Full Text of HB4194 93rd General Assembly
HB4194 93RD GENERAL ASSEMBLY
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93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004 HB4194
Introduced 1/26/2004, by Gary Hannig, Jack D. Franks SYNOPSIS AS INTRODUCED: |
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30 ILCS 500/1-15.120 new |
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30 ILCS 500/45-10 |
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30 ILCS 500/50-17 new |
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35 ILCS 5/1501 |
from Ch. 120, par. 15-1501 |
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Amends the Procurement Code. Defines "expatriate corporation" as a foreign incorporated entity that (1) is publicly traded in the United States, (2) is incorporated in a tax haven, (3) less than 10% of the gross income of which is derived from activities in the tax haven, (4) less than 10% of the employees of which are permanently located in the tax haven, and (5) has certain ownership or other business interest connections with a domestic corporation or partnership. Provides that an expatriate corporation shall be considered a non-resident bidder. Provides that no business or member of a unitary business group, as defined in the Illinois Income Tax Act, shall submit a bid for or enter into a contract with a State agency under this Code if that business or any member of the unitary business group is an expatriate corporation. Amends the Illinois Income Tax Act. Provides that notwithstanding the definition of "unitary business group", any person formed or incorporated in a foreign tax haven may be a member of a unitary business group without regard to where its business activities are conducted. Lists those places that are "foreign tax havens". Provides that the term "foreign tax haven" also includes any foreign country that does not impose a substantial business income tax or other substantial business activity tax, as determined by the Department by rule. Effective July 1, 2004.
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A BILL FOR
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HB4194 |
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| AN ACT concerning taxes.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Illinois Procurement Code is amended by | 5 |
| changing Section 45-10 and adding Sections 1-15.120 and 50-17 | 6 |
| as follows: | 7 |
| (30 ILCS 500/1-15.120 new)
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| Sec. 1-15.120. Expatriate corporation. "Expatriate | 9 |
| corporation" means a foreign incorporated entity to which all | 10 |
| the following apply: | 11 |
| (1) It is publicly traded in the United States;
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| (2) Is incorporated in a tax haven, including Andorra, | 13 |
| Anguilla, Antigua and Barbuda, Aruba, the Bahamas, | 14 |
| Bahrain, Barbados, Belize, Bermuda, British Virgin | 15 |
| Islands, Cayman Islands, Cook Islands, Turks and Caicos | 16 |
| Islands, Dominica, Gibraltar, Grenada, | 17 |
| Guernsey-Sark-Alderney, Isle of Man, Jersey, Liberia, | 18 |
| Liechtenstein, Luxemburg, Maldives, Marshall Islands, | 19 |
| Monaco, Montserrat, Nauru, Netherlands Antilles, Niue, | 20 |
| Panama, Samoa, Seychelles, St. Kitts and Nevis, St. Lucia, | 21 |
| St. Vincent and the Grenadines, Tonga, U.S. Virgin Islands, | 22 |
| and Vanuatu;
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| (3) Less than 10% of the gross income of the foreign | 24 |
| entity is derived from activities in the tax haven;
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| (4) Less than 10% of the employees of the foreign | 26 |
| entity are permanently located in the tax haven;
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| (5) Either clause (A) or clause (B) applies:
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| (A) The foreign entity was established in | 29 |
| connection with a transaction or series of related | 30 |
| transactions pursuant to which (I) the foreign entity | 31 |
| directly or indirectly acquired substantially all of | 32 |
| the properties held by a domestic corporation or all of |
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| the properties constituting a trade or business of a | 2 |
| domestic partnership or related foreign partnership | 3 |
| and (II) immediately after the acquisition, more than | 4 |
| 50% of the publicly traded stock, by vote or value, of | 5 |
| the foreign entity is held by former shareholders of | 6 |
| the domestic corporation or by former partners of the | 7 |
| domestic partnership or related foreign partnership. | 8 |
| For purposes of subclause (II), any stock sold in a | 9 |
| public offering related to the transaction or a series | 10 |
| of transactions is disregarded.
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| (B) The foreign entity was established in | 12 |
| connection with a transaction or series of related | 13 |
| transactions pursuant to which (I) the foreign entity | 14 |
| directly or indirectly acquired substantially all of | 15 |
| the properties held by a domestic corporation or all of | 16 |
| the properties constituting a trade or business of a | 17 |
| domestic partnership or related foreign partnership | 18 |
| and (II) the acquiring foreign entity is more than 50% | 19 |
| owned, by vote or value, by domestic shareholders or | 20 |
| partners.
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| (30 ILCS 500/45-10)
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| Sec. 45-10. Resident bidders.
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| (a) Amount of preference. When a contract is to be awarded
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| to the lowest responsible
bidder, a resident bidder shall be | 25 |
| allowed a preference as against
a non-resident bidder from any
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| state that gives or requires a preference to bidders from that
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| state. The preference shall be equal
to the preference given or | 28 |
| required by the state of the
non-resident bidder. Further, if | 29 |
| only non-resident bidders are
bidding, the purchasing agency is | 30 |
| within its right to specify that
Illinois
labor and | 31 |
| manufacturing locations be used as a part of the
manufacturing | 32 |
| process, if applicable.
This specification may be negotiated as | 33 |
| part of the solicitation
process.
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| (b) Residency. A resident bidder is a person authorized to
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| transact business in this State
and having a bona fide |
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| establishment for transacting business
within this State where | 2 |
| it was
actually transacting business on the date when any bid | 3 |
| for a
public contract is first advertised
or announced. A | 4 |
| resident bidder includes a foreign corporation
duly authorized | 5 |
| to transact
business in this State that has a bona fide | 6 |
| establishment for
transacting business within this State
where | 7 |
| it was actually transacting business on the date when any
bid | 8 |
| for a public contract is first
advertised or announced ; | 9 |
| however, an expatriate corporation shall be considered a | 10 |
| non-resident bidder .
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| (c) Federal funds. This Section does not apply to any
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| contract for any project as to
which federal funds are | 13 |
| available for expenditure when its
provisions may be in | 14 |
| conflict with
federal law or federal regulation.
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| (Source: P.A. 90-572, eff. date - See Sec. 99-5.)
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| (30 ILCS 500/50-17 new)
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| Sec. 50-17. Expatriate corporations. No business or member | 18 |
| of a unitary business group, as defined in the Illinois Income | 19 |
| Tax Act, shall submit a bid for or enter into a contract with a | 20 |
| State agency under this Code if that business or any member of | 21 |
| the unitary business group is an expatriate corporation as | 22 |
| defined in this Code.
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| Section 10. The Illinois Income Tax Act is amended by | 24 |
| changing Section 1501 as follows:
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| (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
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| Sec. 1501. Definitions.
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| (a) In general. When used in this Act, where not
otherwise | 28 |
| distinctly expressed or manifestly incompatible with the | 29 |
| intent
thereof:
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| (1) Business income. The term "business income" means | 31 |
| income arising from
transactions and activity in the | 32 |
| regular course of the taxpayer's trade
or business, net of | 33 |
| the deductions allocable thereto, and includes income
from |
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| tangible and intangible property if the acquisition, | 2 |
| management, and
disposition of the property constitute | 3 |
| integral parts of the taxpayer's
regular trade or business | 4 |
| operations. Such term does not include compensation
or the | 5 |
| deductions allocable thereto.
For each taxable year | 6 |
| beginning on or after January 1, 2003, a taxpayer may
elect | 7 |
| to treat all income other than compensation as business | 8 |
| income. This
election shall be made in accordance with | 9 |
| rules adopted by the Department and,
once made, shall be | 10 |
| irrevocable.
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| (2) Commercial domicile. The term "commercial | 12 |
| domicile" means the
principal
place from which the trade or | 13 |
| business of the taxpayer is directed or managed.
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| (3) Compensation. The term "compensation" means wages, | 15 |
| salaries,
commissions
and any other form of remuneration | 16 |
| paid to employees for personal services.
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| (4) Corporation. The term "corporation" includes | 18 |
| associations, joint-stock
companies, insurance companies | 19 |
| and cooperatives. Any entity, including a
limited | 20 |
| liability company formed under the Illinois Limited | 21 |
| Liability Company
Act, shall be treated as a corporation if | 22 |
| it is so classified for federal
income tax purposes.
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| (5) Department. The term "Department" means the | 24 |
| Department of Revenue of
this State.
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| (6) Director. The term "Director" means the Director of | 26 |
| Revenue of this
State.
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| (7) Fiduciary. The term "fiduciary" means a guardian, | 28 |
| trustee, executor,
administrator, receiver, or any person | 29 |
| acting in any fiduciary capacity for any
person.
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| (8) Financial organization.
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| (A) The term "financial organization" means
any
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| bank, bank holding company, trust company, savings | 33 |
| bank, industrial bank,
land bank, safe deposit | 34 |
| company, private banker, savings and loan association,
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| building and loan association, credit union, currency | 36 |
| exchange, cooperative
bank, small loan company, sales |
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| finance company, investment company, or any
person | 2 |
| which is owned by a bank or bank holding company. For | 3 |
| the purpose of
this Section a "person" will include | 4 |
| only those persons which a bank holding
company may | 5 |
| acquire and hold an interest in, directly or | 6 |
| indirectly, under the
provisions of the Bank Holding | 7 |
| Company Act of 1956 (12 U.S.C. 1841, et seq.),
except | 8 |
| where interests in any person must be disposed of | 9 |
| within certain
required time limits under the Bank | 10 |
| Holding Company Act of 1956.
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| (B) For purposes of subparagraph (A) of this | 12 |
| paragraph, the term
"bank" includes (i) any entity that | 13 |
| is regulated by the Comptroller of the
Currency under | 14 |
| the National Bank Act, or by the Federal Reserve Board, | 15 |
| or by
the
Federal Deposit Insurance Corporation and | 16 |
| (ii) any federally or State chartered
bank
operating as | 17 |
| a credit card bank.
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| (C) For purposes of subparagraph (A) of this | 19 |
| paragraph, the term
"sales finance company" has the | 20 |
| meaning provided in the following item (i) or
(ii):
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| (i) A person primarily engaged in one or more | 22 |
| of the following
businesses: the business of | 23 |
| purchasing customer receivables, the business
of | 24 |
| making loans upon the security of customer | 25 |
| receivables, the
business of making loans for the | 26 |
| express purpose of funding purchases of
tangible | 27 |
| personal property or services by the borrower, or | 28 |
| the business of
finance leasing. For purposes of | 29 |
| this item (i), "customer receivable"
means:
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| (a) a retail installment contract or | 31 |
| retail charge agreement within
the
meaning
of | 32 |
| the Sales Finance Agency Act, the Retail | 33 |
| Installment Sales Act, or the
Motor Vehicle | 34 |
| Retail Installment Sales Act;
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| (b) an installment, charge, credit, or | 36 |
| similar contract or agreement
arising from
the |
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| sale of tangible personal property or services | 2 |
| in a transaction involving
a deferred payment | 3 |
| price payable in one or more installments | 4 |
| subsequent
to the sale; or
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| (c) the outstanding balance of a contract | 6 |
| or agreement described in
provisions
(a) or (b) | 7 |
| of this item (i).
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| A customer receivable need not provide for | 9 |
| payment of interest on
deferred
payments. A sales | 10 |
| finance company may purchase a customer receivable | 11 |
| from, or
make a loan secured by a customer | 12 |
| receivable to, the seller in the original
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| transaction or to a person who purchased the | 14 |
| customer receivable directly or
indirectly from | 15 |
| that seller.
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| (ii) A corporation meeting each of the | 17 |
| following criteria:
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| (a) the corporation must be a member of an | 19 |
| "affiliated group" within
the
meaning of | 20 |
| Section 1504(a) of the Internal Revenue Code, | 21 |
| determined
without regard to Section 1504(b) | 22 |
| of the Internal Revenue Code;
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| (b) more than 50% of the gross income of | 24 |
| the corporation for the
taxable
year
must be | 25 |
| interest income derived from qualifying loans. | 26 |
| A "qualifying
loan" is a loan made to a member | 27 |
| of the corporation's affiliated group that
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| originates customer receivables (within the | 29 |
| meaning of item (i)) or to whom
customer | 30 |
| receivables originated by a member of the | 31 |
| affiliated group have been
transferred, to
the | 32 |
| extent the average outstanding balance of | 33 |
| loans from that corporation
to members of its | 34 |
| affiliated group during the taxable year do not | 35 |
| exceed
the limitation amount for that | 36 |
| corporation. The "limitation amount" for a
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| corporation is the average outstanding | 2 |
| balances during the taxable year of
customer | 3 |
| receivables (within the meaning of item (i)) | 4 |
| originated by
all members of the affiliated | 5 |
| group.
If the average outstanding balances of | 6 |
| the
loans made by a corporation to members of | 7 |
| its affiliated group exceed the
limitation | 8 |
| amount, the interest income of that | 9 |
| corporation from qualifying
loans shall be | 10 |
| equal to its interest income from loans to | 11 |
| members of its
affiliated groups times a | 12 |
| fraction equal to the limitation amount | 13 |
| divided by
the average outstanding balances of | 14 |
| the loans made by that corporation to
members | 15 |
| of its affiliated group;
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| (c) the total of all shareholder's equity | 17 |
| (including, without
limitation,
paid-in
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| capital on common and preferred stock and | 19 |
| retained earnings) of the
corporation plus the | 20 |
| total of all of its loans, advances, and other
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| obligations payable or owed to members of its | 22 |
| affiliated group may not
exceed 20% of the | 23 |
| total assets of the corporation at any time | 24 |
| during the tax
year; and
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| (d) more than 50% of all interest-bearing | 26 |
| obligations of the
affiliated group payable to | 27 |
| persons outside the group determined in | 28 |
| accordance
with generally accepted accounting | 29 |
| principles must be obligations of the
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| corporation.
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| This amendatory Act of the 91st General Assembly is | 32 |
| declaratory of
existing
law.
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| (D) Subparagraphs
(B) and (C) of this paragraph are | 34 |
| declaratory of
existing law and apply retroactively, | 35 |
| for all tax years beginning on or before
December 31, | 36 |
| 1996,
to all original returns, to all amended returns |
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| filed no later than 30
days after the effective date of | 2 |
| this amendatory Act of 1996, and to all
notices issued | 3 |
| on or before the effective date of this amendatory Act | 4 |
| of 1996
under subsection (a) of Section 903, subsection | 5 |
| (a) of Section 904,
subsection (e) of Section 909, or | 6 |
| Section 912.
A taxpayer that is a "financial | 7 |
| organization" that engages in any transaction
with an | 8 |
| affiliate shall be a "financial organization" for all | 9 |
| purposes of this
Act.
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| (E) For all tax years beginning on or
before | 11 |
| December 31, 1996, a taxpayer that falls within the | 12 |
| definition
of a
"financial organization" under | 13 |
| subparagraphs (B) or (C) of this paragraph, but
who | 14 |
| does
not fall within the definition of a "financial | 15 |
| organization" under the Proposed
Regulations issued by | 16 |
| the Department of Revenue on July 19, 1996, may
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| irrevocably elect to apply the Proposed Regulations | 18 |
| for all of those years as
though the Proposed | 19 |
| Regulations had been lawfully promulgated, adopted, | 20 |
| and in
effect for all of those years. For purposes of | 21 |
| applying subparagraphs (B) or
(C) of
this
paragraph to | 22 |
| all of those years, the election allowed by this | 23 |
| subparagraph
applies only to the taxpayer making the | 24 |
| election and to those members of the
taxpayer's unitary | 25 |
| business group who are ordinarily required to | 26 |
| apportion
business income under the same subsection of | 27 |
| Section 304 of this Act as the
taxpayer making the | 28 |
| election. No election allowed by this subparagraph | 29 |
| shall
be made under a claim
filed under subsection (d) | 30 |
| of Section 909 more than 30 days after the
effective | 31 |
| date of this amendatory Act of 1996.
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| (F) Finance Leases. For purposes of this | 33 |
| subsection, a finance lease
shall be treated as a loan | 34 |
| or other extension of credit, rather than as a
lease,
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| regardless of how the transaction is characterized for | 36 |
| any other purpose,
including the purposes of any |
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| regulatory agency to which the lessor is subject.
A | 2 |
| finance lease is any transaction in the form of a lease | 3 |
| in which the lessee
is treated as the owner of the | 4 |
| leased asset entitled to any deduction for
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| depreciation allowed under Section 167 of the Internal | 6 |
| Revenue Code.
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| (9) Fiscal year. The term "fiscal year" means an | 8 |
| accounting period of
12 months ending on the last day of | 9 |
| any month other than December.
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| (10) Includes and including. The terms "includes" and | 11 |
| "including" when
used in a definition contained in this Act | 12 |
| shall not be deemed to exclude
other things otherwise | 13 |
| within the meaning of the term defined.
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| (11) Internal Revenue Code. The term "Internal Revenue | 15 |
| Code" means the
United States Internal Revenue Code of 1954 | 16 |
| or any successor law or laws
relating to federal income | 17 |
| taxes in effect for the taxable year.
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| (12) Mathematical error. The term "mathematical error" | 19 |
| includes the
following types of errors, omissions, or | 20 |
| defects in a return filed by a
taxpayer which prevents | 21 |
| acceptance of the return as filed for processing:
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| (A) arithmetic errors or incorrect computations on | 23 |
| the return or
supporting schedules;
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| (B) entries on the wrong lines;
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| (C) omission of required supporting forms or | 26 |
| schedules or the omission
of the information in whole | 27 |
| or in part called for thereon; and
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| (D) an attempt to claim, exclude, deduct, or | 29 |
| improperly report, in a
manner
directly contrary to the | 30 |
| provisions of the Act and regulations thereunder
any | 31 |
| item of income, exemption, deduction, or credit.
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| (13) Nonbusiness income. The term "nonbusiness income" | 33 |
| means all income
other than business income or | 34 |
| compensation.
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| (14) Nonresident. The term "nonresident" means a | 36 |
| person who is not a
resident.
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| (15) Paid, incurred and accrued. The terms "paid", | 2 |
| "incurred" and
"accrued"
shall be construed according to | 3 |
| the method of accounting upon the basis
of which the | 4 |
| person's base income is computed under this Act.
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| (16) Partnership and partner. The term "partnership" | 6 |
| includes a syndicate,
group, pool, joint venture or other | 7 |
| unincorporated organization, through
or by means of which | 8 |
| any business, financial operation, or venture is carried
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| on, and which is not, within the meaning of this Act, a | 10 |
| trust or estate
or a corporation; and the term "partner" | 11 |
| includes a member in such syndicate,
group, pool, joint | 12 |
| venture or organization.
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| The term "partnership" includes any entity, including | 14 |
| a limited
liability company formed under the Illinois
| 15 |
| Limited Liability Company Act, classified as a partnership | 16 |
| for federal income tax purposes.
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| The term "partnership" does not include a syndicate, | 18 |
| group, pool,
joint venture, or other unincorporated | 19 |
| organization established for the
sole purpose of playing | 20 |
| the Illinois State Lottery.
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| (17) Part-year resident. The term "part-year resident" | 22 |
| means an individual
who became a resident during the | 23 |
| taxable year or ceased to be a resident
during the taxable | 24 |
| year. Under Section 1501(a)(20)(A)(i) residence
commences | 25 |
| with presence in this State for other than a temporary or | 26 |
| transitory
purpose and ceases with absence from this State | 27 |
| for other than a temporary or
transitory purpose. Under | 28 |
| Section 1501(a)(20)(A)(ii) residence commences
with the | 29 |
| establishment of domicile in this State and ceases with the
| 30 |
| establishment of domicile in another State.
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| (18) Person. The term "person" shall be construed to | 32 |
| mean and include
an individual, a trust, estate, | 33 |
| partnership, association, firm, company,
corporation, | 34 |
| limited liability company, or fiduciary. For purposes of | 35 |
| Section
1301 and 1302 of this Act, a "person" means (i) an | 36 |
| individual, (ii) a
corporation, (iii) an officer, agent, or |
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| employee of a
corporation, (iv) a member, agent or employee | 2 |
| of a partnership, or (v)
a member,
manager, employee, | 3 |
| officer, director, or agent of a limited liability company
| 4 |
| who in such capacity commits an offense specified in | 5 |
| Section 1301 and 1302.
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| (18A) Records. The term "records" includes all data | 7 |
| maintained by the
taxpayer, whether on paper, microfilm, | 8 |
| microfiche, or any type of
machine-sensible data | 9 |
| compilation.
| 10 |
| (19) Regulations. The term "regulations" includes | 11 |
| rules promulgated and
forms prescribed by the Department.
| 12 |
| (20) Resident. The term "resident" means:
| 13 |
| (A) an individual (i) who is
in this State for | 14 |
| other than a temporary or transitory purpose during the
| 15 |
| taxable year; or (ii) who is domiciled in this State | 16 |
| but is absent from
the State for a temporary or | 17 |
| transitory purpose during the taxable year;
| 18 |
| (B) The estate of a decedent who at his or her | 19 |
| death was domiciled in
this
State;
| 20 |
| (C) A trust created by a will of a decedent who at | 21 |
| his death was
domiciled
in this State; and
| 22 |
| (D) An irrevocable trust, the grantor of which was | 23 |
| domiciled in this
State
at the time such trust became | 24 |
| irrevocable. For purpose of this subparagraph,
a trust | 25 |
| shall be considered irrevocable to the extent that the | 26 |
| grantor is
not treated as the owner thereof under | 27 |
| Sections 671 through 678 of the Internal
Revenue Code.
| 28 |
| (21) Sales. The term "sales" means all gross receipts | 29 |
| of the taxpayer
not allocated under Sections 301, 302 and | 30 |
| 303.
| 31 |
| (22) State. The term "state" when applied to a | 32 |
| jurisdiction other than
this State means any state of the | 33 |
| United States, the District of Columbia,
the Commonwealth | 34 |
| of Puerto Rico, any Territory or Possession of the United
| 35 |
| States, and any foreign country, or any political | 36 |
| subdivision of any of the
foregoing. For purposes of the |
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| foreign tax credit under Section 601, the
term "state" | 2 |
| means any state of the United States, the District of | 3 |
| Columbia,
the Commonwealth of Puerto Rico, and any | 4 |
| territory or possession of the
United States, or any | 5 |
| political subdivision of any of the foregoing,
effective | 6 |
| for tax years ending on or after December 31, 1989.
| 7 |
| (23) Taxable year. The term "taxable year" means the | 8 |
| calendar year, or
the fiscal year ending during such | 9 |
| calendar year, upon the basis of which
the base income is | 10 |
| computed under this Act. "Taxable year" means, in the
case | 11 |
| of a return made for a fractional part of a year under the | 12 |
| provisions
of this Act, the period for which such return is | 13 |
| made.
| 14 |
| (24) Taxpayer. The term "taxpayer" means any person | 15 |
| subject to the tax
imposed by this Act.
| 16 |
| (25) International banking facility. The term | 17 |
| international banking
facility shall have the same meaning | 18 |
| as is set forth in the Illinois Banking
Act or as is set | 19 |
| forth in the laws of the United States or regulations of
| 20 |
| the Board of Governors of the Federal Reserve System.
| 21 |
| (26) Income Tax Return Preparer.
| 22 |
| (A) The term "income tax return preparer"
means any | 23 |
| person who prepares for compensation, or who employs | 24 |
| one or more
persons to prepare for compensation, any | 25 |
| return of tax imposed by this Act
or any claim for | 26 |
| refund of tax imposed by this Act. The preparation of a
| 27 |
| substantial portion of a return or claim for refund | 28 |
| shall be treated as
the preparation of that return or | 29 |
| claim for refund.
| 30 |
| (B) A person is not an income tax return preparer | 31 |
| if all he or she does
is
| 32 |
| (i) furnish typing, reproducing, or other | 33 |
| mechanical assistance;
| 34 |
| (ii) prepare returns or claims for refunds for | 35 |
| the employer by whom he
or she is regularly and | 36 |
| continuously employed;
|
|
|
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| 1 |
| (iii) prepare as a fiduciary returns or claims | 2 |
| for refunds for any
person; or
| 3 |
| (iv) prepare claims for refunds for a taxpayer | 4 |
| in response to any
notice
of deficiency issued to | 5 |
| that taxpayer or in response to any waiver of
| 6 |
| restriction after the commencement of an audit of | 7 |
| that taxpayer or of another
taxpayer if a | 8 |
| determination in the audit of the other taxpayer | 9 |
| directly or
indirectly affects the tax liability | 10 |
| of the taxpayer whose claims he or she is
| 11 |
| preparing.
| 12 |
| (27) Unitary business group. The term "unitary | 13 |
| business group" means
a group of persons related through | 14 |
| common ownership whose business activities
are integrated | 15 |
| with, dependent upon and contribute to each other. The | 16 |
| group
will not include those members whose business | 17 |
| activity outside the United
States is 80% or more of any | 18 |
| such member's total business activity; for
purposes of this | 19 |
| paragraph and clause (a)(3)(B)(ii) of Section 304,
| 20 |
| business
activity within the United States shall be | 21 |
| measured by means of the factors
ordinarily applicable | 22 |
| under subsections (a), (b), (c), (d), or (h)
of Section
304 | 23 |
| except that, in the case of members ordinarily required to | 24 |
| apportion
business income by means of the 3 factor formula | 25 |
| of property, payroll and sales
specified in subsection (a) | 26 |
| of Section 304, including the
formula as weighted in | 27 |
| subsection (h) of Section 304, such members shall
not use | 28 |
| the sales factor in the computation and the results of the | 29 |
| property
and payroll factor computations of subsection (a) | 30 |
| of Section 304 shall be
divided by 2 (by one if either
the | 31 |
| property or payroll factor has a denominator of zero). The | 32 |
| computation
required by the preceding sentence shall, in | 33 |
| each case, involve the division of
the member's property, | 34 |
| payroll, or revenue miles in the United States,
insurance | 35 |
| premiums on property or risk in the United States, or | 36 |
| financial
organization business income from sources within |
|
|
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| the United States, as the
case may be, by the respective | 2 |
| worldwide figures for such items. Common
ownership in the | 3 |
| case of corporations is the direct or indirect control or
| 4 |
| ownership of more than 50% of the outstanding voting stock | 5 |
| of the persons
carrying on unitary business activity. | 6 |
| Unitary business activity can
ordinarily be illustrated | 7 |
| where the activities of the members are: (1) in the
same | 8 |
| general line (such as manufacturing, wholesaling, | 9 |
| retailing of tangible
personal property, insurance, | 10 |
| transportation or finance); or (2) are steps in a
| 11 |
| vertically structured enterprise or process (such as the | 12 |
| steps involved in the
production of natural resources, | 13 |
| which might include exploration, mining,
refining, and | 14 |
| marketing); and, in either instance, the members are | 15 |
| functionally
integrated through the exercise of strong | 16 |
| centralized management (where, for
example, authority over | 17 |
| such matters as purchasing, financing, tax compliance,
| 18 |
| product line, personnel, marketing and capital investment | 19 |
| is not left to each
member). In no event, however, will any | 20 |
| unitary business group include members
which are | 21 |
| ordinarily required to apportion business income under | 22 |
| different
subsections of Section 304 except that for tax | 23 |
| years ending on or after
December 31, 1987 this prohibition | 24 |
| shall not apply to a unitary business group
composed of one | 25 |
| or more taxpayers all of which apportion business income
| 26 |
| pursuant to subsection (b) of Section 304, or all of which | 27 |
| apportion business
income pursuant to subsection (d) of | 28 |
| Section 304, and a holding company of such
single-factor | 29 |
| taxpayers (see definition of "financial organization" for | 30 |
| rule
regarding holding companies of financial | 31 |
| organizations). If a unitary business
group would, but for | 32 |
| the preceding sentence, include members that are
| 33 |
| ordinarily required to apportion business income under | 34 |
| different subsections of
Section 304, then for each | 35 |
| subsection of Section 304 for which there are two or
more | 36 |
| members, there shall be a separate unitary business group |
|
|
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| composed of such
members. For purposes of the preceding two | 2 |
| sentences, a member is "ordinarily
required to apportion | 3 |
| business income" under a particular subsection of Section
| 4 |
| 304 if it would be required to use the apportionment method | 5 |
| prescribed by such
subsection except for the fact that it | 6 |
| derives business income solely from
Illinois. If the | 7 |
| unitary business group members' accounting periods differ,
| 8 |
| the common parent's accounting period or, if there is no | 9 |
| common parent, the
accounting period of the member that is | 10 |
| expected to have, on a recurring basis,
the greatest | 11 |
| Illinois income tax liability must be used to determine | 12 |
| whether to
use the apportionment method provided in | 13 |
| subsection (a) or subsection (h) of
Section 304. The
| 14 |
| prohibition against membership in a unitary business group | 15 |
| for taxpayers
ordinarily required to apportion income | 16 |
| under different subsections of Section
304 does not apply | 17 |
| to taxpayers required to apportion income under subsection
| 18 |
| (a) and subsection (h) of Section
304. The provisions of | 19 |
| this amendatory Act of 1998 apply to tax
years ending on or | 20 |
| after December 31, 1998.
| 21 |
| (28) Subchapter S corporation. The term "Subchapter S | 22 |
| corporation"
means a corporation for which there is in | 23 |
| effect an election under Section
1362 of the Internal | 24 |
| Revenue Code, or for which there is a federal election
to | 25 |
| opt out of the provisions of the Subchapter S Revision Act | 26 |
| of 1982 and
have applied instead the prior federal | 27 |
| Subchapter S rules as in effect on July
1, 1982.
| 28 |
| (29) Foreign tax haven. | 29 |
| (A) Notwithstanding any provision of item (27), | 30 |
| any person formed or incorporated in a foreign tax | 31 |
| haven may be a member of a unitary business group | 32 |
| without regard to where its business activities are | 33 |
| conducted. | 34 |
| (B) The term "foreign tax haven" includes Andorra, | 35 |
| Anguilla, Antigua and Barbuda, Aruba, the Bahamas, | 36 |
| Bahrain, Barbados, Belize, Bermuda, British Virgin |
|
|
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| 1 |
| Islands, Cayman Islands, Cook Islands, Turks and | 2 |
| Caicos Islands, Dominica, Gibraltar, Grenada, | 3 |
| Guernsey-Sark-Alderney, Isle of Man, Jersey, Liberia, | 4 |
| Liechtenstein, Luxemburg, Maldives, Marshall Islands, | 5 |
| Monaco, Montserrat, Nauru, Netherlands Antilles, Niue, | 6 |
| Panama, Samoa, Seychelles, St. Kitts and Nevis, St. | 7 |
| Lucia, St. Vincent and the Grenadines, Tonga, U.S. | 8 |
| Virgin Islands, and Vanuatu. | 9 |
| (C) The term "foreign tax haven" also includes any | 10 |
| foreign country that does not impose a substantial | 11 |
| business income tax or other substantial business | 12 |
| activity tax, as determined by the Department by rule. | 13 |
| (D) The provisions of this item (29) apply to tax | 14 |
| years ending on or after December 31, 2004.
| 15 |
| (b) Other definitions.
| 16 |
| (1) Words denoting number, gender, and so forth,
when | 17 |
| used in this Act, where not otherwise distinctly expressed | 18 |
| or manifestly
incompatible with the intent thereof:
| 19 |
| (A) Words importing the singular include and apply | 20 |
| to several persons,
parties or things;
| 21 |
| (B) Words importing the plural include the | 22 |
| singular; and
| 23 |
| (C) Words importing the masculine gender include | 24 |
| the feminine as well.
| 25 |
| (2) "Company" or "association" as including successors | 26 |
| and assigns. The
word "company" or "association", when used | 27 |
| in reference to a corporation,
shall be deemed to embrace | 28 |
| the words "successors and assigns of such company
or | 29 |
| association", and in like manner as if these last-named | 30 |
| words, or words
of similar import, were expressed.
| 31 |
| (3) Other terms. Any term used in any Section of this | 32 |
| Act with respect
to the application of, or in connection | 33 |
| with, the provisions of any other
Section of this Act shall | 34 |
| have the same meaning as in such other Section.
| 35 |
| (Source: P.A. 91-535, eff. 1-1-00; 91-913, eff.
1-1-01; 92-846, |
|
|
|
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| 1 |
| eff. 8-23-02.)
| 2 |
| Section 99. Effective date. This Act takes effect July 1, | 3 |
| 2004.
|
|