Illinois General Assembly - Full Text of HB2599
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Full Text of HB2599  103rd General Assembly

HB2599 103RD GENERAL ASSEMBLY

  
  

 


 
103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB2599

 

Introduced 2/15/2023, by Rep. Adam M. Niemerg

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201

    Amends the Illinois Income Tax Act. Reduces the rate of tax on individuals, trusts, estates, and certain pass-through entities from 4.95% to 3.75%. Reduces the rate of tax on corporations from 7% to 6%. Effective immediately.


LRB103 30837 HLH 57338 b

 

 

A BILL FOR

 

HB2599LRB103 30837 HLH 57338 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
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
17subsection (d-1):
18        (1) In the case of an individual, trust or estate, for
19    taxable years ending prior to July 1, 1989, an amount
20    equal to 2 1/2% of the taxpayer's net income for the
21    taxable year.
22        (2) In the case of an individual, trust or estate, for
23    taxable years beginning prior to July 1, 1989 and ending

 

 

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1    after June 30, 1989, an amount equal to the sum of (i) 2
2    1/2% of the taxpayer's net income for the period prior to
3    July 1, 1989, as calculated under Section 202.3, and (ii)
4    3% of the taxpayer's net income for the period after June
5    30, 1989, as calculated under Section 202.3.
6        (3) In the case of an individual, trust or estate, for
7    taxable years beginning after June 30, 1989, and ending
8    prior to January 1, 2011, an amount equal to 3% of the
9    taxpayer's net income for the taxable year.
10        (4) In the case of an individual, trust, or estate,
11    for taxable years beginning prior to January 1, 2011, and
12    ending after December 31, 2010, an amount equal to the sum
13    of (i) 3% of the taxpayer's net income for the period prior
14    to January 1, 2011, as calculated under Section 202.5, and
15    (ii) 5% of the taxpayer's net income for the period after
16    December 31, 2010, as calculated under Section 202.5.
17        (5) In the case of an individual, trust, or estate,
18    for taxable years beginning on or after January 1, 2011,
19    and ending prior to January 1, 2015, an amount equal to 5%
20    of the taxpayer's net income for the taxable year.
21        (5.1) In the case of an individual, trust, or estate,
22    for taxable years beginning prior to January 1, 2015, and
23    ending after December 31, 2014, an amount equal to the sum
24    of (i) 5% of the taxpayer's net income for the period prior
25    to January 1, 2015, as calculated under Section 202.5, and
26    (ii) 3.75% of the taxpayer's net income for the period

 

 

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1    after December 31, 2014, as calculated under Section
2    202.5.
3        (5.2) In the case of an individual, trust, or estate,
4    for taxable years beginning on or after January 1, 2015,
5    and ending prior to July 1, 2017, an amount equal to 3.75%
6    of the taxpayer's net income for the taxable year.
7        (5.3) In the case of an individual, trust, or estate,
8    for taxable years beginning prior to July 1, 2017, and
9    ending after June 30, 2017, an amount equal to the sum of
10    (i) 3.75% of the taxpayer's net income for the period
11    prior to July 1, 2017, as calculated under Section 202.5,
12    and (ii) 4.95% of the taxpayer's net income for the period
13    after June 30, 2017, as calculated under Section 202.5.
14        (5.4) In the case of an individual, trust, or estate,
15    for taxable years beginning on or after July 1, 2017 and
16    ending prior to January 1, 2024, an amount equal to 4.95%
17    of the taxpayer's net income for the taxable year.
18        (5.5) In the case of an individual, trust, or estate,
19    for taxable years beginning prior to January 1, 2024 and
20    ending after December 31, 2023, an amount equal to the sum
21    of (i) 4.95% of the taxpayer's net income for the period
22    prior to January 1, 2024, as calculated under Section
23    202.5, and (ii) 3.75% of the taxpayer's net income for the
24    period after December 31, 2023, as calculated under
25    Section 202.5.
26        (5.6) In the case of an individual, trust, or estate,

 

 

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1    for taxable years beginning on or after January 1, 2024,
2    an amount equal to 3.75% of the taxpayer's net income for
3    the taxable year.
4        (6) In the case of a corporation, for taxable years
5    ending prior to July 1, 1989, an amount equal to 4% of the
6    taxpayer's net income for the taxable year.
7        (7) In the case of a corporation, for taxable years
8    beginning prior to July 1, 1989 and ending after June 30,
9    1989, an amount equal to the sum of (i) 4% of the
10    taxpayer's net income for the period prior to July 1,
11    1989, as calculated under Section 202.3, and (ii) 4.8% of
12    the taxpayer's net income for the period after June 30,
13    1989, as calculated under Section 202.3.
14        (8) In the case of a corporation, for taxable years
15    beginning after June 30, 1989, and ending prior to January
16    1, 2011, an amount equal to 4.8% of the taxpayer's net
17    income for the taxable year.
18        (9) In the case of a corporation, for taxable years
19    beginning prior to January 1, 2011, and ending after
20    December 31, 2010, an amount equal to the sum of (i) 4.8%
21    of the taxpayer's net income for the period prior to
22    January 1, 2011, as calculated under Section 202.5, and
23    (ii) 7% of the taxpayer's net income for the period after
24    December 31, 2010, as calculated under Section 202.5.
25        (10) In the case of a corporation, for taxable years
26    beginning on or after January 1, 2011, and ending prior to

 

 

HB2599- 5 -LRB103 30837 HLH 57338 b

1    January 1, 2015, an amount equal to 7% of the taxpayer's
2    net income for the taxable year.
3        (11) In the case of a corporation, for taxable years
4    beginning prior to January 1, 2015, and ending after
5    December 31, 2014, an amount equal to the sum of (i) 7% of
6    the taxpayer's net income for the period prior to January
7    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
8    of the taxpayer's net income for the period after December
9    31, 2014, as calculated under Section 202.5.
10        (12) In the case of a corporation, for taxable years
11    beginning on or after January 1, 2015, and ending prior to
12    July 1, 2017, an amount equal to 5.25% of the taxpayer's
13    net income for the taxable year.
14        (13) In the case of a corporation, for taxable years
15    beginning prior to July 1, 2017, and ending after June 30,
16    2017, an amount equal to the sum of (i) 5.25% of the
17    taxpayer's net income for the period prior to July 1,
18    2017, as calculated under Section 202.5, and (ii) 7% of
19    the taxpayer's net income for the period after June 30,
20    2017, as calculated under Section 202.5.
21        (14) In the case of a corporation, for taxable years
22    beginning on or after July 1, 2017 and ending prior to
23    January 1, 2024, an amount equal to 7% of the taxpayer's
24    net income for the taxable year.
25        (15) In the case of a corporation, for taxable years
26    beginning prior to January 1, 2024 and ending after

 

 

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1    December 31, 2023, an amount equal to the sum of (i) 7% of
2    the taxpayer's net income for the period prior to January
3    1, 2024, as calculated under Section 202.5, and (ii) 6% of
4    the taxpayer's net income for the period after December
5    31, 2023, as calculated under Section 202.5.
6        (16) In the case of a corporation, for taxable years
7    beginning on or after January 1, 2024, an amount equal to
8    6% of the taxpayer's net income for the taxable year.
9    The rates under this subsection (b) are subject to the
10provisions of Section 201.5.
11    (b-5) Surcharge; sale or exchange of assets, properties,
12and intangibles of organization gaming licensees. For each of
13taxable years 2019 through 2027, a surcharge is imposed on all
14taxpayers on income arising from the sale or exchange of
15capital assets, depreciable business property, real property
16used in the trade or business, and Section 197 intangibles (i)
17of an organization licensee under the Illinois Horse Racing
18Act of 1975 and (ii) of an organization gaming licensee under
19the Illinois Gambling Act. The amount of the surcharge is
20equal to the amount of federal income tax liability for the
21taxable year attributable to those sales and exchanges. The
22surcharge imposed shall not apply if:
23        (1) the organization gaming license, organization
24    license, or racetrack property is transferred as a result
25    of any of the following:
26            (A) bankruptcy, a receivership, or a debt

 

 

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1        adjustment initiated by or against the initial
2        licensee or the substantial owners of the initial
3        licensee;
4            (B) cancellation, revocation, or termination of
5        any such license by the Illinois Gaming Board or the
6        Illinois Racing Board;
7            (C) a determination by the Illinois Gaming Board
8        that transfer of the license is in the best interests
9        of Illinois gaming;
10            (D) the death of an owner of the equity interest in
11        a licensee;
12            (E) the acquisition of a controlling interest in
13        the stock or substantially all of the assets of a
14        publicly traded company;
15            (F) a transfer by a parent company to a wholly
16        owned subsidiary; or
17            (G) the transfer or sale to or by one person to
18        another person where both persons were initial owners
19        of the license when the license was issued; or
20        (2) the controlling interest in the organization
21    gaming license, organization license, or racetrack
22    property is transferred in a transaction to lineal
23    descendants in which no gain or loss is recognized or as a
24    result of a transaction in accordance with Section 351 of
25    the Internal Revenue Code in which no gain or loss is
26    recognized; or

 

 

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1        (3) live horse racing was not conducted in 2010 at a
2    racetrack located within 3 miles of the Mississippi River
3    under a license issued pursuant to the Illinois Horse
4    Racing Act of 1975.
5    The transfer of an organization gaming license,
6organization license, or racetrack property by a person other
7than the initial licensee to receive the organization gaming
8license is not subject to a surcharge. The Department shall
9adopt rules necessary to implement and administer this
10subsection.
11    (c) Personal Property Tax Replacement Income Tax.
12Beginning on July 1, 1979 and thereafter, in addition to such
13income tax, there is also hereby imposed the Personal Property
14Tax Replacement Income Tax measured by net income on every
15corporation (including Subchapter S corporations), partnership
16and trust, for each taxable year ending after June 30, 1979.
17Such taxes are imposed on the privilege of earning or
18receiving income in or as a resident of this State. The
19Personal Property Tax Replacement Income Tax shall be in
20addition to the income tax imposed by subsections (a) and (b)
21of this Section and in addition to all other occupation or
22privilege taxes imposed by this State or by any municipal
23corporation or political subdivision thereof.
24    (d) Additional Personal Property Tax Replacement Income
25Tax Rates. The personal property tax replacement income tax
26imposed by this subsection and subsection (c) of this Section

 

 

HB2599- 9 -LRB103 30837 HLH 57338 b

1in the case of a corporation, other than a Subchapter S
2corporation and except as adjusted by subsection (d-1), shall
3be an additional amount equal to 2.85% of such taxpayer's net
4income for the taxable year, except that beginning on January
51, 1981, and thereafter, the rate of 2.85% specified in this
6subsection shall be reduced to 2.5%, and in the case of a
7partnership, trust or a Subchapter S corporation shall be an
8additional amount equal to 1.5% of such taxpayer's net income
9for the taxable year.
10    (d-1) Rate reduction for certain foreign insurers. In the
11case of a foreign insurer, as defined by Section 35A-5 of the
12Illinois Insurance Code, whose state or country of domicile
13imposes on insurers domiciled in Illinois a retaliatory tax
14(excluding any insurer whose premiums from reinsurance assumed
15are 50% or more of its total insurance premiums as determined
16under paragraph (2) of subsection (b) of Section 304, except
17that for purposes of this determination premiums from
18reinsurance do not include premiums from inter-affiliate
19reinsurance arrangements), beginning with taxable years ending
20on or after December 31, 1999, the sum of the rates of tax
21imposed by subsections (b) and (d) shall be reduced (but not
22increased) to the rate at which the total amount of tax imposed
23under this Act, net of all credits allowed under this Act,
24shall equal (i) the total amount of tax that would be imposed
25on the foreign insurer's net income allocable to Illinois for
26the taxable year by such foreign insurer's state or country of

 

 

HB2599- 10 -LRB103 30837 HLH 57338 b

1domicile if that net income were subject to all income taxes
2and taxes measured by net income imposed by such foreign
3insurer's state or country of domicile, net of all credits
4allowed or (ii) a rate of zero if no such tax is imposed on
5such income by the foreign insurer's state of domicile. For
6the purposes of this subsection (d-1), an inter-affiliate
7includes a mutual insurer under common management.
8        (1) For the purposes of subsection (d-1), in no event
9    shall the sum of the rates of tax imposed by subsections
10    (b) and (d) be reduced below the rate at which the sum of:
11            (A) the total amount of tax imposed on such
12        foreign insurer under this Act for a taxable year, net
13        of all credits allowed under this Act, plus
14            (B) the privilege tax imposed by Section 409 of
15        the Illinois Insurance Code, the fire insurance
16        company tax imposed by Section 12 of the Fire
17        Investigation Act, and the fire department taxes
18        imposed under Section 11-10-1 of the Illinois
19        Municipal Code,
20    equals 1.25% for taxable years ending prior to December
21    31, 2003, or 1.75% for taxable years ending on or after
22    December 31, 2003, of the net taxable premiums written for
23    the taxable year, as described by subsection (1) of
24    Section 409 of the Illinois Insurance Code. This paragraph
25    will in no event increase the rates imposed under
26    subsections (b) and (d).

 

 

HB2599- 11 -LRB103 30837 HLH 57338 b

1        (2) Any reduction in the rates of tax imposed by this
2    subsection shall be applied first against the rates
3    imposed by subsection (b) and only after the tax imposed
4    by subsection (a) net of all credits allowed under this
5    Section other than the credit allowed under subsection (i)
6    has been reduced to zero, against the rates imposed by
7    subsection (d).
8    This subsection (d-1) is exempt from the provisions of
9Section 250.
10    (e) Investment credit. A taxpayer shall be allowed a
11credit against the Personal Property Tax Replacement Income
12Tax for investment in qualified property.
13        (1) A taxpayer shall be allowed a credit equal to .5%
14    of the basis of qualified property placed in service
15    during the taxable year, provided such property is placed
16    in service on or after July 1, 1984. There shall be allowed
17    an additional credit equal to .5% of the basis of
18    qualified property placed in service during the taxable
19    year, provided such property is placed in service on or
20    after July 1, 1986, and the taxpayer's base employment
21    within Illinois has increased by 1% or more over the
22    preceding year as determined by the taxpayer's employment
23    records filed with the Illinois Department of Employment
24    Security. Taxpayers who are new to Illinois shall be
25    deemed to have met the 1% growth in base employment for the
26    first year in which they file employment records with the

 

 

HB2599- 12 -LRB103 30837 HLH 57338 b

1    Illinois Department of Employment Security. The provisions
2    added to this Section by Public Act 85-1200 (and restored
3    by Public Act 87-895) shall be construed as declaratory of
4    existing law and not as a new enactment. If, in any year,
5    the increase in base employment within Illinois over the
6    preceding year is less than 1%, the additional credit
7    shall be limited to that percentage times a fraction, the
8    numerator of which is .5% and the denominator of which is
9    1%, but shall not exceed .5%. The investment credit shall
10    not be allowed to the extent that it would reduce a
11    taxpayer's liability in any tax year below zero, nor may
12    any credit for qualified property be allowed for any year
13    other than the year in which the property was placed in
14    service in Illinois. For tax years ending on or after
15    December 31, 1987, and on or before December 31, 1988, the
16    credit shall be allowed for the tax year in which the
17    property is placed in service, or, if the amount of the
18    credit exceeds the tax liability for that year, whether it
19    exceeds the original liability or the liability as later
20    amended, such excess may be carried forward and applied to
21    the tax liability of the 5 taxable years following the
22    excess credit years if the taxpayer (i) makes investments
23    which cause the creation of a minimum of 2,000 full-time
24    equivalent jobs in Illinois, (ii) is located in an
25    enterprise zone established pursuant to the Illinois
26    Enterprise Zone Act and (iii) is certified by the

 

 

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1    Department of Commerce and Community Affairs (now
2    Department of Commerce and Economic Opportunity) as
3    complying with the requirements specified in clause (i)
4    and (ii) by July 1, 1986. The Department of Commerce and
5    Community Affairs (now Department of Commerce and Economic
6    Opportunity) shall notify the Department of Revenue of all
7    such certifications immediately. For tax years ending
8    after December 31, 1988, the credit shall be allowed for
9    the tax year in which the property is placed in service,
10    or, if the amount of the credit exceeds the tax liability
11    for that year, whether it exceeds the original liability
12    or the liability as later amended, such excess may be
13    carried forward and applied to the tax liability of the 5
14    taxable years following the excess credit years. The
15    credit shall be applied to the earliest year for which
16    there is a liability. If there is credit from more than one
17    tax year that is available to offset a liability, earlier
18    credit shall be applied first.
19        (2) The term "qualified property" means property
20    which:
21            (A) is tangible, whether new or used, including
22        buildings and structural components of buildings and
23        signs that are real property, but not including land
24        or improvements to real property that are not a
25        structural component of a building such as
26        landscaping, sewer lines, local access roads, fencing,

 

 

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1        parking lots, and other appurtenances;
2            (B) is depreciable pursuant to Section 167 of the
3        Internal Revenue Code, except that "3-year property"
4        as defined in Section 168(c)(2)(A) of that Code is not
5        eligible for the credit provided by this subsection
6        (e);
7            (C) is acquired by purchase as defined in Section
8        179(d) of the Internal Revenue Code;
9            (D) is used in Illinois by a taxpayer who is
10        primarily engaged in manufacturing, or in mining coal
11        or fluorite, or in retailing, or was placed in service
12        on or after July 1, 2006 in a River Edge Redevelopment
13        Zone established pursuant to the River Edge
14        Redevelopment Zone Act; and
15            (E) has not previously been used in Illinois in
16        such a manner and by such a person as would qualify for
17        the credit provided by this subsection (e) or
18        subsection (f).
19        (3) For purposes of this subsection (e),
20    "manufacturing" means the material staging and production
21    of tangible personal property by procedures commonly
22    regarded as manufacturing, processing, fabrication, or
23    assembling which changes some existing material into new
24    shapes, new qualities, or new combinations. For purposes
25    of this subsection (e) the term "mining" shall have the
26    same meaning as the term "mining" in Section 613(c) of the

 

 

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1    Internal Revenue Code. For purposes of this subsection
2    (e), the term "retailing" means the sale of tangible
3    personal property for use or consumption and not for
4    resale, or services rendered in conjunction with the sale
5    of tangible personal property for use or consumption and
6    not for resale. For purposes of this subsection (e),
7    "tangible personal property" has the same meaning as when
8    that term is used in the Retailers' Occupation Tax Act,
9    and, for taxable years ending after December 31, 2008,
10    does not include the generation, transmission, or
11    distribution of electricity.
12        (4) The basis of qualified property shall be the basis
13    used to compute the depreciation deduction for federal
14    income tax purposes.
15        (5) If the basis of the property for federal income
16    tax depreciation purposes is increased after it has been
17    placed in service in Illinois by the taxpayer, the amount
18    of such increase shall be deemed property placed in
19    service on the date of such increase in basis.
20        (6) The term "placed in service" shall have the same
21    meaning as under Section 46 of the Internal Revenue Code.
22        (7) If during any taxable year, any property ceases to
23    be qualified property in the hands of the taxpayer within
24    48 months after being placed in service, or the situs of
25    any qualified property is moved outside Illinois within 48
26    months after being placed in service, the Personal

 

 

HB2599- 16 -LRB103 30837 HLH 57338 b

1    Property Tax Replacement Income Tax for such taxable year
2    shall be increased. Such increase shall be determined by
3    (i) recomputing the investment credit which would have
4    been allowed for the year in which credit for such
5    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 (7), 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        (8) Unless the investment credit is extended by law,
14    the basis of qualified property shall not include costs
15    incurred after December 31, 2018, except for costs
16    incurred pursuant to a binding contract entered into on or
17    before December 31, 2018.
18        (9) Each taxable year ending before December 31, 2000,
19    a partnership may elect to pass through to its partners
20    the credits to which the partnership is entitled under
21    this subsection (e) for the taxable year. A partner may
22    use the credit allocated to him or her under this
23    paragraph only against the tax imposed in subsections (c)
24    and (d) of this Section. If the partnership makes that
25    election, those credits shall be allocated among the
26    partners in the partnership in accordance with the rules

 

 

HB2599- 17 -LRB103 30837 HLH 57338 b

1    set forth in Section 704(b) of the Internal Revenue Code,
2    and the rules promulgated under that Section, and the
3    allocated amount of the credits shall be allowed to the
4    partners for that taxable year. The partnership shall make
5    this election on its Personal Property Tax Replacement
6    Income Tax return for that taxable year. The election to
7    pass through the credits shall be irrevocable.
8        For taxable years ending on or after December 31,
9    2000, a partner that qualifies its partnership for a
10    subtraction under subparagraph (I) of paragraph (2) of
11    subsection (d) of Section 203 or a shareholder that
12    qualifies a Subchapter S corporation for a subtraction
13    under subparagraph (S) of paragraph (2) of subsection (b)
14    of Section 203 shall be allowed a credit under this
15    subsection (e) equal to its share of the credit earned
16    under this subsection (e) during the taxable year by the
17    partnership or Subchapter S corporation, determined in
18    accordance with the determination of income and
19    distributive share of income under Sections 702 and 704
20    and Subchapter S of the Internal Revenue Code. This
21    paragraph is exempt from the provisions of Section 250.
22    (f) Investment credit; Enterprise Zone; River Edge
23Redevelopment Zone.
24        (1) A taxpayer shall be allowed a credit against the
25    tax imposed by subsections (a) and (b) of this Section for
26    investment in qualified property which is placed in

 

 

HB2599- 18 -LRB103 30837 HLH 57338 b

1    service in an Enterprise Zone created pursuant to the
2    Illinois Enterprise Zone Act or, for property placed in
3    service on or after July 1, 2006, a River Edge
4    Redevelopment Zone established pursuant to the River Edge
5    Redevelopment Zone Act. For partners, shareholders of
6    Subchapter S corporations, and owners of limited liability
7    companies, if the liability company is treated as a
8    partnership for purposes of federal and State income
9    taxation, there shall be allowed a credit under this
10    subsection (f) to be determined in accordance with the
11    determination of income and distributive share of income
12    under Sections 702 and 704 and Subchapter S of the
13    Internal Revenue Code. The credit shall be .5% of the
14    basis for such property. The credit shall be available
15    only in the taxable year in which the property is placed in
16    service in the Enterprise Zone or River Edge Redevelopment
17    Zone and shall not be allowed to the extent that it would
18    reduce a taxpayer's liability for the tax imposed by
19    subsections (a) and (b) of this Section to below zero. For
20    tax years ending on or after December 31, 1985, the credit
21    shall be allowed for the tax year in which the property is
22    placed in service, or, if the amount of the credit exceeds
23    the tax liability for that year, whether it exceeds the
24    original liability or the liability as later amended, such
25    excess may be carried forward and applied to the tax
26    liability of the 5 taxable years following the excess

 

 

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1    credit year. The credit shall be applied to the earliest
2    year for which there is a liability. If there is credit
3    from more than one tax year that is available to offset a
4    liability, the credit accruing first in time shall be
5    applied first.
6        (2) The term qualified property means property which:
7            (A) is tangible, whether new or used, including
8        buildings and structural components of buildings;
9            (B) is depreciable pursuant to Section 167 of the
10        Internal Revenue Code, except that "3-year property"
11        as defined in Section 168(c)(2)(A) of that Code is not
12        eligible for the credit provided by this subsection
13        (f);
14            (C) is acquired by purchase as defined in Section
15        179(d) of the Internal Revenue Code;
16            (D) is used in the Enterprise Zone or River Edge
17        Redevelopment Zone by the taxpayer; and
18            (E) has not been previously used in Illinois in
19        such a manner and by such a person as would qualify for
20        the credit provided by this subsection (f) or
21        subsection (e).
22        (3) The basis of qualified property shall be the basis
23    used to compute the depreciation deduction for federal
24    income tax purposes.
25        (4) 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 the Enterprise Zone or River Edge
2    Redevelopment Zone by the taxpayer, the amount of such
3    increase shall be deemed property placed in service on the
4    date of such increase in basis.
5        (5) The term "placed in service" shall have the same
6    meaning as under Section 46 of the Internal Revenue Code.
7        (6) If during any taxable year, any property ceases to
8    be qualified property in the hands of the taxpayer within
9    48 months after being placed in service, or the situs of
10    any qualified property is moved outside the Enterprise
11    Zone or River Edge Redevelopment Zone within 48 months
12    after being placed in service, the tax imposed under
13    subsections (a) and (b) of this Section for such taxable
14    year shall be increased. Such increase shall be determined
15    by (i) recomputing the investment credit which would have
16    been allowed for the year in which credit for such
17    property was originally allowed by eliminating such
18    property from such computation, and (ii) subtracting such
19    recomputed credit from the amount of credit previously
20    allowed. For the purposes of this paragraph (6), a
21    reduction of the basis of qualified property resulting
22    from a redetermination of the purchase price shall be
23    deemed a disposition of qualified property to the extent
24    of such reduction.
25        (7) There shall be allowed an additional credit equal
26    to 0.5% of the basis of qualified property placed in

 

 

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1    service during the taxable year in a River Edge
2    Redevelopment Zone, provided such property is placed in
3    service on or after July 1, 2006, and the taxpayer's base
4    employment within Illinois has increased by 1% or more
5    over the preceding year as determined by the taxpayer's
6    employment records filed with the Illinois Department of
7    Employment Security. Taxpayers who are new to Illinois
8    shall be deemed to have met the 1% growth in base
9    employment for the first year in which they file
10    employment records with the Illinois Department of
11    Employment Security. If, in any year, the increase in base
12    employment within Illinois over the preceding year is less
13    than 1%, the additional credit shall be limited to that
14    percentage times a fraction, the numerator of which is
15    0.5% and the denominator of which is 1%, but shall not
16    exceed 0.5%.
17        (8) For taxable years beginning on or after January 1,
18    2021, there shall be allowed an Enterprise Zone
19    construction jobs credit against the taxes imposed under
20    subsections (a) and (b) of this Section as provided in
21    Section 13 of the Illinois Enterprise Zone Act.
22        The credit or credits may not reduce the taxpayer's
23    liability to less than zero. If the amount of the credit or
24    credits exceeds the taxpayer's liability, the excess may
25    be carried forward and applied against the taxpayer's
26    liability in succeeding calendar years in the same manner

 

 

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1    provided under paragraph (4) of Section 211 of this Act.
2    The credit or credits shall be applied to the earliest
3    year for which there is a tax liability. If there are
4    credits from more than one taxable year that are available
5    to offset a liability, the earlier credit shall be applied
6    first.
7        For partners, shareholders of Subchapter S
8    corporations, and owners of limited liability companies,
9    if the liability company is treated as a partnership for
10    the purposes of federal and State income taxation, there
11    shall be allowed a credit under this Section to be
12    determined in accordance with the determination of income
13    and distributive share of income under Sections 702 and
14    704 and Subchapter S of the Internal Revenue Code.
15        The total aggregate amount of credits awarded under
16    the Blue Collar Jobs Act (Article 20 of Public Act 101-9)
17    shall not exceed $20,000,000 in any State fiscal year.
18        This paragraph (8) is exempt from the provisions of
19    Section 250.
20    (g) (Blank).
21    (h) Investment credit; High Impact Business.
22        (1) Subject to subsections (b) and (b-5) of Section
23    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
24    be allowed a credit against the tax imposed by subsections
25    (a) and (b) of this Section for investment in qualified
26    property which is placed in service by a Department of

 

 

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1    Commerce and Economic Opportunity designated High Impact
2    Business. The credit shall be .5% of the basis for such
3    property. The credit shall not be available (i) until the
4    minimum investments in qualified property set forth in
5    subdivision (a)(3)(A) of Section 5.5 of the Illinois
6    Enterprise Zone Act have been satisfied or (ii) until the
7    time authorized in subsection (b-5) of the Illinois
8    Enterprise Zone Act for entities designated as High Impact
9    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
10    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
11    Act, and shall not be allowed to the extent that it would
12    reduce a taxpayer's liability for the tax imposed by
13    subsections (a) and (b) of this Section to below zero. The
14    credit applicable to such investments shall be taken in
15    the taxable year in which such investments have been
16    completed. The credit for additional investments beyond
17    the minimum investment by a designated high impact
18    business authorized under subdivision (a)(3)(A) of Section
19    5.5 of the Illinois Enterprise Zone Act shall be available
20    only in the taxable year in which the property is placed in
21    service and shall not be allowed to the extent that it
22    would reduce a taxpayer's liability for the tax imposed by
23    subsections (a) and (b) of this Section to below zero. For
24    tax years ending on or after December 31, 1987, the credit
25    shall be allowed for the tax year in which the property is
26    placed in service, or, if the amount of the credit exceeds

 

 

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1    the tax liability for that year, whether it exceeds the
2    original liability or the liability as later amended, such
3    excess may be carried forward and applied to the tax
4    liability of the 5 taxable years following the excess
5    credit year. The credit shall be applied to the earliest
6    year for which there is a liability. If there is credit
7    from more than one tax year that is available to offset a
8    liability, the credit accruing first in time shall be
9    applied first.
10        Changes made in this subdivision (h)(1) by Public Act
11    88-670 restore changes made by Public Act 85-1182 and
12    reflect existing law.
13        (2) The term qualified property means property which:
14            (A) is tangible, whether new or used, including
15        buildings and structural components of buildings;
16            (B) is depreciable pursuant to Section 167 of the
17        Internal Revenue Code, except that "3-year property"
18        as defined in Section 168(c)(2)(A) of that Code is not
19        eligible for the credit provided by this subsection
20        (h);
21            (C) is acquired by purchase as defined in Section
22        179(d) of the Internal Revenue Code; and
23            (D) is not eligible for the Enterprise Zone
24        Investment Credit provided by subsection (f) of this
25        Section.
26        (3) The basis of qualified property shall be the basis

 

 

HB2599- 25 -LRB103 30837 HLH 57338 b

1    used to compute the depreciation deduction for federal
2    income tax purposes.
3        (4) If the basis of the property for federal income
4    tax depreciation purposes is increased after it has been
5    placed in service in a federally designated Foreign Trade
6    Zone or Sub-Zone located in Illinois by the taxpayer, the
7    amount of such increase shall be deemed property placed in
8    service on the date of such increase in basis.
9        (5) The term "placed in service" shall have the same
10    meaning as under Section 46 of the Internal Revenue Code.
11        (6) If during any taxable year ending on or before
12    December 31, 1996, any property ceases to be qualified
13    property in the hands of the taxpayer within 48 months
14    after being placed in service, or the situs of any
15    qualified property is moved outside Illinois within 48
16    months after being placed in service, the tax imposed
17    under subsections (a) and (b) of this Section for such
18    taxable year shall be increased. Such increase shall be
19    determined by (i) recomputing the investment credit which
20    would have been allowed for the year in which credit for
21    such property was originally allowed by eliminating such
22    property from such computation, and (ii) subtracting such
23    recomputed credit from the amount of credit previously
24    allowed. For the purposes of this paragraph (6), a
25    reduction of the basis of qualified property resulting
26    from a redetermination of the purchase price shall be

 

 

HB2599- 26 -LRB103 30837 HLH 57338 b

1    deemed a disposition of qualified property to the extent
2    of such reduction.
3        (7) Beginning with tax years ending after December 31,
4    1996, if a taxpayer qualifies for the credit under this
5    subsection (h) and thereby is granted a tax abatement and
6    the taxpayer relocates its entire facility in violation of
7    the explicit terms and length of the contract under
8    Section 18-183 of the Property Tax Code, the tax imposed
9    under subsections (a) and (b) of this Section shall be
10    increased for the taxable year in which the taxpayer
11    relocated its facility by an amount equal to the amount of
12    credit received by the taxpayer under this subsection (h).
13    (h-5) High Impact Business construction jobs credit. For
14taxable years beginning on or after January 1, 2021, there
15shall also be allowed a High Impact Business construction jobs
16credit against the tax imposed under subsections (a) and (b)
17of this Section as provided in subsections (i) and (j) of
18Section 5.5 of the Illinois Enterprise Zone Act.
19    The credit or credits may not reduce the taxpayer's
20liability to less than zero. If the amount of the credit or
21credits exceeds the taxpayer's liability, the excess may be
22carried forward and applied against the taxpayer's liability
23in succeeding calendar years in the manner provided under
24paragraph (4) of Section 211 of this Act. The credit or credits
25shall be applied to the earliest year for which there is a tax
26liability. If there are credits from more than one taxable

 

 

HB2599- 27 -LRB103 30837 HLH 57338 b

1year that are available to offset a liability, the earlier
2credit shall be applied first.
3    For partners, shareholders of Subchapter S corporations,
4and owners of limited liability companies, if the liability
5company is treated as a partnership for the purposes of
6federal and State income taxation, there shall be allowed a
7credit under this Section to be determined in accordance with
8the determination of income and distributive share of income
9under Sections 702 and 704 and Subchapter S of the Internal
10Revenue Code.
11    The total aggregate amount of credits awarded under the
12Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
13exceed $20,000,000 in any State fiscal year.
14    This subsection (h-5) is exempt from the provisions of
15Section 250.
16    (i) Credit for Personal Property Tax Replacement Income
17Tax. For tax years ending prior to December 31, 2003, a credit
18shall be allowed against the tax imposed by subsections (a)
19and (b) of this Section for the tax imposed by subsections (c)
20and (d) of this Section. This credit shall be computed by
21multiplying the tax imposed by subsections (c) and (d) of this
22Section by a fraction, the numerator of which is base income
23allocable to Illinois and the denominator of which is Illinois
24base income, and further multiplying the product by the tax
25rate imposed by subsections (a) and (b) of this Section.
26    Any credit earned on or after December 31, 1986 under this

 

 

HB2599- 28 -LRB103 30837 HLH 57338 b

1subsection which is unused in the year the credit is computed
2because it exceeds the tax liability imposed by subsections
3(a) and (b) for that year (whether it exceeds the original
4liability or the liability as later amended) may be carried
5forward and applied to the tax liability imposed by
6subsections (a) and (b) of the 5 taxable years following the
7excess credit year, provided that no credit may be carried
8forward to any year ending on or after December 31, 2003. This
9credit shall be applied first to the earliest year for which
10there is a liability. If there is a credit under this
11subsection from more than one tax year that is available to
12offset a liability the earliest credit arising under this
13subsection shall be applied first.
14    If, during any taxable year ending on or after December
1531, 1986, the tax imposed by subsections (c) and (d) of this
16Section for which a taxpayer has claimed a credit under this
17subsection (i) is reduced, the amount of credit for such tax
18shall also be reduced. Such reduction shall be determined by
19recomputing the credit to take into account the reduced tax
20imposed by subsections (c) and (d). If any portion of the
21reduced amount of credit has been carried to a different
22taxable year, an amended return shall be filed for such
23taxable year to reduce the amount of credit claimed.
24    (j) Training expense credit. Beginning with tax years
25ending on or after December 31, 1986 and prior to December 31,
262003, a taxpayer shall be allowed a credit against the tax

 

 

HB2599- 29 -LRB103 30837 HLH 57338 b

1imposed by subsections (a) and (b) under this Section for all
2amounts paid or accrued, on behalf of all persons employed by
3the taxpayer in Illinois or Illinois residents employed
4outside of Illinois by a taxpayer, for educational or
5vocational training in semi-technical or technical fields or
6semi-skilled or skilled fields, which were deducted from gross
7income in the computation of taxable income. The credit
8against the tax imposed by subsections (a) and (b) shall be
91.6% of such training expenses. For partners, shareholders of
10subchapter S corporations, and owners of limited liability
11companies, if the liability company is treated as a
12partnership for purposes of federal and State income taxation,
13there shall be allowed a credit under this subsection (j) to be
14determined in accordance with the determination of income and
15distributive share of income under Sections 702 and 704 and
16subchapter S of the Internal Revenue Code.
17    Any credit allowed under this subsection which is unused
18in the year the credit is earned may be carried forward to each
19of the 5 taxable years following the year for which the credit
20is first computed until it is used. This credit shall be
21applied first to the earliest year for which there is a
22liability. If there is a credit under this subsection from
23more than one tax year that is available to offset a liability,
24the earliest credit arising under this subsection shall be
25applied first. No carryforward credit may be claimed in any
26tax year ending on or after December 31, 2003.

 

 

HB2599- 30 -LRB103 30837 HLH 57338 b

1    (k) Research and development credit. For tax years ending
2after July 1, 1990 and prior to December 31, 2003, and
3beginning again for tax years ending on or after December 31,
42004, and ending prior to January 1, 2027, a taxpayer shall be
5allowed a credit against the tax imposed by subsections (a)
6and (b) of this Section for increasing research activities in
7this State. The credit allowed against the tax imposed by
8subsections (a) and (b) shall be equal to 6 1/2% of the
9qualifying expenditures for increasing research activities in
10this State. For partners, shareholders of subchapter S
11corporations, and owners of limited liability companies, if
12the liability company is treated as a partnership for purposes
13of federal and State income taxation, there shall be allowed a
14credit under this subsection to be determined in accordance
15with the determination of income and distributive share of
16income under Sections 702 and 704 and subchapter S of the
17Internal Revenue Code.
18    For purposes of this subsection, "qualifying expenditures"
19means the qualifying expenditures as defined for the federal
20credit for increasing research activities which would be
21allowable under Section 41 of the Internal Revenue Code and
22which are conducted in this State, "qualifying expenditures
23for increasing research activities in this State" means the
24excess of qualifying expenditures for the taxable year in
25which incurred over qualifying expenditures for the base
26period, "qualifying expenditures for the base period" means

 

 

HB2599- 31 -LRB103 30837 HLH 57338 b

1the average of the qualifying expenditures for each year in
2the base period, and "base period" means the 3 taxable years
3immediately preceding the taxable year for which the
4determination is being made.
5    Any credit in excess of the tax liability for the taxable
6year may be carried forward. A taxpayer may elect to have the
7unused credit shown on its final completed return carried over
8as a credit against the tax liability for the following 5
9taxable years or until it has been fully used, whichever
10occurs first; provided that no credit earned in a tax year
11ending prior to December 31, 2003 may be carried forward to any
12year ending on or after December 31, 2003.
13    If an unused credit is carried forward to a given year from
142 or more earlier years, that credit arising in the earliest
15year will be applied first against the tax liability for the
16given year. If a tax liability for the given year still
17remains, the credit from the next earliest year will then be
18applied, and so on, until all credits have been used or no tax
19liability for the given year remains. Any remaining unused
20credit or credits then will be carried forward to the next
21following year in which a tax liability is incurred, except
22that no credit can be carried forward to a year which is more
23than 5 years after the year in which the expense for which the
24credit is given was incurred.
25    No inference shall be drawn from Public Act 91-644 in
26construing this Section for taxable years beginning before

 

 

HB2599- 32 -LRB103 30837 HLH 57338 b

1January 1, 1999.
2    It is the intent of the General Assembly that the research
3and development credit under this subsection (k) shall apply
4continuously for all tax years ending on or after December 31,
52004 and ending prior to January 1, 2027, including, but not
6limited to, the period beginning on January 1, 2016 and ending
7on July 6, 2017 (the effective date of Public Act 100-22). All
8actions taken in reliance on the continuation of the credit
9under this subsection (k) by any taxpayer are hereby
10validated.
11    (l) Environmental Remediation Tax Credit.
12        (i) For tax years ending after December 31, 1997 and
13    on or before December 31, 2001, a taxpayer shall be
14    allowed a credit against the tax imposed by subsections
15    (a) and (b) of this Section for certain amounts paid for
16    unreimbursed eligible remediation costs, as specified in
17    this subsection. For purposes of this Section,
18    "unreimbursed eligible remediation costs" means costs
19    approved by the Illinois Environmental Protection Agency
20    ("Agency") under Section 58.14 of the Environmental
21    Protection Act that were paid in performing environmental
22    remediation at a site 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

 

 

HB2599- 33 -LRB103 30837 HLH 57338 b

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. After the Pollution
7    Control Board rules are adopted pursuant to the Illinois
8    Administrative Procedure Act for the administration and
9    enforcement of Section 58.9 of the Environmental
10    Protection Act, determinations as to credit availability
11    for purposes of this Section shall be made consistent with
12    those rules. For purposes of this Section, "taxpayer"
13    includes a person whose tax attributes the taxpayer has
14    succeeded to under Section 381 of the Internal Revenue
15    Code and "related party" includes the persons disallowed a
16    deduction for losses by paragraphs (b), (c), and (f)(1) of
17    Section 267 of the Internal Revenue Code by virtue of
18    being a related taxpayer, as well as any of its partners.
19    The credit allowed against the tax imposed by subsections
20    (a) and (b) shall be equal to 25% of the unreimbursed
21    eligible remediation costs in excess of $100,000 per site,
22    except that the $100,000 threshold shall not apply to any
23    site contained in an enterprise zone as determined by the
24    Department of Commerce and Community Affairs (now
25    Department of Commerce and Economic Opportunity). The
26    total credit allowed shall not exceed $40,000 per year

 

 

HB2599- 34 -LRB103 30837 HLH 57338 b

1    with a maximum total of $150,000 per site. For partners
2    and shareholders of subchapter S corporations, there shall
3    be allowed a credit under this subsection to be determined
4    in accordance with the determination of income and
5    distributive share of income under Sections 702 and 704
6    and subchapter S of the Internal Revenue Code.
7        (ii) A credit allowed under this subsection that is
8    unused in the year the credit is earned may be carried
9    forward to each of the 5 taxable years following the year
10    for which the credit is first earned until it is used. The
11    term "unused credit" does not include any amounts of
12    unreimbursed eligible remediation costs in excess of the
13    maximum credit per site authorized under paragraph (i).
14    This credit shall be applied first to the earliest year
15    for which there is a liability. If there is a credit under
16    this subsection from more than one tax year that is
17    available to offset a liability, the earliest credit
18    arising under this subsection shall be applied first. A
19    credit allowed under this subsection may be sold to a
20    buyer as part of a sale of all or part of the remediation
21    site for which the credit was granted. The purchaser of a
22    remediation site and the tax credit shall succeed to the
23    unused credit and remaining carry-forward period of the
24    seller. To perfect the transfer, the assignor shall record
25    the transfer in the chain of title for the site and provide
26    written notice to the Director of the Illinois Department

 

 

HB2599- 35 -LRB103 30837 HLH 57338 b

1    of Revenue of the assignor's intent to sell the
2    remediation site and the amount of the tax credit to be
3    transferred as a portion of the sale. In no event may a
4    credit be transferred to any taxpayer if the taxpayer or a
5    related party would not be eligible under the provisions
6    of subsection (i).
7        (iii) For purposes of this Section, the term "site"
8    shall have the same meaning as under Section 58.2 of the
9    Environmental Protection Act.
10    (m) Education expense credit. Beginning with tax years
11ending after December 31, 1999, a taxpayer who is the
12custodian of one or more qualifying pupils shall be allowed a
13credit against the tax imposed by subsections (a) and (b) of
14this Section for qualified education expenses incurred on
15behalf of the qualifying pupils. The credit shall be equal to
1625% of qualified education expenses, but in no event may the
17total credit under this subsection claimed by a family that is
18the custodian of qualifying pupils exceed (i) $500 for tax
19years ending prior to December 31, 2017, and (ii) $750 for tax
20years ending on or after December 31, 2017. In no event shall a
21credit under this subsection reduce the taxpayer's liability
22under this Act to less than zero. Notwithstanding any other
23provision of law, for taxable years beginning on or after
24January 1, 2017, no taxpayer may claim a credit under this
25subsection (m) if the taxpayer's adjusted gross income for the
26taxable year exceeds (i) $500,000, in the case of spouses

 

 

HB2599- 36 -LRB103 30837 HLH 57338 b

1filing a joint federal tax return or (ii) $250,000, in the case
2of all other taxpayers. This subsection is exempt from the
3provisions of Section 250 of this Act.
4    For purposes of this subsection:
5    "Qualifying pupils" means individuals who (i) are
6residents of the State of Illinois, (ii) are under the age of
721 at the close of the school year for which a credit is
8sought, and (iii) during the school year for which a credit is
9sought were full-time pupils enrolled in a kindergarten
10through twelfth grade education program at any school, as
11defined in this subsection.
12    "Qualified education expense" means the amount incurred on
13behalf of a qualifying pupil in excess of $250 for tuition,
14book fees, and lab fees at the school in which the pupil is
15enrolled during the regular school year.
16    "School" means any public or nonpublic elementary or
17secondary school in Illinois that is in compliance with Title
18VI of the Civil Rights Act of 1964 and attendance at which
19satisfies the requirements of Section 26-1 of the School Code,
20except that nothing shall be construed to require a child to
21attend any particular public or nonpublic school to qualify
22for the credit under this Section.
23    "Custodian" means, with respect to qualifying pupils, an
24Illinois resident who is a parent, the parents, a legal
25guardian, or the legal guardians of the qualifying pupils.
26    (n) River Edge Redevelopment Zone site remediation tax

 

 

HB2599- 37 -LRB103 30837 HLH 57338 b

1credit.
2        (i) For tax years ending on or after December 31,
3    2006, a taxpayer shall be allowed a credit against the tax
4    imposed by subsections (a) and (b) of this Section for
5    certain amounts paid for unreimbursed eligible remediation
6    costs, as specified in this subsection. For purposes of
7    this Section, "unreimbursed eligible remediation costs"
8    means costs approved by the Illinois Environmental
9    Protection Agency ("Agency") under Section 58.14a of the
10    Environmental Protection Act that were paid in performing
11    environmental remediation at a site within a River Edge
12    Redevelopment Zone for which a No Further Remediation
13    Letter was issued by the Agency and recorded under Section
14    58.10 of the Environmental Protection Act. The credit must
15    be claimed for the taxable year in which Agency approval
16    of the eligible remediation costs is granted. The credit
17    is not available to any taxpayer if the taxpayer or any
18    related party caused or contributed to, in any material
19    respect, a release of regulated substances on, in, or
20    under the site that was identified and addressed by the
21    remedial action pursuant to the Site Remediation Program
22    of the Environmental Protection Act. Determinations as to
23    credit availability for purposes of this Section shall be
24    made consistent with rules adopted by the Pollution
25    Control Board pursuant to the Illinois Administrative
26    Procedure Act for the administration and enforcement of

 

 

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1    Section 58.9 of the Environmental Protection Act. For
2    purposes of this Section, "taxpayer" includes a person
3    whose tax attributes the taxpayer has succeeded to under
4    Section 381 of the Internal Revenue Code and "related
5    party" includes the persons disallowed a deduction for
6    losses by paragraphs (b), (c), and (f)(1) of Section 267
7    of the Internal Revenue Code by virtue of being a related
8    taxpayer, as well as any of its partners. The credit
9    allowed against the tax imposed by subsections (a) and (b)
10    shall be equal to 25% of the unreimbursed eligible
11    remediation costs in excess of $100,000 per site.
12        (ii) A credit allowed under this subsection that is
13    unused in the year the credit is earned may be carried
14    forward to each of the 5 taxable years following the year
15    for which the credit is first earned until it is used. This
16    credit shall be applied first to the earliest year for
17    which there is a liability. If there is a credit under this
18    subsection from more than one tax year that is available
19    to offset a liability, the earliest credit arising under
20    this subsection shall be applied first. A credit allowed
21    under this subsection may be sold to a buyer as part of a
22    sale of all or part of the remediation site for which the
23    credit was granted. The purchaser of a remediation site
24    and the tax credit shall succeed to the unused credit and
25    remaining carry-forward period of the seller. To perfect
26    the transfer, the assignor shall record the transfer in

 

 

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1    the chain of title for the site and provide written notice
2    to the Director of the Illinois Department of Revenue of
3    the assignor's intent to sell the remediation site and the
4    amount of the tax credit to be transferred as a portion of
5    the sale. In no event may a credit be transferred to any
6    taxpayer if the taxpayer or a related party would not be
7    eligible under the provisions of subsection (i).
8        (iii) For purposes of this Section, the term "site"
9    shall have the same meaning as under Section 58.2 of the
10    Environmental Protection Act.
11    (o) For each of taxable years during the Compassionate Use
12of Medical Cannabis Program, a surcharge is imposed on all
13taxpayers on income arising from the sale or exchange of
14capital assets, depreciable business property, real property
15used in the trade or business, and Section 197 intangibles of
16an organization registrant under the Compassionate Use of
17Medical Cannabis Program Act. The amount of the surcharge is
18equal to the amount of federal income tax liability for the
19taxable year attributable to those sales and exchanges. The
20surcharge imposed does not apply if:
21        (1) the medical cannabis cultivation center
22    registration, medical cannabis dispensary registration, or
23    the property of a registration is transferred as a result
24    of any of the following:
25            (A) bankruptcy, a receivership, or a debt
26        adjustment initiated by or against the initial

 

 

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1        registration or the substantial owners of the initial
2        registration;
3            (B) cancellation, revocation, or termination of
4        any registration by the Illinois Department of Public
5        Health;
6            (C) a determination by the Illinois Department of
7        Public Health that transfer of the registration is in
8        the best interests of Illinois qualifying patients as
9        defined by the Compassionate Use of Medical Cannabis
10        Program Act;
11            (D) the death of an owner of the equity interest in
12        a registrant;
13            (E) the acquisition of a controlling interest in
14        the stock or substantially all of the assets of a
15        publicly traded company;
16            (F) a transfer by a parent company to a wholly
17        owned subsidiary; or
18            (G) the transfer or sale to or by one person to
19        another person where both persons were initial owners
20        of the registration when the registration was issued;
21        or
22        (2) the cannabis cultivation center registration,
23    medical cannabis dispensary registration, or the
24    controlling interest in a registrant's property is
25    transferred in a transaction to lineal descendants in
26    which no gain or loss is recognized or as a result of a

 

 

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1    transaction in accordance with Section 351 of the Internal
2    Revenue Code in which no gain or loss is recognized.
3    (p) Pass-through entity tax.
4        (1) For taxable years ending on or after December 31,
5    2021 and beginning prior to January 1, 2026, a partnership
6    (other than a publicly traded partnership under Section
7    7704 of the Internal Revenue Code) or Subchapter S
8    corporation may elect to apply the provisions of this
9    subsection. A separate election shall be made for each
10    taxable year. Such election shall be made at such time,
11    and in such form and manner as prescribed by the
12    Department, and, once made, is irrevocable.
13        (2) Entity-level tax. A partnership or Subchapter S
14    corporation electing to apply the provisions of this
15    subsection shall be subject to a tax for the privilege of
16    earning or receiving income in this State in an amount
17    equal to the applicable percentage 4.95% of the taxpayer's
18    net income for the taxable year.
19        (2.1) Applicable percentage defined. As used in this
20    subsection (p), the applicable percentage is the tax rate
21    imposed on individuals, trusts, and estates under
22    subsection (b) for the taxable year.
23        (3) Net income defined.
24            (A) In general. For purposes of paragraph (2), the
25        term net income has the same meaning as defined in
26        Section 202 of this Act, except that the following

 

 

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1        provisions shall not apply:
2                (i) the standard exemption allowed under
3            Section 204;
4                (ii) the deduction for net losses allowed
5            under Section 207;
6                (iii) in the case of an S corporation, the
7            modification under Section 203(b)(2)(S); and
8                (iv) in the case of a partnership, the
9            modifications under Section 203(d)(2)(H) and
10            Section 203(d)(2)(I).
11            (B) Special rule for tiered partnerships. If a
12        taxpayer making the election under paragraph (1) is a
13        partner of another taxpayer making the election under
14        paragraph (1), net income shall be computed as
15        provided in subparagraph (A), except that the taxpayer
16        shall subtract its distributive share of the net
17        income of the electing partnership (including its
18        distributive share of the net income of the electing
19        partnership derived as a distributive share from
20        electing partnerships in which it is a partner).
21        (4) Credit for entity level tax. Each partner or
22    shareholder of a taxpayer making the election under this
23    Section shall be allowed a credit against the tax imposed
24    under subsections (a) and (b) of Section 201 of this Act
25    for the taxable year of the partnership or Subchapter S
26    corporation for which an election is in effect ending

 

 

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1    within or with the taxable year of the partner or
2    shareholder in an amount equal to 4.95% times the partner
3    or shareholder's distributive share of the net income of
4    the electing partnership or Subchapter S corporation, but
5    not to exceed the partner's or shareholder's share of the
6    tax imposed under paragraph (1) which is actually paid by
7    the partnership or Subchapter S corporation. If the
8    taxpayer is a partnership or Subchapter S corporation that
9    is itself a partner of a partnership making the election
10    under paragraph (1), the credit under this paragraph shall
11    be allowed to the taxpayer's partners or shareholders (or
12    if the partner is a partnership or Subchapter S
13    corporation then its partners or shareholders) in
14    accordance with the determination of income and
15    distributive share of income under Sections 702 and 704
16    and Subchapter S of the Internal Revenue Code. If the
17    amount of the credit allowed under this paragraph exceeds
18    the partner's or shareholder's liability for tax imposed
19    under subsections (a) and (b) of Section 201 of this Act
20    for the taxable year, such excess shall be treated as an
21    overpayment for purposes of Section 909 of this Act.
22        (5) Nonresidents. A nonresident individual who is a
23    partner or shareholder of a partnership or Subchapter S
24    corporation for a taxable year for which an election is in
25    effect under paragraph (1) shall not be required to file
26    an income tax return under this Act for such taxable year

 

 

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1    if the only source of net income of the individual (or the
2    individual and the individual's spouse in the case of a
3    joint return) is from an entity making the election under
4    paragraph (1) and the credit allowed to the partner or
5    shareholder under paragraph (4) equals or exceeds the
6    individual's liability for the tax imposed under
7    subsections (a) and (b) of Section 201 of this Act for the
8    taxable year.
9        (6) Liability for tax. Except as provided in this
10    paragraph, a partnership or Subchapter S making the
11    election under paragraph (1) is liable for the
12    entity-level tax imposed under paragraph (2). If the
13    electing partnership or corporation fails to pay the full
14    amount of tax deemed assessed under paragraph (2), the
15    partners or shareholders shall be liable to pay the tax
16    assessed (including penalties and interest). Each partner
17    or shareholder shall be liable for the unpaid assessment
18    based on the ratio of the partner's or shareholder's share
19    of the net income of the partnership over the total net
20    income of the partnership. If the partnership or
21    Subchapter S corporation fails to pay the tax assessed
22    (including penalties and interest) and thereafter an
23    amount of such tax is paid by the partners or
24    shareholders, such amount shall not be collected from the
25    partnership or corporation.
26        (7) Foreign tax. For purposes of the credit allowed

 

 

HB2599- 45 -LRB103 30837 HLH 57338 b

1    under Section 601(b)(3) of this Act, tax paid by a
2    partnership or Subchapter S corporation to another state
3    which, as determined by the Department, is substantially
4    similar to the tax imposed under this subsection, shall be
5    considered tax paid by the partner or shareholder to the
6    extent that the partner's or shareholder's share of the
7    income of the partnership or Subchapter S corporation
8    allocated and apportioned to such other state bears to the
9    total income of the partnership or Subchapter S
10    corporation allocated or apportioned to such other state.
11        (8) Suspension of withholding. The provisions of
12    Section 709.5 of this Act shall not apply to a partnership
13    or Subchapter S corporation for the taxable year for which
14    an election under paragraph (1) is in effect.
15        (9) Requirement to pay estimated tax. For each taxable
16    year for which an election under paragraph (1) is in
17    effect, a partnership or Subchapter S corporation is
18    required to pay estimated tax for such taxable year under
19    Sections 803 and 804 of this Act if the amount payable as
20    estimated tax can reasonably be expected to exceed $500.
21        (10) The provisions of this subsection shall apply
22    only with respect to taxable years for which the
23    limitation on individual deductions applies under Section
24    164(b)(6) of the Internal Revenue Code.
25(Source: P.A. 101-9, eff. 6-5-19; 101-31, eff. 6-28-19;
26101-207, eff. 8-2-19; 101-363, eff. 8-9-19; 102-558, eff.

 

 

HB2599- 46 -LRB103 30837 HLH 57338 b

18-20-21; 102-658, eff. 8-27-21.)
 
2    Section 99. Effective date. This Act takes effect upon
3becoming law.