96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB3257

 

Introduced 2/9/2010, by Sen. Martin A. Sandoval

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/304   from Ch. 120, par. 3-304

    Amends the Illinois Income Tax Act. With respect to the apportionment of business income for persons other than residents, provides that, for tax years ending on or after December 31, 2010, the income shall be apportioned using the property factor, payroll factor, and sales factor. Effective immediately.


LRB096 20472 HLH 36127 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3257 LRB096 20472 HLH 36127 b

1     AN ACT concerning revenue.
 
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 Section 304 as follows:
 
6     (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
7     Sec. 304. Business income of persons other than residents.
8     (a) In general. The business income of a person other than
9 a resident shall be allocated to this State if such person's
10 business income is derived solely from this State. If a person
11 other than a resident derives business income from this State
12 and one or more other states, then, for tax years ending on or
13 before December 30, 1998, for taxable years ending on or after
14 December 31, 2010, and except as otherwise provided by this
15 Section, such person's business income shall be apportioned to
16 this State by multiplying the income by a fraction, the
17 numerator of which is the sum of the property factor (if any),
18 the payroll factor (if any) and 200% of the sales factor (if
19 any), and the denominator of which is 4 reduced by the number
20 of factors other than the sales factor which have a denominator
21 of zero and by an additional 2 if the sales factor has a
22 denominator of zero. For tax years ending on or after December
23 31, 1998, and except as otherwise provided by this Section,

 

 

SB3257 - 2 - LRB096 20472 HLH 36127 b

1 persons other than residents who derive business income from
2 this State and one or more other states shall compute their
3 apportionment factor by weighting their property, payroll, and
4 sales factors as provided in subsection (h) of this Section.
5     (1) Property factor.
6         (A) The property factor is a fraction, the numerator of
7     which is the average value of the person's real and
8     tangible personal property owned or rented and used in the
9     trade or business in this State during the taxable year and
10     the denominator of which is the average value of all the
11     person's real and tangible personal property owned or
12     rented and used in the trade or business during the taxable
13     year.
14         (B) Property owned by the person is valued at its
15     original cost. Property rented by the person is valued at 8
16     times the net annual rental rate. Net annual rental rate is
17     the annual rental rate paid by the person less any annual
18     rental rate received by the person from sub-rentals.
19         (C) The average value of property shall be determined
20     by averaging the values at the beginning and ending of the
21     taxable year but the Director may require the averaging of
22     monthly values during the taxable year if reasonably
23     required to reflect properly the average value of the
24     person's property.
25     (2) Payroll factor.
26         (A) The payroll factor is a fraction, the numerator of

 

 

SB3257 - 3 - LRB096 20472 HLH 36127 b

1     which is the total amount paid in this State during the
2     taxable year by the person for compensation, and the
3     denominator of which is the total compensation paid
4     everywhere during the taxable year.
5         (B) Compensation is paid in this State if:
6             (i) The individual's service is performed entirely
7         within this State;
8             (ii) The individual's service is performed both
9         within and without this State, but the service
10         performed without this State is incidental to the
11         individual's service performed within this State; or
12             (iii) Some of the service is performed within this
13         State and either the base of operations, or if there is
14         no base of operations, the place from which the service
15         is directed or controlled is within this State, or the
16         base of operations or the place from which the service
17         is directed or controlled is not in any state in which
18         some part of the service is performed, but the
19         individual's residence is in this State.
20             (iv) Compensation paid to nonresident professional
21         athletes.
22             (a) General. The Illinois source income of a
23         nonresident individual who is a member of a
24         professional athletic team includes the portion of the
25         individual's total compensation for services performed
26         as a member of a professional athletic team during the

 

 

SB3257 - 4 - LRB096 20472 HLH 36127 b

1         taxable year which the number of duty days spent within
2         this State performing services for the team in any
3         manner during the taxable year bears to the total
4         number of duty days spent both within and without this
5         State during the taxable year.
6             (b) Travel days. Travel days that do not involve
7         either a game, practice, team meeting, or other similar
8         team event are not considered duty days spent in this
9         State. However, such travel days are considered in the
10         total duty days spent both within and without this
11         State.
12             (c) Definitions. For purposes of this subpart
13         (iv):
14                 (1) The term "professional athletic team"
15             includes, but is not limited to, any professional
16             baseball, basketball, football, soccer, or hockey
17             team.
18                 (2) The term "member of a professional
19             athletic team" includes those employees who are
20             active players, players on the disabled list, and
21             any other persons required to travel and who travel
22             with and perform services on behalf of a
23             professional athletic team on a regular basis.
24             This includes, but is not limited to, coaches,
25             managers, and trainers.
26                 (3) Except as provided in items (C) and (D) of

 

 

SB3257 - 5 - LRB096 20472 HLH 36127 b

1             this subpart (3), the term "duty days" means all
2             days during the taxable year from the beginning of
3             the professional athletic team's official
4             pre-season training period through the last game
5             in which the team competes or is scheduled to
6             compete. Duty days shall be counted for the year in
7             which they occur, including where a team's
8             official pre-season training period through the
9             last game in which the team competes or is
10             scheduled to compete, occurs during more than one
11             tax year.
12                     (A) Duty days shall also include days on
13                 which a member of a professional athletic team
14                 performs service for a team on a date that does
15                 not fall within the foregoing period (e.g.,
16                 participation in instructional leagues, the
17                 "All Star Game", or promotional "caravans").
18                 Performing a service for a professional
19                 athletic team includes conducting training and
20                 rehabilitation activities, when such
21                 activities are conducted at team facilities.
22                     (B) Also included in duty days are game
23                 days, practice days, days spent at team
24                 meetings, promotional caravans, preseason
25                 training camps, and days served with the team
26                 through all post-season games in which the team

 

 

SB3257 - 6 - LRB096 20472 HLH 36127 b

1                 competes or is scheduled to compete.
2                     (C) Duty days for any person who joins a
3                 team during the period from the beginning of
4                 the professional athletic team's official
5                 pre-season training period through the last
6                 game in which the team competes, or is
7                 scheduled to compete, shall begin on the day
8                 that person joins the team. Conversely, duty
9                 days for any person who leaves a team during
10                 this period shall end on the day that person
11                 leaves the team. Where a person switches teams
12                 during a taxable year, a separate duty-day
13                 calculation shall be made for the period the
14                 person was with each team.
15                     (D) Days for which a member of a
16                 professional athletic team is not compensated
17                 and is not performing services for the team in
18                 any manner, including days when such member of
19                 a professional athletic team has been
20                 suspended without pay and prohibited from
21                 performing any services for the team, shall not
22                 be treated as duty days.
23                     (E) Days for which a member of a
24                 professional athletic team is on the disabled
25                 list and does not conduct rehabilitation
26                 activities at facilities of the team, and is

 

 

SB3257 - 7 - LRB096 20472 HLH 36127 b

1                 not otherwise performing services for the team
2                 in Illinois, shall not be considered duty days
3                 spent in this State. All days on the disabled
4                 list, however, are considered to be included in
5                 total duty days spent both within and without
6                 this State.
7                 (4) The term "total compensation for services
8             performed as a member of a professional athletic
9             team" means the total compensation received during
10             the taxable year for services performed:
11                     (A) from the beginning of the official
12                 pre-season training period through the last
13                 game in which the team competes or is scheduled
14                 to compete during that taxable year; and
15                     (B) during the taxable year on a date which
16                 does not fall within the foregoing period
17                 (e.g., participation in instructional leagues,
18                 the "All Star Game", or promotional caravans).
19                 This compensation shall include, but is not
20             limited to, salaries, wages, bonuses as described
21             in this subpart, and any other type of compensation
22             paid during the taxable year to a member of a
23             professional athletic team for services performed
24             in that year. This compensation does not include
25             strike benefits, severance pay, termination pay,
26             contract or option year buy-out payments,

 

 

SB3257 - 8 - LRB096 20472 HLH 36127 b

1             expansion or relocation payments, or any other
2             payments not related to services performed for the
3             team.
4                 For purposes of this subparagraph, "bonuses"
5             included in "total compensation for services
6             performed as a member of a professional athletic
7             team" subject to the allocation described in
8             Section 302(c)(1) are: bonuses earned as a result
9             of play (i.e., performance bonuses) during the
10             season, including bonuses paid for championship,
11             playoff or "bowl" games played by a team, or for
12             selection to all-star league or other honorary
13             positions; and bonuses paid for signing a
14             contract, unless the payment of the signing bonus
15             is not conditional upon the signee playing any
16             games for the team or performing any subsequent
17             services for the team or even making the team, the
18             signing bonus is payable separately from the
19             salary and any other compensation, and the signing
20             bonus is nonrefundable.
21     (3) Sales factor.
22         (A) The sales factor is a fraction, the numerator of
23     which is the total sales of the person in this State during
24     the taxable year, and the denominator of which is the total
25     sales of the person everywhere during the taxable year.
26         (B) Sales of tangible personal property are in this

 

 

SB3257 - 9 - LRB096 20472 HLH 36127 b

1     State if:
2             (i) The property is delivered or shipped to a
3         purchaser, other than the United States government,
4         within this State regardless of the f. o. b. point or
5         other conditions of the sale; or
6             (ii) The property is shipped from an office, store,
7         warehouse, factory or other place of storage in this
8         State and either the purchaser is the United States
9         government or the person is not taxable in the state of
10         the purchaser; provided, however, that premises owned
11         or leased by a person who has independently contracted
12         with the seller for the printing of newspapers,
13         periodicals or books shall not be deemed to be an
14         office, store, warehouse, factory or other place of
15         storage for purposes of this Section. Sales of tangible
16         personal property are not in this State if the seller
17         and purchaser would be members of the same unitary
18         business group but for the fact that either the seller
19         or purchaser is a person with 80% or more of total
20         business activity outside of the United States and the
21         property is purchased for resale.
22         (B-1) Patents, copyrights, trademarks, and similar
23     items of intangible personal property.
24             (i) Gross receipts from the licensing, sale, or
25         other disposition of a patent, copyright, trademark,
26         or similar item of intangible personal property, other

 

 

SB3257 - 10 - LRB096 20472 HLH 36127 b

1         than gross receipts governed by paragraph (B-7) of this
2         item (3), are in this State to the extent the item is
3         utilized in this State during the year the gross
4         receipts are included in gross income.
5             (ii) Place of utilization.
6                 (I) A patent is utilized in a state to the
7             extent that it is employed in production,
8             fabrication, manufacturing, or other processing in
9             the state or to the extent that a patented product
10             is produced in the state. If a patent is utilized
11             in more than one state, the extent to which it is
12             utilized in any one state shall be a fraction equal
13             to the gross receipts of the licensee or purchaser
14             from sales or leases of items produced,
15             fabricated, manufactured, or processed within that
16             state using the patent and of patented items
17             produced within that state, divided by the total of
18             such gross receipts for all states in which the
19             patent is utilized.
20                 (II) A copyright is utilized in a state to the
21             extent that printing or other publication
22             originates in the state. If a copyright is utilized
23             in more than one state, the extent to which it is
24             utilized in any one state shall be a fraction equal
25             to the gross receipts from sales or licenses of
26             materials printed or published in that state

 

 

SB3257 - 11 - LRB096 20472 HLH 36127 b

1             divided by the total of such gross receipts for all
2             states in which the copyright is utilized.
3                 (III) Trademarks and other items of intangible
4             personal property governed by this paragraph (B-1)
5             are utilized in the state in which the commercial
6             domicile of the licensee or purchaser is located.
7             (iii) If the state of utilization of an item of
8         property governed by this paragraph (B-1) cannot be
9         determined from the taxpayer's books and records or
10         from the books and records of any person related to the
11         taxpayer within the meaning of Section 267(b) of the
12         Internal Revenue Code, 26 U.S.C. 267, the gross
13         receipts attributable to that item shall be excluded
14         from both the numerator and the denominator of the
15         sales factor.
16         (B-2) Gross receipts from the license, sale, or other
17     disposition of patents, copyrights, trademarks, and
18     similar items of intangible personal property, other than
19     gross receipts governed by paragraph (B-7) of this item
20     (3), may be included in the numerator or denominator of the
21     sales factor only if gross receipts from licenses, sales,
22     or other disposition of such items comprise more than 50%
23     of the taxpayer's total gross receipts included in gross
24     income during the tax year and during each of the 2
25     immediately preceding tax years; provided that, when a
26     taxpayer is a member of a unitary business group, such

 

 

SB3257 - 12 - LRB096 20472 HLH 36127 b

1     determination shall be made on the basis of the gross
2     receipts of the entire unitary business group.
3         (B-5) For taxable years ending on or after December 31,
4     2008, except as provided in subsections (ii) through (vii),
5     receipts from the sale of telecommunications service or
6     mobile telecommunications service are in this State if the
7     customer's service address is in this State.
8             (i) For purposes of this subparagraph (B-5), the
9         follow terms have the following meanings:
10             "Ancillary services" means services that are
11         associated with or incidental to the provision of
12         "telecommunications services", including but not
13         limited to "detailed telecommunications billing",
14         "directory assistance", "vertical service", and "voice
15         mail services".
16             "Air-to-Ground Radiotelephone service" means a
17         radio service, as that term is defined in 47 CFR 22.99,
18         in which common carriers are authorized to offer and
19         provide radio telecommunications service for hire to
20         subscribers in aircraft.
21             "Call-by-call Basis" means any method of charging
22         for telecommunications services where the price is
23         measured by individual calls.
24             "Communications Channel" means a physical or
25         virtual path of communications over which signals are
26         transmitted between or among customer channel

 

 

SB3257 - 13 - LRB096 20472 HLH 36127 b

1         termination points.
2             "Conference bridging service" means an "ancillary
3         service" that links two or more participants of an
4         audio or video conference call and may include the
5         provision of a telephone number. "Conference bridging
6         service" does not include the "telecommunications
7         services" used to reach the conference bridge.
8             "Customer Channel Termination Point" means the
9         location where the customer either inputs or receives
10         the communications.
11             "Detailed telecommunications billing service"
12         means an "ancillary service" of separately stating
13         information pertaining to individual calls on a
14         customer's billing statement.
15             "Directory assistance" means an "ancillary
16         service" of providing telephone number information,
17         and/or address information.
18             "Home service provider" means the facilities based
19         carrier or reseller with which the customer contracts
20         for the provision of mobile telecommunications
21         services.
22             "Mobile telecommunications service" means
23         commercial mobile radio service, as defined in Section
24         20.3 of Title 47 of the Code of Federal Regulations as
25         in effect on June 1, 1999.
26             "Place of primary use" means the street address

 

 

SB3257 - 14 - LRB096 20472 HLH 36127 b

1         representative of where the customer's use of the
2         telecommunications service primarily occurs, which
3         must be the residential street address or the primary
4         business street address of the customer. In the case of
5         mobile telecommunications services, "place of primary
6         use" must be within the licensed service area of the
7         home service provider.
8             "Post-paid telecommunication service" means the
9         telecommunications service obtained by making a
10         payment on a call-by-call basis either through the use
11         of a credit card or payment mechanism such as a bank
12         card, travel card, credit card, or debit card, or by
13         charge made to a telephone number which is not
14         associated with the origination or termination of the
15         telecommunications service. A post-paid calling
16         service includes telecommunications service, except a
17         prepaid wireless calling service, that would be a
18         prepaid calling service except it is not exclusively a
19         telecommunication service.
20             "Prepaid telecommunication service" means the
21         right to access exclusively telecommunications
22         services, which must be paid for in advance and which
23         enables the origination of calls using an access number
24         or authorization code, whether manually or
25         electronically dialed, and that is sold in
26         predetermined units or dollars of which the number

 

 

SB3257 - 15 - LRB096 20472 HLH 36127 b

1         declines with use in a known amount.
2             "Prepaid Mobile telecommunication service" means a
3         telecommunications service that provides the right to
4         utilize mobile wireless service as well as other
5         non-telecommunication services, including but not
6         limited to ancillary services, which must be paid for
7         in advance that is sold in predetermined units or
8         dollars of which the number declines with use in a
9         known amount.
10             "Private communication service" means a
11         telecommunication service that entitles the customer
12         to exclusive or priority use of a communications
13         channel or group of channels between or among
14         termination points, regardless of the manner in which
15         such channel or channels are connected, and includes
16         switching capacity, extension lines, stations, and any
17         other associated services that are provided in
18         connection with the use of such channel or channels.
19             "Service address" means:
20                 (a) The location of the telecommunications
21             equipment to which a customer's call is charged and
22             from which the call originates or terminates,
23             regardless of where the call is billed or paid;
24                 (b) If the location in line (a) is not known,
25             service address means the origination point of the
26             signal of the telecommunications services first

 

 

SB3257 - 16 - LRB096 20472 HLH 36127 b

1             identified by either the seller's
2             telecommunications system or in information
3             received by the seller from its service provider
4             where the system used to transport such signals is
5             not that of the seller; and
6                 (c) If the locations in line (a) and line (b)
7             are not known, the service address means the
8             location of the customer's place of primary use.
9             "Telecommunications service" means the electronic
10         transmission, conveyance, or routing of voice, data,
11         audio, video, or any other information or signals to a
12         point, or between or among points. The term
13         "telecommunications service" includes such
14         transmission, conveyance, or routing in which computer
15         processing applications are used to act on the form,
16         code or protocol of the content for purposes of
17         transmission, conveyance or routing without regard to
18         whether such service is referred to as voice over
19         Internet protocol services or is classified by the
20         Federal Communications Commission as enhanced or value
21         added. "Telecommunications service" does not include:
22                 (a) Data processing and information services
23             that allow data to be generated, acquired, stored,
24             processed, or retrieved and delivered by an
25             electronic transmission to a purchaser when such
26             purchaser's primary purpose for the underlying

 

 

SB3257 - 17 - LRB096 20472 HLH 36127 b

1             transaction is the processed data or information;
2                 (b) Installation or maintenance of wiring or
3             equipment on a customer's premises;
4                 (c) Tangible personal property;
5                 (d) Advertising, including but not limited to
6             directory advertising.
7                 (e) Billing and collection services provided
8             to third parties;
9                 (f) Internet access service;
10                 (g) Radio and television audio and video
11             programming services, regardless of the medium,
12             including the furnishing of transmission,
13             conveyance and routing of such services by the
14             programming service provider. Radio and television
15             audio and video programming services shall include
16             but not be limited to cable service as defined in
17             47 USC 522(6) and audio and video programming
18             services delivered by commercial mobile radio
19             service providers, as defined in 47 CFR 20.3;
20                 (h) "Ancillary services"; or
21                 (i) Digital products "delivered
22             electronically", including but not limited to
23             software, music, video, reading materials or ring
24             tones.
25             "Vertical service" means an "ancillary service"
26         that is offered in connection with one or more

 

 

SB3257 - 18 - LRB096 20472 HLH 36127 b

1         "telecommunications services", which offers advanced
2         calling features that allow customers to identify
3         callers and to manage multiple calls and call
4         connections, including "conference bridging services".
5             "Voice mail service" means an "ancillary service"
6         that enables the customer to store, send or receive
7         recorded messages. "Voice mail service" does not
8         include any "vertical services" that the customer may
9         be required to have in order to utilize the "voice mail
10         service".
11             (ii) Receipts from the sale of telecommunications
12         service sold on an individual call-by-call basis are in
13         this State if either of the following applies:
14                 (a) The call both originates and terminates in
15             this State.
16                 (b) The call either originates or terminates
17             in this State and the service address is located in
18             this State.
19             (iii) Receipts from the sale of postpaid
20         telecommunications service at retail are in this State
21         if the origination point of the telecommunication
22         signal, as first identified by the service provider's
23         telecommunication system or as identified by
24         information received by the seller from its service
25         provider if the system used to transport
26         telecommunication signals is not the seller's, is

 

 

SB3257 - 19 - LRB096 20472 HLH 36127 b

1         located in this State.
2             (iv) Receipts from the sale of prepaid
3         telecommunications service or prepaid mobile
4         telecommunications service at retail are in this State
5         if the purchaser obtains the prepaid card or similar
6         means of conveyance at a location in this State.
7         Receipts from recharging a prepaid telecommunications
8         service or mobile telecommunications service is in
9         this State if the purchaser's billing information
10         indicates a location in this State.
11             (v) Receipts from the sale of private
12         communication services are in this State as follows:
13                 (a) 100% of receipts from charges imposed at
14             each channel termination point in this State.
15                 (b) 100% of receipts from charges for the total
16             channel mileage between each channel termination
17             point in this State.
18                 (c) 50% of the total receipts from charges for
19             service segments when those segments are between 2
20             customer channel termination points, 1 of which is
21             located in this State and the other is located
22             outside of this State, which segments are
23             separately charged.
24                 (d) The receipts from charges for service
25             segments with a channel termination point located
26             in this State and in two or more other states, and

 

 

SB3257 - 20 - LRB096 20472 HLH 36127 b

1             which segments are not separately billed, are in
2             this State based on a percentage determined by
3             dividing the number of customer channel
4             termination points in this State by the total
5             number of customer channel termination points.
6             (vi) Receipts from charges for ancillary services
7         for telecommunications service sold to customers at
8         retail are in this State if the customer's primary
9         place of use of telecommunications services associated
10         with those ancillary services is in this State. If the
11         seller of those ancillary services cannot determine
12         where the associated telecommunications are located,
13         then the ancillary services shall be based on the
14         location of the purchaser.
15             (vii) Receipts to access a carrier's network or
16         from the sale of telecommunication services or
17         ancillary services for resale are in this State as
18         follows:
19                 (a) 100% of the receipts from access fees
20             attributable to intrastate telecommunications
21             service that both originates and terminates in
22             this State.
23                 (b) 50% of the receipts from access fees
24             attributable to interstate telecommunications
25             service if the interstate call either originates
26             or terminates in this State.

 

 

SB3257 - 21 - LRB096 20472 HLH 36127 b

1                 (c) 100% of the receipts from interstate end
2             user access line charges, if the customer's
3             service address is in this State. As used in this
4             subdivision, "interstate end user access line
5             charges" includes, but is not limited to, the
6             surcharge approved by the federal communications
7             commission and levied pursuant to 47 CFR 69.
8                 (d) Gross receipts from sales of
9             telecommunication services or from ancillary
10             services for telecommunications services sold to
11             other telecommunication service providers for
12             resale shall be sourced to this State using the
13             apportionment concepts used for non-resale
14             receipts of telecommunications services if the
15             information is readily available to make that
16             determination. If the information is not readily
17             available, then the taxpayer may use any other
18             reasonable and consistent method.
19         (B-7) For taxable years ending on or after December 31,
20     2008, receipts from the sale of broadcasting services are
21     in this State if the broadcasting services are received in
22     this State. For purposes of this paragraph (B-7), the
23     following terms have the following meanings:
24             "Advertising revenue" means consideration received
25         by the taxpayer in exchange for broadcasting services
26         or allowing the broadcasting of commercials or

 

 

SB3257 - 22 - LRB096 20472 HLH 36127 b

1         announcements in connection with the broadcasting of
2         film or radio programming, from sponsorships of the
3         programming, or from product placements in the
4         programming.
5             "Audience factor" means the ratio that the
6         audience or subscribers located in this State of a
7         station, a network, or a cable system bears to the
8         total audience or total subscribers for that station,
9         network, or cable system. The audience factor for film
10         or radio programming shall be determined by reference
11         to the books and records of the taxpayer or by
12         reference to published rating statistics provided the
13         method used by the taxpayer is consistently used from
14         year to year for this purpose and fairly represents the
15         taxpayer's activity in this State.
16             "Broadcast" or "broadcasting" or "broadcasting
17         services" means the transmission or provision of film
18         or radio programming, whether through the public
19         airwaves, by cable, by direct or indirect satellite
20         transmission, or by any other means of communication,
21         either through a station, a network, or a cable system.
22             "Film" or "film programming" means the broadcast
23         on television of any and all performances, events, or
24         productions, including but not limited to news,
25         sporting events, plays, stories, or other literary,
26         commercial, educational, or artistic works, either

 

 

SB3257 - 23 - LRB096 20472 HLH 36127 b

1         live or through the use of video tape, disc, or any
2         other type of format or medium. Each episode of a
3         series of films produced for television shall
4         constitute separate "film" notwithstanding that the
5         series relates to the same principal subject and is
6         produced during one or more tax periods.
7             "Radio" or "radio programming" means the broadcast
8         on radio of any and all performances, events, or
9         productions, including but not limited to news,
10         sporting events, plays, stories, or other literary,
11         commercial, educational, or artistic works, either
12         live or through the use of an audio tape, disc, or any
13         other format or medium. Each episode in a series of
14         radio programming produced for radio broadcast shall
15         constitute a separate "radio programming"
16         notwithstanding that the series relates to the same
17         principal subject and is produced during one or more
18         tax periods.
19                 (i) In the case of advertising revenue from
20             broadcasting, the customer is the advertiser and
21             the service is received in this State if the
22             commercial domicile of the advertiser is in this
23             State.
24                 (ii) In the case where film or radio
25             programming is broadcast by a station, a network,
26             or a cable system for a fee or other remuneration

 

 

SB3257 - 24 - LRB096 20472 HLH 36127 b

1             received from the recipient of the broadcast, the
2             portion of the service that is received in this
3             State is measured by the portion of the recipients
4             of the broadcast located in this State.
5             Accordingly, the fee or other remuneration for
6             such service that is included in the Illinois
7             numerator of the sales factor is the total of those
8             fees or other remuneration received from
9             recipients in Illinois. For purposes of this
10             paragraph, a taxpayer may determine the location
11             of the recipients of its broadcast using the
12             address of the recipient shown in its contracts
13             with the recipient or using the billing address of
14             the recipient in the taxpayer's records.
15                 (iii) In the case where film or radio
16             programming is broadcast by a station, a network,
17             or a cable system for a fee or other remuneration
18             from the person providing the programming, the
19             portion of the broadcast service that is received
20             by such station, network, or cable system in this
21             State is measured by the portion of recipients of
22             the broadcast located in this State. Accordingly,
23             the amount of revenue related to such an
24             arrangement that is included in the Illinois
25             numerator of the sales factor is the total fee or
26             other total remuneration from the person providing

 

 

SB3257 - 25 - LRB096 20472 HLH 36127 b

1             the programming related to that broadcast
2             multiplied by the Illinois audience factor for
3             that broadcast.
4                 (iv) In the case where film or radio
5             programming is provided by a taxpayer that is a
6             network or station to a customer for broadcast in
7             exchange for a fee or other remuneration from that
8             customer the broadcasting service is received at
9             the location of the office of the customer from
10             which the services were ordered in the regular
11             course of the customer's trade or business.
12             Accordingly, in such a case the revenue derived by
13             the taxpayer that is included in the taxpayer's
14             Illinois numerator of the sales factor is the
15             revenue from such customers who receive the
16             broadcasting service in Illinois.
17                 (v) In the case where film or radio programming
18             is provided by a taxpayer that is not a network or
19             station to another person for broadcasting in
20             exchange for a fee or other remuneration from that
21             person, the broadcasting service is received at
22             the location of the office of the customer from
23             which the services were ordered in the regular
24             course of the customer's trade or business.
25             Accordingly, in such a case the revenue derived by
26             the taxpayer that is included in the taxpayer's

 

 

SB3257 - 26 - LRB096 20472 HLH 36127 b

1             Illinois numerator of the sales factor is the
2             revenue from such customers who receive the
3             broadcasting service in Illinois.
4         (C) For taxable years ending before December 31, 2008,
5     sales, other than sales governed by paragraphs (B), (B-1),
6     and (B-2), are in this State if:
7             (i) The income-producing activity is performed in
8         this State; or
9             (ii) The income-producing activity is performed
10         both within and without this State and a greater
11         proportion of the income-producing activity is
12         performed within this State than without this State,
13         based on performance costs.
14         (C-5) For taxable years ending on or after December 31,
15     2008, sales, other than sales governed by paragraphs (B),
16     (B-1), (B-2), (B-5), and (B-7), are in this State if any of
17     the following criteria are met:
18             (i) Sales from the sale or lease of real property
19         are in this State if the property is located in this
20         State.
21             (ii) Sales from the lease or rental of tangible
22         personal property are in this State if the property is
23         located in this State during the rental period. Sales
24         from the lease or rental of tangible personal property
25         that is characteristically moving property, including,
26         but not limited to, motor vehicles, rolling stock,

 

 

SB3257 - 27 - LRB096 20472 HLH 36127 b

1         aircraft, vessels, or mobile equipment are in this
2         State to the extent that the property is used in this
3         State.
4             (iii) In the case of interest, net gains (but not
5         less than zero) and other items of income from
6         intangible personal property, the sale is in this State
7         if:
8                 (a) in the case of a taxpayer who is a dealer
9             in the item of intangible personal property within
10             the meaning of Section 475 of the Internal Revenue
11             Code, the income or gain is received from a
12             customer in this State. For purposes of this
13             subparagraph, a customer is in this State if the
14             customer is an individual, trust or estate who is a
15             resident of this State and, for all other
16             customers, if the customer's commercial domicile
17             is in this State. Unless the dealer has actual
18             knowledge of the residence or commercial domicile
19             of a customer during a taxable year, the customer
20             shall be deemed to be a customer in this State if
21             the billing address of the customer, as shown in
22             the records of the dealer, is in this State; or
23                 (b) in all other cases, if the
24             income-producing activity of the taxpayer is
25             performed in this State or, if the
26             income-producing activity of the taxpayer is

 

 

SB3257 - 28 - LRB096 20472 HLH 36127 b

1             performed both within and without this State, if a
2             greater proportion of the income-producing
3             activity of the taxpayer is performed within this
4             State than in any other state, based on performance
5             costs.
6             (iv) Sales of services are in this State if the
7         services are received in this State. For the purposes
8         of this section, gross receipts from the performance of
9         services provided to a corporation, partnership, or
10         trust may only be attributed to a state where that
11         corporation, partnership, or trust has a fixed place of
12         business. If the state where the services are received
13         is not readily determinable or is a state where the
14         corporation, partnership, or trust receiving the
15         service does not have a fixed place of business, the
16         services shall be deemed to be received at the location
17         of the office of the customer from which the services
18         were ordered in the regular course of the customer's
19         trade or business. If the ordering office cannot be
20         determined, the services shall be deemed to be received
21         at the office of the customer to which the services are
22         billed. If the taxpayer is not taxable in the state in
23         which the services are received, the sale must be
24         excluded from both the numerator and the denominator of
25         the sales factor. The Department shall adopt rules
26         prescribing where specific types of service are

 

 

SB3257 - 29 - LRB096 20472 HLH 36127 b

1         received, including, but not limited to, publishing,
2         and utility service.
3         (D) For taxable years ending on or after December 31,
4     1995, the following items of income shall not be included
5     in the numerator or denominator of the sales factor:
6     dividends; amounts included under Section 78 of the
7     Internal Revenue Code; and Subpart F income as defined in
8     Section 952 of the Internal Revenue Code. No inference
9     shall be drawn from the enactment of this paragraph (D) in
10     construing this Section for taxable years ending before
11     December 31, 1995.
12         (E) Paragraphs (B-1) and (B-2) shall apply to tax years
13     ending on or after December 31, 1999, provided that a
14     taxpayer may elect to apply the provisions of these
15     paragraphs to prior tax years. Such election shall be made
16     in the form and manner prescribed by the Department, shall
17     be irrevocable, and shall apply to all tax years; provided
18     that, if a taxpayer's Illinois income tax liability for any
19     tax year, as assessed under Section 903 prior to January 1,
20     1999, was computed in a manner contrary to the provisions
21     of paragraphs (B-1) or (B-2), no refund shall be payable to
22     the taxpayer for that tax year to the extent such refund is
23     the result of applying the provisions of paragraph (B-1) or
24     (B-2) retroactively. In the case of a unitary business
25     group, such election shall apply to all members of such
26     group for every tax year such group is in existence, but

 

 

SB3257 - 30 - LRB096 20472 HLH 36127 b

1     shall not apply to any taxpayer for any period during which
2     that taxpayer is not a member of such group.
3     (b) Insurance companies.
4         (1) In general. Except as otherwise provided by
5     paragraph (2), business income of an insurance company for
6     a taxable year shall be apportioned to this State by
7     multiplying such income by a fraction, the numerator of
8     which is the direct premiums written for insurance upon
9     property or risk in this State, and the denominator of
10     which is the direct premiums written for insurance upon
11     property or risk everywhere. For purposes of this
12     subsection, the term "direct premiums written" means the
13     total amount of direct premiums written, assessments and
14     annuity considerations as reported for the taxable year on
15     the annual statement filed by the company with the Illinois
16     Director of Insurance in the form approved by the National
17     Convention of Insurance Commissioners or such other form as
18     may be prescribed in lieu thereof.
19         (2) Reinsurance. If the principal source of premiums
20     written by an insurance company consists of premiums for
21     reinsurance accepted by it, the business income of such
22     company shall be apportioned to this State by multiplying
23     such income by a fraction, the numerator of which is the
24     sum of (i) direct premiums written for insurance upon
25     property or risk in this State, plus (ii) premiums written
26     for reinsurance accepted in respect of property or risk in

 

 

SB3257 - 31 - LRB096 20472 HLH 36127 b

1     this State, and the denominator of which is the sum of
2     (iii) direct premiums written for insurance upon property
3     or risk everywhere, plus (iv) premiums written for
4     reinsurance accepted in respect of property or risk
5     everywhere. For taxable years ending before December 31,
6     2008, for purposes of this paragraph, premiums written for
7     reinsurance accepted in respect of property or risk in this
8     State, whether or not otherwise determinable, may, at the
9     election of the company, be determined on the basis of the
10     proportion which premiums written for reinsurance accepted
11     from companies commercially domiciled in Illinois bears to
12     premiums written for reinsurance accepted from all
13     sources, or, alternatively, in the proportion which the sum
14     of the direct premiums written for insurance upon property
15     or risk in this State by each ceding company from which
16     reinsurance is accepted bears to the sum of the total
17     direct premiums written by each such ceding company for the
18     taxable year.
19     (c) Financial organizations.
20         (1) In general. For taxable years ending before
21     December 31, 2008, business income of a financial
22     organization shall be apportioned to this State by
23     multiplying such income by a fraction, the numerator of
24     which is its business income from sources within this
25     State, and the denominator of which is its business income
26     from all sources. For the purposes of this subsection, the

 

 

SB3257 - 32 - LRB096 20472 HLH 36127 b

1     business income of a financial organization from sources
2     within this State is the sum of the amounts referred to in
3     subparagraphs (A) through (E) following, but excluding the
4     adjusted income of an international banking facility as
5     determined in paragraph (2):
6             (A) Fees, commissions or other compensation for
7         financial services rendered within this State;
8             (B) Gross profits from trading in stocks, bonds or
9         other securities managed within this State;
10             (C) Dividends, and interest from Illinois
11         customers, which are received within this State;
12             (D) Interest charged to customers at places of
13         business maintained within this State for carrying
14         debit balances of margin accounts, without deduction
15         of any costs incurred in carrying such accounts; and
16             (E) Any other gross income resulting from the
17         operation as a financial organization within this
18         State. In computing the amounts referred to in
19         paragraphs (A) through (E) of this subsection, any
20         amount received by a member of an affiliated group
21         (determined under Section 1504(a) of the Internal
22         Revenue Code but without reference to whether any such
23         corporation is an "includible corporation" under
24         Section 1504(b) of the Internal Revenue Code) from
25         another member of such group shall be included only to
26         the extent such amount exceeds expenses of the

 

 

SB3257 - 33 - LRB096 20472 HLH 36127 b

1         recipient directly related thereto.
2         (2) International Banking Facility. For taxable years
3     ending before December 31, 2008:
4             (A) Adjusted Income. The adjusted income of an
5         international banking facility is its income reduced
6         by the amount of the floor amount.
7             (B) Floor Amount. The floor amount shall be the
8         amount, if any, determined by multiplying the income of
9         the international banking facility by a fraction, not
10         greater than one, which is determined as follows:
11                 (i) The numerator shall be:
12                 The average aggregate, determined on a
13             quarterly basis, of the financial organization's
14             loans to banks in foreign countries, to foreign
15             domiciled borrowers (except where secured
16             primarily by real estate) and to foreign
17             governments and other foreign official
18             institutions, as reported for its branches,
19             agencies and offices within the state on its
20             "Consolidated Report of Condition", Schedule A,
21             Lines 2.c., 5.b., and 7.a., which was filed with
22             the Federal Deposit Insurance Corporation and
23             other regulatory authorities, for the year 1980,
24             minus
25                 The average aggregate, determined on a
26             quarterly basis, of such loans (other than loans of

 

 

SB3257 - 34 - LRB096 20472 HLH 36127 b

1             an international banking facility), as reported by
2             the financial institution for its branches,
3             agencies and offices within the state, on the
4             corresponding Schedule and lines of the
5             Consolidated Report of Condition for the current
6             taxable year, provided, however, that in no case
7             shall the amount determined in this clause (the
8             subtrahend) exceed the amount determined in the
9             preceding clause (the minuend); and
10                 (ii) the denominator shall be the average
11             aggregate, determined on a quarterly basis, of the
12             international banking facility's loans to banks in
13             foreign countries, to foreign domiciled borrowers
14             (except where secured primarily by real estate)
15             and to foreign governments and other foreign
16             official institutions, which were recorded in its
17             financial accounts for the current taxable year.
18             (C) Change to Consolidated Report of Condition and
19         in Qualification. In the event the Consolidated Report
20         of Condition which is filed with the Federal Deposit
21         Insurance Corporation and other regulatory authorities
22         is altered so that the information required for
23         determining the floor amount is not found on Schedule
24         A, lines 2.c., 5.b. and 7.a., the financial institution
25         shall notify the Department and the Department may, by
26         regulations or otherwise, prescribe or authorize the

 

 

SB3257 - 35 - LRB096 20472 HLH 36127 b

1         use of an alternative source for such information. The
2         financial institution shall also notify the Department
3         should its international banking facility fail to
4         qualify as such, in whole or in part, or should there
5         be any amendment or change to the Consolidated Report
6         of Condition, as originally filed, to the extent such
7         amendment or change alters the information used in
8         determining the floor amount.
9         (3) For taxable years ending on or after December 31,
10     2008, the business income of a financial organization shall
11     be apportioned to this State by multiplying such income by
12     a fraction, the numerator of which is its gross receipts
13     from sources in this State or otherwise attributable to
14     this State's marketplace and the denominator of which is
15     its gross receipts everywhere during the taxable year.
16     "Gross receipts" for purposes of this subparagraph (3)
17     means gross income, including net taxable gain on
18     disposition of assets, including securities and money
19     market instruments, when derived from transactions and
20     activities in the regular course of the financial
21     organization's trade or business. The following examples
22     are illustrative:
23             (i) Receipts from the lease or rental of real or
24         tangible personal property are in this State if the
25         property is located in this State during the rental
26         period. Receipts from the lease or rental of tangible

 

 

SB3257 - 36 - LRB096 20472 HLH 36127 b

1         personal property that is characteristically moving
2         property, including, but not limited to, motor
3         vehicles, rolling stock, aircraft, vessels, or mobile
4         equipment are from sources in this State to the extent
5         that the property is used in this State.
6             (ii) Interest income, commissions, fees, gains on
7         disposition, and other receipts from assets in the
8         nature of loans that are secured primarily by real
9         estate or tangible personal property are from sources
10         in this State if the security is located in this State.
11             (iii) Interest income, commissions, fees, gains on
12         disposition, and other receipts from consumer loans
13         that are not secured by real or tangible personal
14         property are from sources in this State if the debtor
15         is a resident of this State.
16             (iv) Interest income, commissions, fees, gains on
17         disposition, and other receipts from commercial loans
18         and installment obligations that are not secured by
19         real or tangible personal property are from sources in
20         this State if the proceeds of the loan are to be
21         applied in this State. If it cannot be determined where
22         the funds are to be applied, the income and receipts
23         are from sources in this State if the office of the
24         borrower from which the loan was negotiated in the
25         regular course of business is located in this State. If
26         the location of this office cannot be determined, the

 

 

SB3257 - 37 - LRB096 20472 HLH 36127 b

1         income and receipts shall be excluded from the
2         numerator and denominator of the sales factor.
3             (v) Interest income, fees, gains on disposition,
4         service charges, merchant discount income, and other
5         receipts from credit card receivables are from sources
6         in this State if the card charges are regularly billed
7         to a customer in this State.
8             (vi) Receipts from the performance of services,
9         including, but not limited to, fiduciary, advisory,
10         and brokerage services, are in this State if the
11         services are received in this State within the meaning
12         of subparagraph (a)(3)(C-5)(iv) of this Section.
13             (vii) Receipts from the issuance of travelers
14         checks and money orders are from sources in this State
15         if the checks and money orders are issued from a
16         location within this State.
17             (viii) Receipts from investment assets and
18         activities and trading assets and activities are
19         included in the receipts factor as follows:
20                 (1) Interest, dividends, net gains (but not
21             less than zero) and other income from investment
22             assets and activities from trading assets and
23             activities shall be included in the receipts
24             factor. Investment assets and activities and
25             trading assets and activities include but are not
26             limited to: investment securities; trading account

 

 

SB3257 - 38 - LRB096 20472 HLH 36127 b

1             assets; federal funds; securities purchased and
2             sold under agreements to resell or repurchase;
3             options; futures contracts; forward contracts;
4             notional principal contracts such as swaps;
5             equities; and foreign currency transactions. With
6             respect to the investment and trading assets and
7             activities described in subparagraphs (A) and (B)
8             of this paragraph, the receipts factor shall
9             include the amounts described in such
10             subparagraphs.
11                     (A) The receipts factor shall include the
12                 amount by which interest from federal funds
13                 sold and securities purchased under resale
14                 agreements exceeds interest expense on federal
15                 funds purchased and securities sold under
16                 repurchase agreements.
17                     (B) The receipts factor shall include the
18                 amount by which interest, dividends, gains and
19                 other income from trading assets and
20                 activities, including but not limited to
21                 assets and activities in the matched book, in
22                 the arbitrage book, and foreign currency
23                 transactions, exceed amounts paid in lieu of
24                 interest, amounts paid in lieu of dividends,
25                 and losses from such assets and activities.
26                 (2) The numerator of the receipts factor

 

 

SB3257 - 39 - LRB096 20472 HLH 36127 b

1             includes interest, dividends, net gains (but not
2             less than zero), and other income from investment
3             assets and activities and from trading assets and
4             activities described in paragraph (1) of this
5             subsection that are attributable to this State.
6                     (A) The amount of interest, dividends, net
7                 gains (but not less than zero), and other
8                 income from investment assets and activities
9                 in the investment account to be attributed to
10                 this State and included in the numerator is
11                 determined by multiplying all such income from
12                 such assets and activities by a fraction, the
13                 numerator of which is the gross income from
14                 such assets and activities which are properly
15                 assigned to a fixed place of business of the
16                 taxpayer within this State and the denominator
17                 of which is the gross income from all such
18                 assets and activities.
19                     (B) The amount of interest from federal
20                 funds sold and purchased and from securities
21                 purchased under resale agreements and
22                 securities sold under repurchase agreements
23                 attributable to this State and included in the
24                 numerator is determined by multiplying the
25                 amount described in subparagraph (A) of
26                 paragraph (1) of this subsection from such

 

 

SB3257 - 40 - LRB096 20472 HLH 36127 b

1                 funds and such securities by a fraction, the
2                 numerator of which is the gross income from
3                 such funds and such securities which are
4                 properly assigned to a fixed place of business
5                 of the taxpayer within this State and the
6                 denominator of which is the gross income from
7                 all such funds and such securities.
8                     (C) The amount of interest, dividends,
9                 gains, and other income from trading assets and
10                 activities, including but not limited to
11                 assets and activities in the matched book, in
12                 the arbitrage book and foreign currency
13                 transactions (but excluding amounts described
14                 in subparagraphs (A) or (B) of this paragraph),
15                 attributable to this State and included in the
16                 numerator is determined by multiplying the
17                 amount described in subparagraph (B) of
18                 paragraph (1) of this subsection by a fraction,
19                 the numerator of which is the gross income from
20                 such trading assets and activities which are
21                 properly assigned to a fixed place of business
22                 of the taxpayer within this State and the
23                 denominator of which is the gross income from
24                 all such assets and activities.
25                     (D) Properly assigned, for purposes of
26                 this paragraph (2) of this subsection, means

 

 

SB3257 - 41 - LRB096 20472 HLH 36127 b

1                 the investment or trading asset or activity is
2                 assigned to the fixed place of business with
3                 which it has a preponderance of substantive
4                 contacts. An investment or trading asset or
5                 activity assigned by the taxpayer to a fixed
6                 place of business without the State shall be
7                 presumed to have been properly assigned if:
8                         (i) the taxpayer has assigned, in the
9                     regular course of its business, such asset
10                     or activity on its records to a fixed place
11                     of business consistent with federal or
12                     state regulatory requirements;
13                         (ii) such assignment on its records is
14                     based upon substantive contacts of the
15                     asset or activity to such fixed place of
16                     business; and
17                         (iii) the taxpayer uses such records
18                     reflecting assignment of such assets or
19                     activities for the filing of all state and
20                     local tax returns for which an assignment
21                     of such assets or activities to a fixed
22                     place of business is required.
23                     (E) The presumption of proper assignment
24                 of an investment or trading asset or activity
25                 provided in subparagraph (D) of paragraph (2)
26                 of this subsection may be rebutted upon a

 

 

SB3257 - 42 - LRB096 20472 HLH 36127 b

1                 showing by the Department, supported by a
2                 preponderance of the evidence, that the
3                 preponderance of substantive contacts
4                 regarding such asset or activity did not occur
5                 at the fixed place of business to which it was
6                 assigned on the taxpayer's records. If the
7                 fixed place of business that has a
8                 preponderance of substantive contacts cannot
9                 be determined for an investment or trading
10                 asset or activity to which the presumption in
11                 subparagraph (D) of paragraph (2) of this
12                 subsection does not apply or with respect to
13                 which that presumption has been rebutted, that
14                 asset or activity is properly assigned to the
15                 state in which the taxpayer's commercial
16                 domicile is located. For purposes of this
17                 subparagraph (E), it shall be presumed,
18                 subject to rebuttal, that taxpayer's
19                 commercial domicile is in the state of the
20                 United States or the District of Columbia to
21                 which the greatest number of employees are
22                 regularly connected with the management of the
23                 investment or trading income or out of which
24                 they are working, irrespective of where the
25                 services of such employees are performed, as of
26                 the last day of the taxable year.

 

 

SB3257 - 43 - LRB096 20472 HLH 36127 b

1         (4) (Blank).
2         (5) (Blank).
3     (d) Transportation services. For taxable years ending
4 before December 31, 2008, business income derived from
5 furnishing transportation services shall be apportioned to
6 this State in accordance with paragraphs (1) and (2):
7         (1) Such business income (other than that derived from
8     transportation by pipeline) shall be apportioned to this
9     State by multiplying such income by a fraction, the
10     numerator of which is the revenue miles of the person in
11     this State, and the denominator of which is the revenue
12     miles of the person everywhere. For purposes of this
13     paragraph, a revenue mile is the transportation of 1
14     passenger or 1 net ton of freight the distance of 1 mile
15     for a consideration. Where a person is engaged in the
16     transportation of both passengers and freight, the
17     fraction above referred to shall be determined by means of
18     an average of the passenger revenue mile fraction and the
19     freight revenue mile fraction, weighted to reflect the
20     person's
21             (A) relative railway operating income from total
22         passenger and total freight service, as reported to the
23         Interstate Commerce Commission, in the case of
24         transportation by railroad, and
25             (B) relative gross receipts from passenger and
26         freight transportation, in case of transportation

 

 

SB3257 - 44 - LRB096 20472 HLH 36127 b

1         other than by railroad.
2         (2) Such business income derived from transportation
3     by pipeline shall be apportioned to this State by
4     multiplying such income by a fraction, the numerator of
5     which is the revenue miles of the person in this State, and
6     the denominator of which is the revenue miles of the person
7     everywhere. For the purposes of this paragraph, a revenue
8     mile is the transportation by pipeline of 1 barrel of oil,
9     1,000 cubic feet of gas, or of any specified quantity of
10     any other substance, the distance of 1 mile for a
11     consideration.
12         (3) For taxable years ending on or after December 31,
13     2008, business income derived from providing
14     transportation services other than airline services shall
15     be apportioned to this State by using a fraction, (a) the
16     numerator of which shall be (i) all receipts from any
17     movement or shipment of people, goods, mail, oil, gas, or
18     any other substance (other than by airline) that both
19     originates and terminates in this State, plus (ii) that
20     portion of the person's gross receipts from movements or
21     shipments of people, goods, mail, oil, gas, or any other
22     substance (other than by airline) that originates in one
23     state or jurisdiction and terminates in another state or
24     jurisdiction, that is determined by the ratio that the
25     miles traveled in this State bears to total miles
26     everywhere and (b) the denominator of which shall be all

 

 

SB3257 - 45 - LRB096 20472 HLH 36127 b

1     revenue derived from the movement or shipment of people,
2     goods, mail, oil, gas, or any other substance (other than
3     by airline). Where a taxpayer is engaged in the
4     transportation of both passengers and freight, the
5     fraction above referred to shall first be determined
6     separately for passenger miles and freight miles. Then an
7     average of the passenger miles fraction and the freight
8     miles fraction shall be weighted to reflect the taxpayer's:
9             (A) relative railway operating income from total
10         passenger and total freight service, as reported to the
11         Surface Transportation Board, in the case of
12         transportation by railroad; and
13             (B) relative gross receipts from passenger and
14         freight transportation, in case of transportation
15         other than by railroad.
16         (4) For taxable years ending on or after December 31,
17     2008, business income derived from furnishing airline
18     transportation services shall be apportioned to this State
19     by multiplying such income by a fraction, the numerator of
20     which is the revenue miles of the person in this State, and
21     the denominator of which is the revenue miles of the person
22     everywhere. For purposes of this paragraph, a revenue mile
23     is the transportation of one passenger or one net ton of
24     freight the distance of one mile for a consideration. If a
25     person is engaged in the transportation of both passengers
26     and freight, the fraction above referred to shall be

 

 

SB3257 - 46 - LRB096 20472 HLH 36127 b

1     determined by means of an average of the passenger revenue
2     mile fraction and the freight revenue mile fraction,
3     weighted to reflect the person's relative gross receipts
4     from passenger and freight airline transportation.
5     (e) Combined apportionment. Where 2 or more persons are
6 engaged in a unitary business as described in subsection
7 (a)(27) of Section 1501, a part of which is conducted in this
8 State by one or more members of the group, the business income
9 attributable to this State by any such member or members shall
10 be apportioned by means of the combined apportionment method.
11     (f) Alternative allocation. If the allocation and
12 apportionment provisions of subsections (a) through (e) and of
13 subsection (h) do not fairly represent the extent of a person's
14 business activity in this State, the person may petition for,
15 or the Director may, without a petition, permit or require, in
16 respect of all or any part of the person's business activity,
17 if reasonable:
18         (1) Separate accounting;
19         (2) The exclusion of any one or more factors;
20         (3) The inclusion of one or more additional factors
21     which will fairly represent the person's business
22     activities in this State; or
23         (4) The employment of any other method to effectuate an
24     equitable allocation and apportionment of the person's
25     business income.
26     (g) Cross reference. For allocation of business income by

 

 

SB3257 - 47 - LRB096 20472 HLH 36127 b

1 residents, see Section 301(a).
2     (h) Apportionment of income. For tax years ending on or
3 after December 31, 1998, the apportionment factor of persons
4 who apportion their business income to this State under
5 subsection (a) shall be equal to:
6         (1) for tax years ending on or after December 31, 1998
7     and before December 31, 1999, 16 2/3% of the property
8     factor plus 16 2/3% of the payroll factor plus 66 2/3% of
9     the sales factor;
10         (2) for tax years ending on or after December 31, 1999
11     and before December 31, 2000, 8 1/3% of the property factor
12     plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
13     factor;
14         (3) for tax years ending on or after December 31, 2000
15     and before December 31, 2010, the sales factor; .
16         (4) for tax years ending on or after December 31, 2010,
17     as provided in subsection (a).
18 If, in any tax year ending on or after December 31, 1998 and
19 before December 31, 2000, the denominator of the payroll,
20 property, or sales factor is zero, the apportionment factor
21 computed in paragraph (1) or (2) of this subsection for that
22 year shall be divided by an amount equal to 100% minus the
23 percentage weight given to each factor whose denominator is
24 equal to zero.
25 (Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08;
26 96-763, eff. 8-25-09.)
 

 

 

SB3257 - 48 - LRB096 20472 HLH 36127 b

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