Illinois General Assembly - Full Text of SB0296
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Full Text of SB0296  94th General Assembly

SB0296 94TH GENERAL ASSEMBLY


 


 
94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB0296

 

Introduced 2/3/2005, by Sen. Dan Cronin

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201   from Ch. 120, par. 2-201

    Amends the Illinois Income Tax Act. Provides that for taxable years ending on or after December 31, 2005, the education expense credit may not exceed $1,000 (now, $500). Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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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 201 as follows:
 
6     (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
7     Sec. 201. Tax Imposed.
8     (a) In general. A tax measured by net income is hereby
9 imposed on every individual, corporation, trust and estate for
10 each taxable year ending after July 31, 1969 on the privilege
11 of earning or receiving income in or as a resident of this
12 State. Such tax shall be in addition to all other occupation or
13 privilege taxes imposed by this State or by any municipal
14 corporation or political subdivision thereof.
15     (b) Rates. The tax imposed by subsection (a) of this
16 Section shall be determined as follows, except as adjusted by
17 subsection (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 equal
20     to 2 1/2% of the taxpayer's net income for the taxable
21     year.
22         (2) In the case of an individual, trust or estate, for
23     taxable years beginning prior to July 1, 1989 and ending
24     after June 30, 1989, an amount equal to the sum of (i) 2
25     1/2% of the taxpayer's net income for the period prior to
26     July 1, 1989, as calculated under Section 202.3, and (ii)
27     3% of the taxpayer's net income for the period after June
28     30, 1989, as calculated under Section 202.3.
29         (3) In the case of an individual, trust or estate, for
30     taxable years beginning after June 30, 1989, an amount
31     equal to 3% of the taxpayer's net income for the taxable
32     year.

 

 

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1         (4) (Blank).
2         (5) (Blank).
3         (6) In the case of a corporation, for taxable years
4     ending prior to July 1, 1989, an amount equal to 4% of the
5     taxpayer's net income for the taxable year.
6         (7) In the case of a corporation, for taxable years
7     beginning prior to July 1, 1989 and ending after June 30,
8     1989, an amount equal to the sum of (i) 4% of the
9     taxpayer's net income for the period prior to July 1, 1989,
10     as calculated under Section 202.3, and (ii) 4.8% of the
11     taxpayer's net income for the period after June 30, 1989,
12     as calculated under Section 202.3.
13         (8) In the case of a corporation, for taxable years
14     beginning after June 30, 1989, an amount equal to 4.8% of
15     the taxpayer's net income for the taxable year.
16     (c) Personal Property Tax Replacement Income Tax.
17 Beginning on July 1, 1979 and thereafter, in addition to such
18 income tax, there is also hereby imposed the Personal Property
19 Tax Replacement Income Tax measured by net income on every
20 corporation (including Subchapter S corporations), partnership
21 and trust, for each taxable year ending after June 30, 1979.
22 Such taxes are imposed on the privilege of earning or receiving
23 income in or as a resident of this State. The Personal Property
24 Tax Replacement Income Tax shall be in addition to the income
25 tax imposed by subsections (a) and (b) of this Section and in
26 addition to all other occupation or privilege taxes imposed by
27 this State or by any municipal corporation or political
28 subdivision thereof.
29     (d) Additional Personal Property Tax Replacement Income
30 Tax Rates. The personal property tax replacement income tax
31 imposed by this subsection and subsection (c) of this Section
32 in the case of a corporation, other than a Subchapter S
33 corporation and except as adjusted by subsection (d-1), shall
34 be an additional amount equal to 2.85% of such taxpayer's net
35 income for the taxable year, except that beginning on January
36 1, 1981, and thereafter, the rate of 2.85% specified in this

 

 

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1 subsection shall be reduced to 2.5%, and in the case of a
2 partnership, trust or a Subchapter S corporation shall be an
3 additional amount equal to 1.5% of such taxpayer's net income
4 for the taxable year.
5     (d-1) Rate reduction for certain foreign insurers. In the
6 case of a foreign insurer, as defined by Section 35A-5 of the
7 Illinois Insurance Code, whose state or country of domicile
8 imposes on insurers domiciled in Illinois a retaliatory tax
9 (excluding any insurer whose premiums from reinsurance assumed
10 are 50% or more of its total insurance premiums as determined
11 under paragraph (2) of subsection (b) of Section 304, except
12 that for purposes of this determination premiums from
13 reinsurance do not include premiums from inter-affiliate
14 reinsurance arrangements), beginning with taxable years ending
15 on or after December 31, 1999, the sum of the rates of tax
16 imposed by subsections (b) and (d) shall be reduced (but not
17 increased) to the rate at which the total amount of tax imposed
18 under this Act, net of all credits allowed under this Act,
19 shall equal (i) the total amount of tax that would be imposed
20 on the foreign insurer's net income allocable to Illinois for
21 the taxable year by such foreign insurer's state or country of
22 domicile if that net income were subject to all income taxes
23 and taxes measured by net income imposed by such foreign
24 insurer's state or country of domicile, net of all credits
25 allowed or (ii) a rate of zero if no such tax is imposed on such
26 income by the foreign insurer's state of domicile. For the
27 purposes of this subsection (d-1), an inter-affiliate includes
28 a mutual insurer under common management.
29         (1) For the purposes of subsection (d-1), in no event
30     shall the sum of the rates of tax imposed by subsections
31     (b) and (d) be reduced below the rate at which the sum of:
32             (A) the total amount of tax imposed on such foreign
33         insurer under this Act for a taxable year, net of all
34         credits allowed under this Act, plus
35             (B) the privilege tax imposed by Section 409 of the
36         Illinois Insurance Code, the fire insurance company

 

 

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1         tax imposed by Section 12 of the Fire Investigation
2         Act, and the fire department taxes imposed under
3         Section 11-10-1 of the Illinois Municipal Code,
4     equals 1.25% for taxable years ending prior to December 31,
5     2003, or 1.75% for taxable years ending on or after
6     December 31, 2003, of the net taxable premiums written for
7     the taxable year, as described by subsection (1) of Section
8     409 of the Illinois Insurance Code. This paragraph will in
9     no event increase the rates imposed under subsections (b)
10     and (d).
11         (2) Any reduction in the rates of tax imposed by this
12     subsection shall be applied first against the rates imposed
13     by subsection (b) and only after the tax imposed by
14     subsection (a) net of all credits allowed under this
15     Section other than the credit allowed under subsection (i)
16     has been reduced to zero, against the rates imposed by
17     subsection (d).
18     This subsection (d-1) is exempt from the provisions of
19 Section 250.
20     (e) Investment credit. A taxpayer shall be allowed a credit
21 against the Personal Property Tax Replacement Income Tax for
22 investment in qualified property.
23         (1) A taxpayer shall be allowed a credit equal to .5%
24     of the basis of qualified property placed in service during
25     the taxable year, provided such property is placed in
26     service on or after July 1, 1984. There shall be allowed an
27     additional credit equal to .5% of the basis of qualified
28     property placed in service during the taxable year,
29     provided such property is placed in service on or after
30     July 1, 1986, and the taxpayer's base employment within
31     Illinois has increased by 1% or more over the preceding
32     year as determined by the taxpayer's employment records
33     filed with the Illinois Department of Employment Security.
34     Taxpayers who are new to Illinois shall be deemed to have
35     met the 1% growth in base employment for the first year in
36     which they file employment records with the Illinois

 

 

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1     Department of Employment Security. The provisions added to
2     this Section by Public Act 85-1200 (and restored by Public
3     Act 87-895) shall be construed as declaratory of existing
4     law and not as a new enactment. If, in any year, the
5     increase in base employment within Illinois over the
6     preceding year is less than 1%, the additional credit shall
7     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
27     Department of Commerce and Community Affairs (now
28     Department of Commerce and Economic Opportunity) as
29     complying with the requirements specified in clause (i) and
30     (ii) by July 1, 1986. The Department of Commerce and
31     Community Affairs (now Department of Commerce and Economic
32     Opportunity) shall notify the Department of Revenue of all
33     such certifications immediately. For tax years ending
34     after December 31, 1988, the credit shall be allowed for
35     the tax year in which the property is placed in service,
36     or, if the amount of the credit exceeds the tax liability

 

 

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1     for that year, whether it exceeds the original liability or
2     the liability as later amended, such excess may be carried
3     forward and applied to the tax liability of the 5 taxable
4     years following the excess credit years. The credit shall
5     be applied to the earliest year for which there is a
6     liability. If there is credit from more than one tax year
7     that is available to offset a liability, earlier credit
8     shall be applied first.
9         (2) The term "qualified property" means property
10     which:
11             (A) is tangible, whether new or used, including
12         buildings and structural components of buildings and
13         signs that are real property, but not including land or
14         improvements to real property that are not a structural
15         component of a building such as landscaping, sewer
16         lines, local access roads, fencing, parking lots, and
17         other appurtenances;
18             (B) is depreciable pursuant to Section 167 of the
19         Internal Revenue Code, except that "3-year property"
20         as defined in Section 168(c)(2)(A) of that Code is not
21         eligible for the credit provided by this subsection
22         (e);
23             (C) is acquired by purchase as defined in Section
24         179(d) of the Internal Revenue Code;
25             (D) is used in Illinois by a taxpayer who is
26         primarily engaged in manufacturing, or in mining coal
27         or fluorite, or in retailing; and
28             (E) has not previously been used in Illinois in
29         such a manner and by such a person as would qualify for
30         the credit provided by this subsection (e) or
31         subsection (f).
32         (3) For purposes of this subsection (e),
33     "manufacturing" means the material staging and production
34     of tangible personal property by procedures commonly
35     regarded as manufacturing, processing, fabrication, or
36     assembling which changes some existing material into new

 

 

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1     shapes, new qualities, or new combinations. For purposes of
2     this subsection (e) the term "mining" shall have the same
3     meaning as the term "mining" in Section 613(c) of the
4     Internal Revenue Code. For purposes of this subsection (e),
5     the term "retailing" means the sale of tangible personal
6     property or services rendered in conjunction with the sale
7     of tangible consumer goods or commodities.
8         (4) The basis of qualified property shall be the basis
9     used to compute the depreciation deduction for federal
10     income tax purposes.
11         (5) If the basis of the property for federal income tax
12     depreciation purposes is increased after it has been placed
13     in service in Illinois by the taxpayer, the amount of such
14     increase shall be deemed property placed in service on the
15     date of such increase in basis.
16         (6) The term "placed in service" shall have the same
17     meaning as under Section 46 of the Internal Revenue Code.
18         (7) If during any taxable year, any property ceases to
19     be qualified property in the hands of the taxpayer within
20     48 months after being placed in service, or the situs of
21     any qualified property is moved outside Illinois within 48
22     months after being placed in service, the Personal Property
23     Tax Replacement Income Tax for such taxable year shall be
24     increased. Such increase shall be determined by (i)
25     recomputing the investment credit which would have been
26     allowed for the year in which credit for such property was
27     originally allowed by eliminating such property from such
28     computation and, (ii) subtracting such recomputed credit
29     from the amount of credit previously allowed. For the
30     purposes of this paragraph (7), a reduction of the basis of
31     qualified property resulting from a redetermination of the
32     purchase price shall be deemed a disposition of qualified
33     property to the extent of such reduction.
34         (8) Unless the investment credit is extended by law,
35     the basis of qualified property shall not include costs
36     incurred after December 31, 2008, except for costs incurred

 

 

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1     pursuant to a binding contract entered into on or before
2     December 31, 2008.
3         (9) Each taxable year ending before December 31, 2000,
4     a partnership may elect to pass through to its partners the
5     credits to which the partnership is entitled under this
6     subsection (e) for the taxable year. A partner may use the
7     credit allocated to him or her under this paragraph only
8     against the tax imposed in subsections (c) and (d) of this
9     Section. If the partnership makes that election, those
10     credits shall be allocated among the partners in the
11     partnership in accordance with the rules set forth in
12     Section 704(b) of the Internal Revenue Code, and the rules
13     promulgated under that Section, and the allocated amount of
14     the credits shall be allowed to the partners for that
15     taxable year. The partnership shall make this election on
16     its Personal Property Tax Replacement Income Tax return for
17     that taxable year. The election to pass through the credits
18     shall be irrevocable.
19         For taxable years ending on or after December 31, 2000,
20     a partner that qualifies its partnership for a subtraction
21     under subparagraph (I) of paragraph (2) of subsection (d)
22     of Section 203 or a shareholder that qualifies a Subchapter
23     S corporation for a subtraction under subparagraph (S) of
24     paragraph (2) of subsection (b) of Section 203 shall be
25     allowed a credit under this subsection (e) equal to its
26     share of the credit earned under this subsection (e) during
27     the taxable year by the partnership or Subchapter S
28     corporation, determined in accordance with the
29     determination of income and distributive share of income
30     under Sections 702 and 704 and Subchapter S of the Internal
31     Revenue Code. This paragraph is exempt from the provisions
32     of Section 250.
33       (f) Investment credit; Enterprise Zone.
34         (1) A taxpayer shall be allowed a credit against the
35     tax imposed by subsections (a) and (b) of this Section for
36     investment in qualified property which is placed in service

 

 

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1     in an Enterprise Zone created pursuant to the Illinois
2     Enterprise Zone Act. For partners, shareholders of
3     Subchapter S corporations, and owners of limited liability
4     companies, if the liability company is treated as a
5     partnership for purposes of federal and State income
6     taxation, there shall be allowed a credit under this
7     subsection (f) to be determined in accordance with the
8     determination of income and distributive share of income
9     under Sections 702 and 704 and Subchapter S of the Internal
10     Revenue Code. The credit shall be .5% of the basis for such
11     property. The credit shall be available only in the taxable
12     year in which the property is placed in service in the
13     Enterprise Zone and shall not be allowed to the extent that
14     it would reduce a taxpayer's liability for the tax imposed
15     by subsections (a) and (b) of this Section to below zero.
16     For tax years ending on or after December 31, 1985, the
17     credit shall be allowed for the tax year in which the
18     property is placed in service, or, if the amount of the
19     credit exceeds the tax liability for that year, whether it
20     exceeds the original liability or the liability as later
21     amended, such excess may be carried forward and applied to
22     the tax liability of the 5 taxable years following the
23     excess credit year. The credit shall be applied to the
24     earliest year for which there is a liability. If there is
25     credit from more than one tax year that is available to
26     offset a liability, the credit accruing first in time shall
27     be applied first.
28         (2) The term qualified property means property which:
29             (A) is tangible, whether new or used, including
30         buildings and structural components of buildings;
31             (B) is depreciable pursuant to Section 167 of the
32         Internal Revenue Code, except that "3-year property"
33         as defined in Section 168(c)(2)(A) of that Code is not
34         eligible for the credit provided by this subsection
35         (f);
36             (C) is acquired by purchase as defined in Section

 

 

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1         179(d) of the Internal Revenue Code;
2             (D) is used in the Enterprise Zone by the taxpayer;
3         and
4             (E) has not been previously used in Illinois in
5         such a manner and by such a person as would qualify for
6         the credit provided by this subsection (f) or
7         subsection (e).
8         (3) The basis of qualified property shall be the basis
9     used to compute the depreciation deduction for federal
10     income tax purposes.
11         (4) If the basis of the property for federal income tax
12     depreciation purposes is increased after it has been placed
13     in service in the Enterprise Zone by the taxpayer, the
14     amount of such increase shall be deemed property placed in
15     service on the date of such increase in basis.
16         (5) The term "placed in service" shall have the same
17     meaning as under Section 46 of the Internal Revenue Code.
18         (6) If during any taxable year, any property ceases to
19     be qualified property in the hands of the taxpayer within
20     48 months after being placed in service, or the situs of
21     any qualified property is moved outside the Enterprise Zone
22     within 48 months after being placed in service, the tax
23     imposed under subsections (a) and (b) of this Section for
24     such taxable year shall be increased. Such increase shall
25     be determined by (i) recomputing the investment credit
26     which would have been allowed for the year in which credit
27     for such property was originally allowed by eliminating
28     such property from such computation, and (ii) subtracting
29     such recomputed credit from the amount of credit previously
30     allowed. For the purposes of this paragraph (6), a
31     reduction of the basis of qualified property resulting from
32     a redetermination of the purchase price shall be deemed a
33     disposition of qualified property to the extent of such
34     reduction.
35       (g) Jobs Tax Credit; Enterprise Zone and Foreign Trade
36 Zone or Sub-Zone.

 

 

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1         (1) A taxpayer conducting a trade or business in an
2     enterprise zone or a High Impact Business designated by the
3     Department of Commerce and Economic Opportunity conducting
4     a trade or business in a federally designated Foreign Trade
5     Zone or Sub-Zone shall be allowed a credit against the tax
6     imposed by subsections (a) and (b) of this Section in the
7     amount of $500 per eligible employee hired to work in the
8     zone during the taxable year.
9         (2) To qualify for the credit:
10             (A) the taxpayer must hire 5 or more eligible
11         employees to work in an enterprise zone or federally
12         designated Foreign Trade Zone or Sub-Zone during the
13         taxable year;
14             (B) the taxpayer's total employment within the
15         enterprise zone or federally designated Foreign Trade
16         Zone or Sub-Zone must increase by 5 or more full-time
17         employees beyond the total employed in that zone at the
18         end of the previous tax year for which a jobs tax
19         credit under this Section was taken, or beyond the
20         total employed by the taxpayer as of December 31, 1985,
21         whichever is later; and
22             (C) the eligible employees must be employed 180
23         consecutive days in order to be deemed hired for
24         purposes of this subsection.
25         (3) An "eligible employee" means an employee who is:
26             (A) Certified by the Department of Commerce and
27         Economic Opportunity as "eligible for services"
28         pursuant to regulations promulgated in accordance with
29         Title II of the Job Training Partnership Act, Training
30         Services for the Disadvantaged or Title III of the Job
31         Training Partnership Act, Employment and Training
32         Assistance for Dislocated Workers Program.
33             (B) Hired after the enterprise zone or federally
34         designated Foreign Trade Zone or Sub-Zone was
35         designated or the trade or business was located in that
36         zone, whichever is later.

 

 

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1             (C) Employed in the enterprise zone or Foreign
2         Trade Zone or Sub-Zone. An employee is employed in an
3         enterprise zone or federally designated Foreign Trade
4         Zone or Sub-Zone if his services are rendered there or
5         it is the base of operations for the services
6         performed.
7             (D) A full-time employee working 30 or more hours
8         per week.
9         (4) For tax years ending on or after December 31, 1985
10     and prior to December 31, 1988, the credit shall be allowed
11     for the tax year in which the eligible employees are hired.
12     For tax years ending on or after December 31, 1988, the
13     credit shall be allowed for the tax year immediately
14     following the tax year in which the eligible employees are
15     hired. If the amount of the credit exceeds the tax
16     liability for that year, whether it exceeds the original
17     liability or the liability as later amended, such excess
18     may be carried forward and applied to the tax liability of
19     the 5 taxable years following the excess credit year. The
20     credit shall be applied to the earliest year for which
21     there is a liability. If there is credit from more than one
22     tax year that is available to offset a liability, earlier
23     credit shall be applied first.
24         (5) The Department of Revenue shall promulgate such
25     rules and regulations as may be deemed necessary to carry
26     out the purposes of this subsection (g).
27         (6) The credit shall be available for eligible
28     employees hired on or after January 1, 1986.
29     (h) Investment credit; High Impact Business.
30         (1) Subject to subsections (b) and (b-5) of Section 5.5
31     of the Illinois Enterprise Zone Act, a taxpayer shall be
32     allowed a credit against the tax imposed by subsections (a)
33     and (b) of this Section for investment in qualified
34     property which is placed in service by a Department of
35     Commerce and Economic Opportunity designated High Impact
36     Business. The credit shall be .5% of the basis for such

 

 

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1     property. The credit shall not be available (i) until the
2     minimum investments in qualified property set forth in
3     subdivision (a)(3)(A) of Section 5.5 of the Illinois
4     Enterprise Zone Act have been satisfied or (ii) until the
5     time authorized in subsection (b-5) of the Illinois
6     Enterprise Zone Act for entities designated as High Impact
7     Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
8     (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
9     Act, and shall not be allowed to the extent that it would
10     reduce a taxpayer's liability for the tax imposed by
11     subsections (a) and (b) of this Section to below zero. The
12     credit applicable to such investments shall be taken in the
13     taxable year in which such investments have been completed.
14     The credit for additional investments beyond the minimum
15     investment by a designated high impact business authorized
16     under subdivision (a)(3)(A) of Section 5.5 of the Illinois
17     Enterprise Zone Act shall be available only in the taxable
18     year in which the property is placed in service and shall
19     not be allowed to the extent that it would reduce a
20     taxpayer's liability for the tax imposed by subsections (a)
21     and (b) of this Section to below zero. For tax years ending
22     on or after December 31, 1987, the credit shall be allowed
23     for the tax year in which the property is placed in
24     service, or, if the amount of the credit exceeds the tax
25     liability for that year, whether it exceeds the original
26     liability or the liability as later amended, such excess
27     may be carried forward and applied to the tax liability of
28     the 5 taxable years following the excess credit year. The
29     credit shall be applied to the earliest year for which
30     there is a liability. If there is credit from more than one
31     tax year that is available to offset a liability, the
32     credit accruing first in time shall be applied first.
33         Changes made in this subdivision (h)(1) by Public Act
34     88-670 restore changes made by Public Act 85-1182 and
35     reflect existing law.
36         (2) The term qualified property means property which:

 

 

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1             (A) is tangible, whether new or used, including
2         buildings and structural components of buildings;
3             (B) is depreciable pursuant to Section 167 of the
4         Internal Revenue Code, except that "3-year property"
5         as defined in Section 168(c)(2)(A) of that Code is not
6         eligible for the credit provided by this subsection
7         (h);
8             (C) is acquired by purchase as defined in Section
9         179(d) of the Internal Revenue Code; and
10             (D) is not eligible for the Enterprise Zone
11         Investment Credit provided by subsection (f) of this
12         Section.
13         (3) The basis of qualified property shall be the basis
14     used to compute the depreciation deduction for federal
15     income tax purposes.
16         (4) If the basis of the property for federal income tax
17     depreciation purposes is increased after it has been placed
18     in service in a federally designated Foreign Trade Zone or
19     Sub-Zone located in Illinois by the taxpayer, the amount of
20     such increase shall be deemed property placed in service on
21     the date of such increase in basis.
22         (5) The term "placed in service" shall have the same
23     meaning as under Section 46 of the Internal Revenue Code.
24         (6) If during any taxable year ending on or before
25     December 31, 1996, any property ceases to be qualified
26     property in the hands of the taxpayer within 48 months
27     after being placed in service, or the situs of any
28     qualified property is moved outside Illinois within 48
29     months after being placed in service, the tax imposed under
30     subsections (a) and (b) of this Section for such taxable
31     year shall be increased. Such increase shall be determined
32     by (i) recomputing the investment credit which would have
33     been allowed for the year in which credit for such property
34     was originally allowed by eliminating such property from
35     such computation, and (ii) subtracting such recomputed
36     credit from the amount of credit previously allowed. For

 

 

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1     the purposes of this paragraph (6), a reduction of the
2     basis of qualified property resulting from a
3     redetermination of the purchase price shall be deemed a
4     disposition of qualified property to the extent of such
5     reduction.
6         (7) Beginning with tax years ending after December 31,
7     1996, if a taxpayer qualifies for the credit under this
8     subsection (h) and thereby is granted a tax abatement and
9     the taxpayer relocates its entire facility in violation of
10     the explicit terms and length of the contract under Section
11     18-183 of the Property Tax Code, the tax imposed under
12     subsections (a) and (b) of this Section shall be increased
13     for the taxable year in which the taxpayer relocated its
14     facility by an amount equal to the amount of credit
15     received by the taxpayer under this subsection (h).
16     (i) Credit for Personal Property Tax Replacement Income
17 Tax. For tax years ending prior to December 31, 2003, a credit
18 shall be allowed against the tax imposed by subsections (a) and
19 (b) of this Section for the tax imposed by subsections (c) and
20 (d) of this Section. This credit shall be computed by
21 multiplying the tax imposed by subsections (c) and (d) of this
22 Section by a fraction, the numerator of which is base income
23 allocable to Illinois and the denominator of which is Illinois
24 base income, and further multiplying the product by the tax
25 rate imposed by subsections (a) and (b) of this Section.
26     Any credit earned on or after December 31, 1986 under this
27 subsection which is unused in the year the credit is computed
28 because it exceeds the tax liability imposed by subsections (a)
29 and (b) for that year (whether it exceeds the original
30 liability or the liability as later amended) may be carried
31 forward and applied to the tax liability imposed by subsections
32 (a) and (b) of the 5 taxable years following the excess credit
33 year, provided that no credit may be carried forward to any
34 year ending on or after December 31, 2003. This credit shall be
35 applied first to the earliest year for which there is a
36 liability. If there is a credit under this subsection from more

 

 

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1 than one tax year that is available to offset a liability the
2 earliest credit arising under this subsection shall be applied
3 first.
4     If, during any taxable year ending on or after December 31,
5 1986, the tax imposed by subsections (c) and (d) of this
6 Section for which a taxpayer has claimed a credit under this
7 subsection (i) is reduced, the amount of credit for such tax
8 shall also be reduced. Such reduction shall be determined by
9 recomputing the credit to take into account the reduced tax
10 imposed by subsections (c) and (d). If any portion of the
11 reduced amount of credit has been carried to a different
12 taxable year, an amended return shall be filed for such taxable
13 year to reduce the amount of credit claimed.
14     (j) Training expense credit. Beginning with tax years
15 ending on or after December 31, 1986 and prior to December 31,
16 2003, a taxpayer shall be allowed a credit against the tax
17 imposed by subsections (a) and (b) under this Section for all
18 amounts paid or accrued, on behalf of all persons employed by
19 the taxpayer in Illinois or Illinois residents employed outside
20 of Illinois by a taxpayer, for educational or vocational
21 training in semi-technical or technical fields or semi-skilled
22 or skilled fields, which were deducted from gross income in the
23 computation of taxable income. The credit against the tax
24 imposed by subsections (a) and (b) shall be 1.6% of such
25 training expenses. For partners, shareholders of subchapter S
26 corporations, and owners of limited liability companies, if the
27 liability company is treated as a partnership for purposes of
28 federal and State income taxation, there shall be allowed a
29 credit under this subsection (j) to be determined in accordance
30 with the determination of income and distributive share of
31 income under Sections 702 and 704 and subchapter S of the
32 Internal Revenue Code.
33     Any credit allowed under this subsection which is unused in
34 the year the credit is earned may be carried forward to each of
35 the 5 taxable years following the year for which the credit is
36 first computed until it is used. This credit shall be applied

 

 

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1 first to the earliest year for which there is a liability. If
2 there is a credit under this subsection from more than one tax
3 year that is available to offset a liability the earliest
4 credit arising under this subsection shall be applied first. No
5 carryforward credit may be claimed in any tax year ending on or
6 after December 31, 2003.
7     (k) Research and development credit.
8     For tax years ending after July 1, 1990 and prior to
9 December 31, 2003, and beginning again for tax years ending on
10 or after December 31, 2004, a taxpayer shall be allowed a
11 credit against the tax imposed by subsections (a) and (b) of
12 this Section for increasing research activities in this State.
13 The credit allowed against the tax imposed by subsections (a)
14 and (b) shall be equal to 6 1/2% of the qualifying expenditures
15 for increasing research activities in this State. For partners,
16 shareholders of subchapter S corporations, and owners of
17 limited liability companies, if the liability company is
18 treated as a partnership for purposes of federal and State
19 income taxation, there shall be allowed a credit under this
20 subsection to be determined in accordance with the
21 determination of income and distributive share of income under
22 Sections 702 and 704 and subchapter S of the Internal Revenue
23 Code.
24     For purposes of this subsection, "qualifying expenditures"
25 means the qualifying expenditures as defined for the federal
26 credit for increasing research activities which would be
27 allowable under Section 41 of the Internal Revenue Code and
28 which are conducted in this State, "qualifying expenditures for
29 increasing research activities in this State" means the excess
30 of qualifying expenditures for the taxable year in which
31 incurred over qualifying expenditures for the base period,
32 "qualifying expenditures for the base period" means the average
33 of the qualifying expenditures for each year in the base
34 period, and "base period" means the 3 taxable years immediately
35 preceding the taxable year for which the determination is being
36 made.

 

 

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1     Any credit in excess of the tax liability for the taxable
2 year may be carried forward. A taxpayer may elect to have the
3 unused credit shown on its final completed return carried over
4 as a credit against the tax liability for the following 5
5 taxable years or until it has been fully used, whichever occurs
6 first; provided that no credit earned in a tax year ending
7 prior to December 31, 2003 may be carried forward to any year
8 ending on or after December 31, 2003.
9     If an unused credit is carried forward to a given year from
10 2 or more earlier years, that credit arising in the earliest
11 year will be applied first against the tax liability for the
12 given year. If a tax liability for the given year still
13 remains, the credit from the next earliest year will then be
14 applied, and so on, until all credits have been used or no tax
15 liability for the given year remains. Any remaining unused
16 credit or credits then will be carried forward to the next
17 following year in which a tax liability is incurred, except
18 that no credit can be carried forward to a year which is more
19 than 5 years after the year in which the expense for which the
20 credit is given was incurred.
21     No inference shall be drawn from this amendatory Act of the
22 91st General Assembly in construing this Section for taxable
23 years beginning before January 1, 1999.
24     (l) Environmental Remediation Tax Credit.
25         (i) For tax years ending after December 31, 1997 and on
26     or before December 31, 2001, a taxpayer shall be allowed a
27     credit against the tax imposed by subsections (a) and (b)
28     of this Section for certain amounts paid for unreimbursed
29     eligible remediation costs, as specified in this
30     subsection. For purposes of this Section, "unreimbursed
31     eligible remediation costs" means costs approved by the
32     Illinois Environmental Protection Agency ("Agency") under
33     Section 58.14 of the Environmental Protection Act that were
34     paid in performing environmental remediation at a site for
35     which a No Further Remediation Letter was issued by the
36     Agency and recorded under Section 58.10 of the

 

 

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1     Environmental Protection Act. The credit must be claimed
2     for the taxable year in which Agency approval of the
3     eligible remediation costs is granted. The credit is not
4     available to any taxpayer if the taxpayer or any related
5     party caused or contributed to, in any material respect, a
6     release of regulated substances on, in, or under the site
7     that was identified and addressed by the remedial action
8     pursuant to the Site Remediation Program of the
9     Environmental Protection Act. After the Pollution Control
10     Board rules are adopted pursuant to the Illinois
11     Administrative Procedure Act for the administration and
12     enforcement of Section 58.9 of the Environmental
13     Protection Act, determinations as to credit availability
14     for purposes of this Section shall be made consistent with
15     those rules. For purposes of this Section, "taxpayer"
16     includes a person whose tax attributes the taxpayer has
17     succeeded to under Section 381 of the Internal Revenue Code
18     and "related party" includes the persons disallowed a
19     deduction for losses by paragraphs (b), (c), and (f)(1) of
20     Section 267 of the Internal Revenue Code by virtue of being
21     a related taxpayer, as well as any of its partners. The
22     credit allowed against the tax imposed by subsections (a)
23     and (b) shall be equal to 25% of the unreimbursed eligible
24     remediation costs in excess of $100,000 per site, except
25     that the $100,000 threshold shall not apply to any site
26     contained in an enterprise zone as determined by the
27     Department of Commerce and Community Affairs (now
28     Department of Commerce and Economic Opportunity). The
29     total credit allowed shall not exceed $40,000 per year with
30     a maximum total of $150,000 per site. For partners and
31     shareholders of subchapter S corporations, there shall be
32     allowed a credit under this subsection to be determined in
33     accordance with the determination of income and
34     distributive share of income under Sections 702 and 704 and
35     subchapter S of the Internal Revenue Code.
36         (ii) A credit allowed under this subsection that is

 

 

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1     unused in the year the credit is earned may be carried
2     forward to each of the 5 taxable years following the year
3     for which the credit is first earned until it is used. The
4     term "unused credit" does not include any amounts of
5     unreimbursed eligible remediation costs in excess of the
6     maximum credit per site authorized under paragraph (i).
7     This credit shall be applied first to the earliest year for
8     which there is a liability. If there is a credit under this
9     subsection from more than one tax year that is available to
10     offset a liability, the earliest credit arising under this
11     subsection shall be applied first. A credit allowed under
12     this subsection may be sold to a buyer as part of a sale of
13     all or part of the remediation site for which the credit
14     was granted. The purchaser of a remediation site and the
15     tax credit shall succeed to the unused credit and remaining
16     carry-forward period of the seller. To perfect the
17     transfer, the assignor shall record the transfer in the
18     chain of title for the site and provide written notice to
19     the Director of the Illinois Department of Revenue of the
20     assignor's intent to sell the remediation site and the
21     amount of the tax credit to be transferred as a portion of
22     the sale. In no event may a credit be transferred to any
23     taxpayer if the taxpayer or a related party would not be
24     eligible under the provisions of subsection (i).
25         (iii) For purposes of this Section, the term "site"
26     shall have the same meaning as under Section 58.2 of the
27     Environmental Protection Act.
28     (m) Education expense credit. Beginning with tax years
29 ending after December 31, 1999, a taxpayer who is the custodian
30 of one or more qualifying pupils shall be allowed a credit
31 against the tax imposed by subsections (a) and (b) of this
32 Section for qualified education expenses incurred on behalf of
33 the qualifying pupils. The credit shall be equal to 25% of
34 qualified education expenses, but in no event may the total
35 credit under this subsection claimed by a family that is the
36 custodian of qualifying pupils exceed $500 for taxable years

 

 

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1 ending on or before December 30, 2005 and $1,000 for taxable
2 years ending on or after December 31, 2005. In no event shall a
3 credit under this subsection reduce the taxpayer's liability
4 under this Act to less than zero. This subsection is exempt
5 from the provisions of Section 250 of this Act.
6     For purposes of this subsection:
7     "Qualifying pupils" means individuals who (i) are
8 residents of the State of Illinois, (ii) are under the age of
9 21 at the close of the school year for which a credit is
10 sought, and (iii) during the school year for which a credit is
11 sought were full-time pupils enrolled in a kindergarten through
12 twelfth grade education program at any school, as defined in
13 this subsection.
14     "Qualified education expense" means the amount incurred on
15 behalf of a qualifying pupil in excess of $250 for tuition,
16 book fees, and lab fees at the school in which the pupil is
17 enrolled during the regular school year.
18     "School" means any public or nonpublic elementary or
19 secondary school in Illinois that is in compliance with Title
20 VI of the Civil Rights Act of 1964 and attendance at which
21 satisfies the requirements of Section 26-1 of the School Code,
22 except that nothing shall be construed to require a child to
23 attend any particular public or nonpublic school to qualify for
24 the credit under this Section.
25     "Custodian" means, with respect to qualifying pupils, an
26 Illinois resident who is a parent, the parents, a legal
27 guardian, or the legal guardians of the qualifying pupils.
28 (Source: P.A. 92-12, eff. 7-1-01; 92-16, eff. 6-28-01; 92-651,
29 eff. 7-11-02; 93-840, eff. 7-30-04; 92-846, eff. 8-23-02;
30 93-29, eff. 6-20-03; 93-840, eff. 7-30-04; 93-871, eff. 8-6-04;
31 revised 10-25-04.)
 
32     Section 99. Effective date. This Act takes effect upon
33 becoming law.