exclusion amount of only (i) $2,000,000 for persons dying
12prior to January 1, 2012, (ii) $3,500,000 for persons dying on
13or after January 1, 2012 and prior to January 1, 2013, and
14(iii) $4,000,000 for persons dying on or after January 1,
152013, and with reduction to the adjusted taxable estate for
16any qualified terminable interest property election as defined
17in subsection (b-1) of this Section. For persons dying on or
18after January 1, 2024, for the purposes of computing the State
19tax credit, the person's adjusted taxable estate shall not
20include the value of the person's ownership interest in
21qualified farm property.
22    (b-1) The person required to file the Illinois return may
23elect on a timely filed Illinois return a marital deduction
24for qualified terminable interest property under Section
252056(b)(7) of the Internal Revenue Code for purposes of the
26Illinois estate tax that is separate and independent of any

 

 

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1qualified terminable interest property election for federal
2estate tax purposes. For purposes of the Illinois estate tax,
3the inclusion of property in the gross estate of a surviving
4spouse is the same as under Section 2044 of the Internal
5Revenue Code.
6    In the case of any trust for which a State or federal
7qualified terminable interest property election is made, the
8trustee may not retain non-income producing assets for more
9than a reasonable amount of time without the consent of the
10surviving spouse.
11    "Taxable transfer" means an event that gives rise to a
12state tax credit, including any credit as a result of the
13imposition of an additional tax under Section 2032A(c) of the
14Internal Revenue Code.
15    "Transferee" means a transferee within the meaning of
16Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
17Code.
18    "Transferred property" means:
19        (1) With respect to a taxable transfer occurring at
20    the death of an individual, the deceased individual's
21    gross estate as defined in Section 2031 of the Internal
22    Revenue Code.
23        (2) With respect to a taxable transfer occurring as a
24    result of a taxable termination as defined in Section
25    2612(a) of the Internal Revenue Code, the taxable amount
26    determined under Section 2622(a) of the Internal Revenue

 

 

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1    Code.
2        (3) With respect to a taxable transfer occurring as a
3    result of a taxable distribution as defined in Section
4    2612(b) of the Internal Revenue Code, the taxable amount
5    determined under Section 2621(a) of the Internal Revenue
6    Code.
7        (4) With respect to an event which causes the
8    imposition of an additional estate tax under Section
9    2032A(c) of the Internal Revenue Code, the qualified real
10    property that was disposed of or which ceased to be used
11    for the qualified use, within the meaning of Section
12    2032A(c)(1) of the Internal Revenue Code.
13    "Trust" includes a trust as defined in Section 2652(b)(1)
14of the Internal Revenue Code.
15(Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11;
1697-636, eff. 6-1-12.)
 
17    Section 99. Effective date. This Act takes effect upon
18becoming law.