Full Text of HB0393 93rd General Assembly
HB0393enr 93RD GENERAL ASSEMBLY
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| AN ACT concerning insurance.
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| Be it enacted by the People of the State of Illinois, | 3 |
| represented in the General Assembly:
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| Section 5. The Illinois Income Tax Act is amended by | 5 |
| changing Section 205 as follows:
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| (35 ILCS 5/205) (from Ch. 120, par. 2-205)
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| Sec. 205. Exempt organizations.
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| (a) Charitable, etc. organizations. The base income of an
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| organization which is exempt from the federal income tax by | 10 |
| reason of
Section 501(a) of the Internal Revenue Code shall not | 11 |
| be determined
under section 203 of this Act, but shall be its | 12 |
| unrelated business
taxable income as determined under section | 13 |
| 512 of the Internal Revenue
Code, without any deduction for the | 14 |
| tax imposed by this Act. The
standard exemption provided by | 15 |
| section 204 of this Act shall not be
allowed in determining the | 16 |
| net income of an organization to which this
subsection applies.
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| (b) Partnerships. A partnership as such shall not be | 18 |
| subject to
the tax imposed by subsection 201 (a) and (b) of | 19 |
| this Act, but shall be
subject to the replacement tax imposed | 20 |
| by subsection 201 (c) and (d) of
this Act and shall compute its | 21 |
| base income as described in subsection (d)
of Section 203 of | 22 |
| this Act. A partnership shall file such returns and other
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| information at such
time and in such manner as may be required | 24 |
| under Article 5 of this Act.
The partners in a partnership | 25 |
| shall be liable for the replacement tax imposed
by subsection | 26 |
| 201 (c) and (d) of this Act on such partnership, to the extent
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| such tax is not paid by the partnership, as provided under the | 28 |
| laws of Illinois
governing the liability of partners for the | 29 |
| obligations of a partnership.
Persons carrying on business as | 30 |
| partners shall be liable for the tax
imposed by subsection 201 | 31 |
| (a) and (b) of this Act only in their separate
or individual | 32 |
| capacities.
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| (c) Subchapter S corporations. A Subchapter S corporation | 2 |
| shall not
be subject to the tax imposed by subsection 201 (a) | 3 |
| and
(b) of this Act but shall be subject to the replacement tax | 4 |
| imposed by subsection
201 (c) and (d) of this Act and shall | 5 |
| file such returns
and other information
at such time and in | 6 |
| such manner as may be required under Article 5 of this Act.
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| (d) Combat zone death. An individual relieved from the | 8 |
| federal
income tax for any taxable year by reason of section | 9 |
| 692 of the Internal
Revenue Code shall not be subject to the | 10 |
| tax imposed by this Act for
such taxable year.
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| (e) Certain trusts. A common trust fund described in | 12 |
| Section 584
of the Internal Revenue Code, and any other trust | 13 |
| to the extent that the
grantor is treated as the owner thereof | 14 |
| under sections 671 through 678
of the Internal Revenue Code | 15 |
| shall not be subject to the tax imposed by
this Act.
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| (f) Certain business activities. A person not otherwise | 17 |
| subject to the tax
imposed by this Act shall not become subject | 18 |
| to the tax imposed by this Act by
reason of:
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| (1) that person's ownership of tangible personal | 20 |
| property located at the
premises of
a printer in this State | 21 |
| with which the person has contracted for printing, or
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| (2) activities of the person's employees or agents | 23 |
| located solely at the
premises of a printer and related to | 24 |
| quality control, distribution, or printing
services | 25 |
| performed by a printer in the State with which the person | 26 |
| has
contracted for printing.
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| (g) A nonprofit risk organization that holds a certificate | 28 |
| of authority under Article VIID of the Illinois Insurance Code | 29 |
| is exempt from the tax imposed under this Act with respect to | 30 |
| its activities or operations in furtherance of the powers | 31 |
| conferred upon it under that Article VIID of the Illinois | 32 |
| Insurance Code.
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| (Source: P.A. 88-361.)
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| Section 10. The Illinois Insurance Code is amended by | 35 |
| adding Article VIID as
follows:
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| (215 ILCS 5/Art. VIID heading new)
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| ARTICLE VIID. NONPROFIT RISK ORGANIZATIONS | 3 |
| (215 ILCS 5/123D-1 new)
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| Sec. 123D-1. Purpose; construction. The purpose of this | 5 |
| Article is to provide for the organization of and
issuance
of a | 6 |
| certificate of authority to nonprofit risk organizations that | 7 |
| insure
nonprofit
organizations and that will qualify, and | 8 |
| continue to qualify, as a qualified
charitable risk
pool, as | 9 |
| defined in subsection (n) of Section 501 of the Internal | 10 |
| Revenue Code.
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| (215 ILCS 5/123D-5 new)
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| Sec. 123D-5. Definitions. As used in this Article:
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| "Member" means a nonprofit organization that participates | 14 |
| as an insured in a nonprofit risk organization.
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| "Nonmember charitable organization" has the meaning set | 16 |
| forth in
subsection (n) of Section 501 of the Internal Revenue | 17 |
| Code.
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| "Nonprofit organizations" means organizations described in | 19 |
| paragraph (3) of
subsection (c), and exempt from taxation under | 20 |
| subsection (a), of Section 501
of the
Internal Revenue Code.
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| "Nonprofit risk organization" means a nonprofit company | 22 |
| organized to do
business solely with nonprofit organizations as | 23 |
| a qualified charitable risk
pool under
subsection (n) of | 24 |
| Section 501 of the Internal Revenue Code that is organized in
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| accordance with this Article.
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| "Startup capital" has the meaning set forth in subsection | 27 |
| (n) of
Section 501
of the Internal Revenue Code.
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| (215 ILCS 5/123D-10 new)
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| Sec. 123D-10. Organization of nonprofit risk | 30 |
| organizations.
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| (a) A company organized pursuant to Articles III or IV, | 32 |
| including such
companies organized as a risk retention group in |
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| this State pursuant to Article
VIIB of
this Code, that | 2 |
| satisfies the requirements of this Article may be organized as
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| a nonprofit
risk organization.
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| (b) Notwithstanding any contrary provision in subsection A | 5 |
| of Section 123B-3
of
this Code, a nonprofit risk organization | 6 |
| may be organized as a reciprocal
insurance
company and qualify | 7 |
| for organization under Article VIIB as a risk retention
group.
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| (c) No nonprofit risk organization issued a certificate of | 9 |
| authority
pursuant to this
Article shall be converted into a | 10 |
| corporation or other entity organized for
pecuniary profit
or | 11 |
| into a for-profit organization of any kind.
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| (215 ILCS 5/123D-15 new)
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| Sec. 123D-15. Conduct of insurance business by nonprofit | 14 |
| risk
organizations.
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| (a) The Director may, pursuant to this Article, issue a | 16 |
| certificate of
authority to write the kinds of insurance | 17 |
| enumerated in Classes 2 and 3 of Section 4 to a
nonprofit risk | 18 |
| organization that is a company organized pursuant to Articles
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| III or IV,
including such companies organized as a risk | 20 |
| retention group in this State
pursuant to
Article VIIB, if such | 21 |
| organization:
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| (1) complies with the applicable requirements of | 23 |
| Articles III or IV
and
VIIB, if organized as a risk | 24 |
| retention group; and
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| (2) has an initial paid-up capital and surplus at least | 26 |
| equal to the
amount of
applicable paid-up capital and | 27 |
| surplus required by Articles III or IV for
a
newly
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| organized company doing the same kind or kinds of insurance | 29 |
| business.
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| Thereafter, every such nonprofit risk organization shall | 31 |
| maintain capital and
surplus at
least equal to the amount of | 32 |
| applicable capital and surplus required to be
maintained by
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| companies under Articles III or IV doing the same kind or kinds | 34 |
| of
insurance
business.
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| (b) Every certificate of authority to engage in an |
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| insurance business issued
by the
Director to any nonprofit risk | 2 |
| organization pursuant to the provisions of this
Article shall
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| specify the company's name, the location of its principal | 4 |
| office, the name and
principal
address of its attorney-in-fact, | 5 |
| if any, and the kind or kinds of insurance
business that it
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| authorized to engage in this State.
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| (215 ILCS 5/123D-20 new)
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| Sec. 123D-20. Relevant criteria.
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| (a) A nonprofit risk
organization
must meet all of the | 10 |
| following criteria:
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| (1) Be organized and operated solely to insure risks of | 12 |
| its members.
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| (2) Directly provide information to its members with | 14 |
| respect to loss
control
and risk management.
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| (3) Be comprised solely of members.
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| (4) Be organized under this Article.
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| (5) Be exempt from Illinois income taxes with respect | 18 |
| to its activities or operations in furtherance of the | 19 |
| powers conferred upon it by this Article.
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| (6) Obtain at least $1,000,000 in startup capital from | 21 |
| nonmember
charitable organizations. The startup capital | 22 |
| may take the form of
advancements
or borrowings in the form | 23 |
| permitted by Section 56 or 76 of this Code,
as
applicable. | 24 |
| Startup capital may be used to satisfy the financial | 25 |
| requirements
contained in this Article applicable to a | 26 |
| nonprofit risk organization only to
the
extent the Director | 27 |
| determines that it complies with those requirements.
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| (7) Be controlled by a board of directors elected by | 29 |
| its members.
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| (8) Require in its organizational documents that:
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| (A) each member of the nonprofit risk organization | 32 |
| shall at all
times be an organization described in | 33 |
| paragraph (3) of subsection (c) of
Section 501 of the | 34 |
| Internal Revenue Code and exempt from tax under
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| subsection (a) of Section 501 of the Internal Revenue |
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| Code;
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| (B) any member that receives a final determination | 3 |
| that it no
longer qualifies as an organization | 4 |
| described in paragraph (3) of
subsection (c) of Section | 5 |
| 501 of the Internal Revenue Code shall
immediately | 6 |
| notify the nonprofit risk organization of the | 7 |
| determination
and the effective date of the | 8 |
| determination; and
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| (C) each policy of insurance issued by the | 10 |
| nonprofit risk
organization shall provide that the | 11 |
| policy does not cover the insured with
respect to | 12 |
| events occurring after the date the final | 13 |
| determination was
issued to the insured. | 14 |
| (b) An organization shall not cease to qualify as a | 15 |
| nonprofit risk organization solely by reason of the failure | 16 |
| of any of its members to continue to be an organization | 17 |
| described in paragraph (3) of subsection (c) of Section 501 | 18 |
| of the Internal Revenue Code if, within a reasonable period | 19 |
| of time after the nonprofit risk organization is notified | 20 |
| as required under subparagraph (8)(B) of subsection (a) of | 21 |
| this Section, the nonprofit risk organization takes such | 22 |
| action as may be reasonably necessary to remove the member | 23 |
| from the nonprofit risk organization.
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| (215 ILCS 5/123D-25 new)
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| Sec. 123D-25. Applicability of other provisions of this | 26 |
| Code. Except as otherwise provided in this Article, where | 27 |
| inconsistent with
this
Article, or where the context otherwise | 28 |
| requires, all of the provisions of this
Code and the
rules of | 29 |
| the Director relating to all insurers and those relating to a | 30 |
| company
organized
pursuant to Articles III or IV or a risk | 31 |
| retention group organized in this
State pursuant
to Article | 32 |
| VIIB transacting the same kind or kinds of insurance shall be
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| applicable to a
nonprofit risk organization organized and | 34 |
| issued a certificate of authority
pursuant to this
Article. | 35 |
| Where any of such provisions of law refer to a corporation, |
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| company,
or insurer,
those references, when read in connection | 2 |
| with and applicable to this Article,
shall mean
such a | 3 |
| nonprofit risk organization.
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| (215 ILCS 5/123D-30 new)
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| Sec. 123D-30. Residual market participation exemption;
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| security
funds. A nonprofit risk organization shall not be | 7 |
| permitted or required to join
or
contribute financially to any | 8 |
| plan, pool, association, or guaranty or
insolvency fund in
this | 9 |
| State, nor shall any nonprofit risk organization, nor its | 10 |
| insureds nor any
claimants
against the insureds, nor its parent | 11 |
| nor any affiliated company, nor any member
organization of its | 12 |
| association, receive any benefit from any such plan, pool
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| association,
or guaranty or insolvency fund for claims arising | 14 |
| out of the operations of the
nonprofit
risk organization. Each | 15 |
| nonprofit risk organization must inform each insured,
in both | 16 |
| the
application for insurance and in the policy issued to the | 17 |
| insured, that (i)
the nonprofit
risk organization is not | 18 |
| subject to all of the insurance laws and rules of this
State, | 19 |
| and (ii)
State insurance insolvency guaranty funds are not | 20 |
| available to the insured for
claims
arising out of the | 21 |
| operations of the nonprofit risk organization.
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| (215 ILCS 5/123D-35 new)
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| Sec. 123D-35. Rules. The Director shall adopt such rules | 24 |
| as may be
necessary
for
the implementation of this Article.
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