HB1558enr 95TH GENERAL ASSEMBLY

HB1558 Enrolled LRB095 09507 BDD 31819 b

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Income Tax Act is amended by changing Section 404 as follows:

(35 ILCS 5/404) (from Ch. 120, par. 4-404)

Sec. 404. Reallocation of Items.

(a) If it appears to the Director that any agreement, understanding or arrangement exists between any persons which causes any person's base income allocable to this State to be improperly or inaccurately reflected, the Director may adjust such items of income and deduction, and any factor taken into account in allocating non-business income to this State, to such extent as may reasonably be required to determine the base income of such person properly allocable to this State.

(b) The Director may not make any adjustment under subsection (a) before the Department adopts rules setting forth the methods and standards by which the Director may exercise authority under this Section. The rules must set forth the types of agreements, understandings, and arrangements that the Director will consider to cause a person's base income allocable to this State to be improperly or inaccurately reflected.

(c) Unless the principal purpose of the agreement, understanding, or arrangement is for the avoidance of federal or state income tax, any adjustment made under this Section and the rules required to be adopted under subsection (b) must be in accordance with Section 482 of the Internal Revenue Code, as amended, and the related Treasury Regulations.

(Source: P.A. 76-261.)

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