Full Text of SB1739 96th General Assembly
SB1739eng 96TH GENERAL ASSEMBLY
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| AN ACT concerning revenue.
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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 Income Tax Act is amended by | 5 |
| changing Section 304 as follows:
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| (35 ILCS 5/304) (from Ch. 120, par. 3-304)
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| Sec. 304. Business income of persons other than residents.
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| (a) In general. The business income of a person other than | 9 |
| a
resident shall be allocated to this State if such person's | 10 |
| business
income is derived solely from this State. If a person | 11 |
| other than a
resident derives business income from this State | 12 |
| and one or more other
states, then, for tax years ending on or | 13 |
| before December 30, 1998, and
except as otherwise provided by | 14 |
| this Section, such
person's business income shall be | 15 |
| apportioned to this State by
multiplying the income by a | 16 |
| fraction, the numerator of which is the sum
of the property | 17 |
| factor (if any), the payroll factor (if any) and 200% of the
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| sales factor (if any), and the denominator of which is 4 | 19 |
| reduced by the
number of factors other than the sales factor | 20 |
| which have a denominator
of zero and by an additional 2 if the | 21 |
| sales factor has a denominator of zero.
For tax years ending on | 22 |
| or after December 31, 1998, and except as otherwise
provided by | 23 |
| this Section, persons other than
residents who derive business |
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| income from this State and one or more other
states shall | 2 |
| compute their apportionment factor by weighting their | 3 |
| property,
payroll, and sales factors as provided in
subsection | 4 |
| (h) of this Section.
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| (1) Property factor.
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| (A) The property factor is a fraction, the numerator of | 7 |
| which is the
average value of the person's real and | 8 |
| tangible personal property owned
or rented and used in the | 9 |
| trade or business in this State during the
taxable year and | 10 |
| the denominator of which is the average value of all
the | 11 |
| person's real and tangible personal property owned or | 12 |
| rented and
used in the trade or business during the taxable | 13 |
| year.
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| (B) Property owned by the person is valued at its | 15 |
| original cost.
Property rented by the person is valued at 8 | 16 |
| times the net annual rental
rate. Net annual rental rate is | 17 |
| the annual rental rate paid by the
person less any annual | 18 |
| rental rate received by the person from
sub-rentals.
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| (C) The average value of property shall be determined | 20 |
| by averaging
the values at the beginning and ending of the | 21 |
| taxable year but the
Director may require the averaging of | 22 |
| monthly values during the taxable
year if reasonably | 23 |
| required to reflect properly the average value of the
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| person's property.
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| (2) Payroll factor.
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| (A) The payroll factor is a fraction, the numerator of |
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| which is the
total amount paid in this State during the | 2 |
| taxable year by the person
for compensation, and the | 3 |
| denominator of which is the total compensation
paid | 4 |
| everywhere during the taxable year.
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| (B) Compensation is paid in this State if:
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| (i) The individual's service is performed entirely | 7 |
| within this
State;
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| (ii) The individual's service is performed both | 9 |
| within and without
this State, but the service | 10 |
| performed without this State is incidental
to the | 11 |
| individual's service performed within this State; or
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| (iii) Some of the service is performed within this | 13 |
| State and either
the base of operations, or if there is | 14 |
| no base of operations, the place
from which the service | 15 |
| is directed or controlled is within this State,
or the | 16 |
| base of operations or the place from which the service | 17 |
| is
directed or controlled is not in any state in which | 18 |
| some part of the
service is performed, but the | 19 |
| individual's residence is in this State.
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| (iv) Compensation paid to nonresident professional | 21 |
| athletes. | 22 |
| (a) General. The Illinois source income of a | 23 |
| nonresident individual who is a member of a | 24 |
| professional athletic team includes the portion of the | 25 |
| individual's total compensation for services performed | 26 |
| as a member of a professional athletic team during the |
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| taxable year which the number of duty days spent within | 2 |
| this State performing services for the team in any | 3 |
| manner during the taxable year bears to the total | 4 |
| number of duty days spent both within and without this | 5 |
| State during the taxable year. | 6 |
| (b) Travel days. Travel days that do not involve | 7 |
| either a game, practice, team meeting, or other similar | 8 |
| team event are not considered duty days spent in this | 9 |
| State. However, such travel days are considered in the | 10 |
| total duty days spent both within and without this | 11 |
| State. | 12 |
| (c) Definitions. For purposes of this subpart | 13 |
| (iv): | 14 |
| (1) The term "professional athletic team" | 15 |
| includes, but is not limited to, any professional | 16 |
| baseball, basketball, football, soccer, or hockey | 17 |
| team. | 18 |
| (2) The term "member of a professional | 19 |
| athletic team" includes those employees who are | 20 |
| active players, players on the disabled list, and | 21 |
| any other persons required to travel and who travel | 22 |
| with and perform services on behalf of a | 23 |
| professional athletic team on a regular basis. | 24 |
| This includes, but is not limited to, coaches, | 25 |
| managers, and trainers. | 26 |
| (3) Except as provided in items (C) and (D) of |
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| this subpart (3), the term "duty days" means all | 2 |
| days during the taxable year from the beginning of | 3 |
| the professional athletic team's official | 4 |
| pre-season training period through the last game | 5 |
| in which the team competes or is scheduled to | 6 |
| compete. Duty days shall be counted for the year in | 7 |
| which they occur, including where a team's | 8 |
| official pre-season training period through the | 9 |
| last game in which the team competes or is | 10 |
| scheduled to compete, occurs during more than one | 11 |
| tax year. | 12 |
| (A) Duty days shall also include days on | 13 |
| which a member of a professional athletic team | 14 |
| performs service for a team on a date that does | 15 |
| not fall within the foregoing period (e.g., | 16 |
| participation in instructional leagues, the | 17 |
| "All Star Game", or promotional "caravans"). | 18 |
| Performing a service for a professional | 19 |
| athletic team includes conducting training and | 20 |
| rehabilitation activities, when such | 21 |
| activities are conducted at team facilities. | 22 |
| (B) Also included in duty days are game | 23 |
| days, practice days, days spent at team | 24 |
| meetings, promotional caravans, preseason | 25 |
| training camps, and days served with the team | 26 |
| through all post-season games in which the team |
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| competes or is scheduled to compete. | 2 |
| (C) Duty days for any person who joins a | 3 |
| team during the period from the beginning of | 4 |
| the professional athletic team's official | 5 |
| pre-season training period through the last | 6 |
| game in which the team competes, or is | 7 |
| scheduled to compete, shall begin on the day | 8 |
| that person joins the team. Conversely, duty | 9 |
| days for any person who leaves a team during | 10 |
| this period shall end on the day that person | 11 |
| leaves the team. Where a person switches teams | 12 |
| during a taxable year, a separate duty-day | 13 |
| calculation shall be made for the period the | 14 |
| person was with each team. | 15 |
| (D) Days for which a member of a | 16 |
| professional athletic team is not compensated | 17 |
| and is not performing services for the team in | 18 |
| any manner, including days when such member of | 19 |
| a professional athletic team has been | 20 |
| suspended without pay and prohibited from | 21 |
| performing any services for the team, shall not | 22 |
| be treated as duty days. | 23 |
| (E) Days for which a member of a | 24 |
| professional athletic team is on the disabled | 25 |
| list and does not conduct rehabilitation | 26 |
| activities at facilities of the team, and is |
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| not otherwise performing services for the team | 2 |
| in Illinois, shall not be considered duty days | 3 |
| spent in this State. All days on the disabled | 4 |
| list, however, are considered to be included in | 5 |
| total duty days spent both within and without | 6 |
| this State. | 7 |
| (4) The term "total compensation for services | 8 |
| performed as a member of a professional athletic | 9 |
| team" means the total compensation received during | 10 |
| the taxable year for services performed: | 11 |
| (A) from the beginning of the official | 12 |
| pre-season training period through the last | 13 |
| game in which the team competes or is scheduled | 14 |
| to compete during that taxable year; and | 15 |
| (B) during the taxable year on a date which | 16 |
| does not fall within the foregoing period | 17 |
| (e.g., participation in instructional leagues, | 18 |
| the "All Star Game", or promotional caravans). | 19 |
| This compensation shall include, but is not | 20 |
| limited to, salaries, wages, bonuses as described | 21 |
| in this subpart, and any other type of compensation | 22 |
| paid during the taxable year to a member of a | 23 |
| professional athletic team for services performed | 24 |
| in that year. This compensation does not include | 25 |
| strike benefits, severance pay, termination pay, | 26 |
| contract or option year buy-out payments, |
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| expansion or relocation payments, or any other | 2 |
| payments not related to services performed for the | 3 |
| team. | 4 |
| For purposes of this subparagraph, "bonuses" | 5 |
| included in "total compensation for services | 6 |
| performed as a member of a professional athletic | 7 |
| team" subject to the allocation described in | 8 |
| Section 302(c)(1) are: bonuses earned as a result | 9 |
| of play (i.e., performance bonuses) during the | 10 |
| season, including bonuses paid for championship, | 11 |
| playoff or "bowl" games played by a team, or for | 12 |
| selection to all-star league or other honorary | 13 |
| positions; and bonuses paid for signing a | 14 |
| contract, unless the payment of the signing bonus | 15 |
| is not conditional upon the signee playing any | 16 |
| games for the team or performing any subsequent | 17 |
| services for the team or even making the team, the | 18 |
| signing bonus is payable separately from the | 19 |
| salary and any other compensation, and the signing | 20 |
| bonus is nonrefundable.
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| (3) Sales factor.
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| (A) The sales factor is a fraction, the numerator of | 23 |
| which is the
total sales of the person in this State during | 24 |
| the taxable year, and the
denominator of which is the total | 25 |
| sales of the person everywhere during
the taxable year.
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| (B) Sales of tangible personal property are in this |
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| State if:
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| (i) The property is delivered or shipped to a | 3 |
| purchaser, other than
the United States government, | 4 |
| within this State regardless of the f. o.
b. point or | 5 |
| other conditions of the sale; or
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| (ii) The property is shipped from an office, store, | 7 |
| warehouse,
factory or other place of storage in this | 8 |
| State and either the purchaser
is the United States | 9 |
| government or the person is not taxable in the
state of | 10 |
| the purchaser; provided, however, that premises owned | 11 |
| or leased
by a person who has independently contracted | 12 |
| with the seller for the printing
of newspapers, | 13 |
| periodicals or books shall not be deemed to be an | 14 |
| office,
store, warehouse, factory or other place of | 15 |
| storage for purposes of this
Section.
Sales of tangible | 16 |
| personal property are not in this State if the
seller | 17 |
| and purchaser would be members of the same unitary | 18 |
| business group
but for the fact that either the seller | 19 |
| or purchaser is a person with 80%
or more of total | 20 |
| business activity outside of the United States and the
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| property is purchased for resale.
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| (B-1) Patents, copyrights, trademarks, and similar | 23 |
| items of intangible
personal property.
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| (i) Gross receipts from the licensing, sale, or | 25 |
| other disposition of a
patent, copyright, trademark, | 26 |
| or similar item of intangible personal property , other |
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| than gross receipts governed by paragraph (B-7) of this | 2 |
| item (3),
are in this State to the extent the item is | 3 |
| utilized in this State during the
year the gross | 4 |
| receipts are included in gross income.
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| (ii) Place of utilization.
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| (I) A patent is utilized in a state to the | 7 |
| extent that it is employed
in production, | 8 |
| fabrication, manufacturing, or other processing in | 9 |
| the state or
to the extent that a patented product | 10 |
| is produced in the state. If a patent is
utilized | 11 |
| in
more than one state, the extent to which it is | 12 |
| utilized in any one state shall
be a fraction equal | 13 |
| to the gross receipts of the licensee or purchaser | 14 |
| from
sales or leases of items produced, | 15 |
| fabricated, manufactured, or processed
within that | 16 |
| state using the patent and of patented items | 17 |
| produced within that
state, divided by the total of | 18 |
| such gross receipts for all states in which the
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| patent is utilized.
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| (II) A copyright is utilized in a state to the | 21 |
| extent that printing or
other publication | 22 |
| originates in the state. If a copyright is utilized | 23 |
| in more
than one state, the extent to which it is | 24 |
| utilized in any one state shall be a
fraction equal | 25 |
| to the gross receipts from sales or licenses of | 26 |
| materials
printed or published in that state |
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| divided by the total of such gross receipts
for all | 2 |
| states in which the copyright is utilized.
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| (III) Trademarks and other items of intangible | 4 |
| personal property
governed by this paragraph (B-1) | 5 |
| are utilized in the state in which the
commercial | 6 |
| domicile of the licensee or purchaser is located.
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| (iii) If the state of utilization of an item of | 8 |
| property governed by
this paragraph (B-1) cannot be | 9 |
| determined from the taxpayer's books and
records or | 10 |
| from the books and records of any person related to the | 11 |
| taxpayer
within the meaning of Section 267(b) of the | 12 |
| Internal Revenue Code, 26 U.S.C.
267, the gross
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| receipts attributable to that item shall be excluded | 14 |
| from both the numerator
and the denominator of the | 15 |
| sales factor.
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| (B-2) Gross receipts from the license, sale, or other | 17 |
| disposition of
patents, copyrights, trademarks, and | 18 |
| similar items of intangible personal
property , other than | 19 |
| gross receipts governed by paragraph (B-7) of this item | 20 |
| (3), may be included in the numerator or denominator of the | 21 |
| sales factor
only if gross receipts from licenses, sales, | 22 |
| or other disposition of such items
comprise more than 50% | 23 |
| of the taxpayer's total gross receipts included in gross
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| income during the tax year and during each of the 2 | 25 |
| immediately preceding tax
years; provided that, when a | 26 |
| taxpayer is a member of a unitary business group,
such |
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| determination shall be made on the basis of the gross | 2 |
| receipts of the
entire unitary business group.
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| (B-5) For taxable years ending on or after December 31, | 4 |
| 2008, except as provided in subsections (ii) through (vii), | 5 |
| receipts from the sale of telecommunications service or | 6 |
| mobile telecommunications service are in this State if the | 7 |
| customer's service address is in this State. | 8 |
| (i) For purposes of this subparagraph (B-5), the | 9 |
| follow terms have the following meanings: | 10 |
| "Ancillary services" means services that are | 11 |
| associated with or incidental to the provision of | 12 |
| "telecommunications services", including but not | 13 |
| limited to "detailed telecommunications billing", | 14 |
| "directory assistance", "vertical service", and "voice | 15 |
| mail services". | 16 |
| "Air-to-Ground Radiotelephone service" means a | 17 |
| radio service, as that term is defined in 47 CFR 22.99, | 18 |
| in which common carriers are authorized to offer and | 19 |
| provide radio telecommunications service for hire to | 20 |
| subscribers in aircraft. | 21 |
| "Call-by-call Basis" means any method of charging | 22 |
| for telecommunications services where the price is | 23 |
| measured by individual calls. | 24 |
| "Communications Channel" means a physical or | 25 |
| virtual path of communications over which signals are | 26 |
| transmitted between or among customer channel |
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| termination points. | 2 |
| "Conference bridging service" means an "ancillary | 3 |
| service" that links two or more participants of an | 4 |
| audio or video conference call and may include the | 5 |
| provision of a telephone number. "Conference bridging | 6 |
| service" does not include the "telecommunications | 7 |
| services" used to reach the conference bridge. | 8 |
| "Customer Channel Termination Point" means the | 9 |
| location where the customer either inputs or receives | 10 |
| the communications. | 11 |
| "Detailed telecommunications billing service" | 12 |
| means an "ancillary service" of separately stating | 13 |
| information pertaining to individual calls on a | 14 |
| customer's billing statement. | 15 |
| "Directory assistance" means an "ancillary | 16 |
| service" of providing telephone number information, | 17 |
| and/or address information. | 18 |
| "Home service provider" means the facilities based | 19 |
| carrier or reseller with which the customer contracts | 20 |
| for the provision of mobile telecommunications | 21 |
| services. | 22 |
| "Mobile telecommunications service" means | 23 |
| commercial mobile radio service, as defined in Section | 24 |
| 20.3 of Title 47 of the Code of Federal Regulations as | 25 |
| in effect on June 1, 1999. | 26 |
| "Place of primary use" means the street address |
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| representative of where the customer's use of the | 2 |
| telecommunications service primarily occurs, which | 3 |
| must be the residential street address or the primary | 4 |
| business street address of the customer. In the case of | 5 |
| mobile telecommunications services, "place of primary | 6 |
| use" must be within the licensed service area of the | 7 |
| home service provider. | 8 |
| "Post-paid telecommunication service" means the | 9 |
| telecommunications service obtained by making a | 10 |
| payment on a call-by-call basis either through the use | 11 |
| of a credit card or payment mechanism such as a bank | 12 |
| card, travel card, credit card, or debit card, or by | 13 |
| charge made to a telephone number which is not | 14 |
| associated with the origination or termination of the | 15 |
| telecommunications service. A post-paid calling | 16 |
| service includes telecommunications service, except a | 17 |
| prepaid wireless calling service, that would be a | 18 |
| prepaid calling service except it is not exclusively a | 19 |
| telecommunication service. | 20 |
| "Prepaid telecommunication service" means the | 21 |
| right to access exclusively telecommunications | 22 |
| services, which must be paid for in advance and which | 23 |
| enables the origination of calls using an access number | 24 |
| or authorization code, whether manually or | 25 |
| electronically dialed, and that is sold in | 26 |
| predetermined units or dollars of which the number |
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| declines with use in a known amount. | 2 |
| "Prepaid Mobile telecommunication service" means a | 3 |
| telecommunications service that provides the right to | 4 |
| utilize mobile wireless service as well as other | 5 |
| non-telecommunication services, including but not | 6 |
| limited to ancillary services, which must be paid for | 7 |
| in advance that is sold in predetermined units or | 8 |
| dollars of which the number declines with use in a | 9 |
| known amount. | 10 |
| "Private communication service" means a | 11 |
| telecommunication service that entitles the customer | 12 |
| to exclusive or priority use of a communications | 13 |
| channel or group of channels between or among | 14 |
| termination points, regardless of the manner in which | 15 |
| such channel or channels are connected, and includes | 16 |
| switching capacity, extension lines, stations, and any | 17 |
| other associated services that are provided in | 18 |
| connection with the use of such channel or channels. | 19 |
| "Service address" means: | 20 |
| (a) The location of the telecommunications | 21 |
| equipment to which a customer's call is charged and | 22 |
| from which the call originates or terminates, | 23 |
| regardless of where the call is billed or paid; | 24 |
| (b) If the location in line (a) is not known, | 25 |
| service address means the origination point of the | 26 |
| signal of the telecommunications services first |
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| identified by either the seller's | 2 |
| telecommunications system or in information | 3 |
| received by the seller from its service provider | 4 |
| where the system used to transport such signals is | 5 |
| not that of the seller; and | 6 |
| (c) If the locations in line (a) and line (b) | 7 |
| are not known, the service address means the | 8 |
| location of the customer's place of primary use. | 9 |
| "Telecommunications service" means the electronic | 10 |
| transmission, conveyance, or routing of voice, data, | 11 |
| audio, video, or any other information or signals to a | 12 |
| point, or between or among points. The term | 13 |
| "telecommunications service" includes such | 14 |
| transmission, conveyance, or routing in which computer | 15 |
| processing applications are used to act on the form, | 16 |
| code or protocol of the content for purposes of | 17 |
| transmission, conveyance or routing without regard to | 18 |
| whether such service is referred to as voice over | 19 |
| Internet protocol services or is classified by the | 20 |
| Federal Communications Commission as enhanced or value | 21 |
| added. "Telecommunications service" does not include: | 22 |
| (a) Data processing and information services | 23 |
| that allow data to be generated, acquired, stored, | 24 |
| processed, or retrieved and delivered by an | 25 |
| electronic transmission to a purchaser when such | 26 |
| purchaser's primary purpose for the underlying |
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| transaction is the processed data or information; | 2 |
| (b) Installation or maintenance of wiring or | 3 |
| equipment on a customer's premises; | 4 |
| (c) Tangible personal property; | 5 |
| (d) Advertising, including but not limited to | 6 |
| directory advertising. | 7 |
| (e) Billing and collection services provided | 8 |
| to third parties; | 9 |
| (f) Internet access service; | 10 |
| (g) Radio and television audio and video | 11 |
| programming services, regardless of the medium, | 12 |
| including the furnishing of transmission, | 13 |
| conveyance and routing of such services by the | 14 |
| programming service provider. Radio and television | 15 |
| audio and video programming services shall include | 16 |
| but not be limited to cable service as defined in | 17 |
| 47 USC 522(6) and audio and video programming | 18 |
| services delivered by commercial mobile radio | 19 |
| service providers, as defined in 47 CFR 20.3; | 20 |
| (h) "Ancillary services"; or | 21 |
| (i) Digital products "delivered | 22 |
| electronically", including but not limited to | 23 |
| software, music, video, reading materials or ring | 24 |
| tones. | 25 |
| "Vertical service" means an "ancillary service" | 26 |
| that is offered in connection with one or more |
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| "telecommunications services", which offers advanced | 2 |
| calling features that allow customers to identify | 3 |
| callers and to manage multiple calls and call | 4 |
| connections, including "conference bridging services". | 5 |
| "Voice mail service" means an "ancillary service" | 6 |
| that enables the customer to store, send or receive | 7 |
| recorded messages. "Voice mail service" does not | 8 |
| include any "vertical services" that the customer may | 9 |
| be required to have in order to utilize the "voice mail | 10 |
| service". | 11 |
| (ii) Receipts from the sale of telecommunications | 12 |
| service sold on an individual call-by-call basis are in | 13 |
| this State if either of the following applies: | 14 |
| (a) The call both originates and terminates in | 15 |
| this State. | 16 |
| (b) The call either originates or terminates | 17 |
| in this State and the service address is located in | 18 |
| this State. | 19 |
| (iii) Receipts from the sale of postpaid | 20 |
| telecommunications service at retail are in this State | 21 |
| if the origination point of the telecommunication | 22 |
| signal, as first identified by the service provider's | 23 |
| telecommunication system or as identified by | 24 |
| information received by the seller from its service | 25 |
| provider if the system used to transport | 26 |
| telecommunication signals is not the seller's, is |
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|
| 1 |
| located in this State. | 2 |
| (iv) Receipts from the sale of prepaid | 3 |
| telecommunications service or prepaid mobile | 4 |
| telecommunications service at retail are in this State | 5 |
| if the purchaser obtains the prepaid card or similar | 6 |
| means of conveyance at a location in this State. | 7 |
| Receipts from recharging a prepaid telecommunications | 8 |
| service or mobile telecommunications service is in | 9 |
| this State if the purchaser's billing information | 10 |
| indicates a location in this State. | 11 |
| (v) Receipts from the sale of private | 12 |
| communication services are in this State as follows: | 13 |
| (a) 100% of receipts from charges imposed at | 14 |
| each channel termination point in this State. | 15 |
| (b) 100% of receipts from charges for the total | 16 |
| channel mileage between each channel termination | 17 |
| point in this State. | 18 |
| (c) 50% of the total receipts from charges for | 19 |
| service segments when those segments are between 2 | 20 |
| customer channel termination points, 1 of which is | 21 |
| located in this State and the other is located | 22 |
| outside of this State, which segments are | 23 |
| separately charged. | 24 |
| (d) The receipts from charges for service | 25 |
| segments with a channel termination point located | 26 |
| in this State and in two or more other states, and |
|
|
|
SB1739 Engrossed |
- 20 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| which segments are not separately billed, are in | 2 |
| this State based on a percentage determined by | 3 |
| dividing the number of customer channel | 4 |
| termination points in this State by the total | 5 |
| number of customer channel termination points. | 6 |
| (vi) Receipts from charges for ancillary services | 7 |
| for telecommunications service sold to customers at | 8 |
| retail are in this State if the customer's primary | 9 |
| place of use of telecommunications services associated | 10 |
| with those ancillary services is in this State. If the | 11 |
| seller of those ancillary services cannot determine | 12 |
| where the associated telecommunications are located, | 13 |
| then the ancillary services shall be based on the | 14 |
| location of the purchaser. | 15 |
| (vii) Receipts to access a carrier's network or | 16 |
| from the sale of telecommunication services or | 17 |
| ancillary services for resale are in this State as | 18 |
| follows: | 19 |
| (a) 100% of the receipts from access fees | 20 |
| attributable to intrastate telecommunications | 21 |
| service that both originates and terminates in | 22 |
| this State. | 23 |
| (b) 50% of the receipts from access fees | 24 |
| attributable to interstate telecommunications | 25 |
| service if the interstate call either originates | 26 |
| or terminates in this State. |
|
|
|
SB1739 Engrossed |
- 21 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| (c) 100% of the receipts from interstate end | 2 |
| user access line charges, if the customer's | 3 |
| service address is in this State. As used in this | 4 |
| subdivision, "interstate end user access line | 5 |
| charges" includes, but is not limited to, the | 6 |
| surcharge approved by the federal communications | 7 |
| commission and levied pursuant to 47 CFR 69. | 8 |
| (d) Gross receipts from sales of | 9 |
| telecommunication services or from ancillary | 10 |
| services for telecommunications services sold to | 11 |
| other telecommunication service providers for | 12 |
| resale shall be sourced to this State using the | 13 |
| apportionment concepts used for non-resale | 14 |
| receipts of telecommunications services if the | 15 |
| information is readily available to make that | 16 |
| determination. If the information is not readily | 17 |
| available, then the taxpayer may use any other | 18 |
| reasonable and consistent method. | 19 |
| (B-7) For taxable years ending on or after December 31, | 20 |
| 2008, receipts from the sale of broadcasting services are | 21 |
| in this State if the broadcasting services are received in | 22 |
| this State. For purposes of this paragraph (B-7), the | 23 |
| following terms have the following meanings: | 24 |
| "Advertising revenue" means consideration received | 25 |
| by the taxpayer in exchange for broadcasting services | 26 |
| or allowing the broadcasting of commercials or |
|
|
|
SB1739 Engrossed |
- 22 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| announcements in connection with the broadcasting of | 2 |
| film or radio programming, from sponsorships of the | 3 |
| programming, or from product placements in the | 4 |
| programming. | 5 |
| "Audience factor" means the ratio that the | 6 |
| audience or subscribers located in this State of a | 7 |
| station, a network, or a cable system bears to the | 8 |
| total audience or total subscribers for that station, | 9 |
| network, or cable system. The audience factor for film | 10 |
| or radio programming shall be determined by reference | 11 |
| to the books and records of the taxpayer or by | 12 |
| reference to published rating statistics provided the | 13 |
| method used by the taxpayer is consistently used from | 14 |
| year to year for this purpose and fairly represents the | 15 |
| taxpayer's activity in this State. | 16 |
| "Broadcast" or "broadcasting" or "broadcasting | 17 |
| services" means the transmission or provision of film | 18 |
| or radio programming, whether through the public | 19 |
| airwaves, by cable, by direct or indirect satellite | 20 |
| transmission, or by any other means of communication, | 21 |
| either through a station, a network, or a cable system. | 22 |
| "Film" or "film programming" means the broadcast | 23 |
| on television of any and all performances, events, or | 24 |
| productions, including but not limited to news, | 25 |
| sporting events, plays, stories, or other literary, | 26 |
| commercial, educational, or artistic works, either |
|
|
|
SB1739 Engrossed |
- 23 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| live or through the use of video tape, disc, or any | 2 |
| other type of format or medium. Each episode of a | 3 |
| series of films produced for television shall | 4 |
| constitute separate "film" notwithstanding that the | 5 |
| series relates to the same principal subject and is | 6 |
| produced during one or more tax periods. | 7 |
| "Radio" or "radio programming" means the broadcast | 8 |
| on radio of any and all performances, events, or | 9 |
| productions, including but not limited to news, | 10 |
| sporting events, plays, stories, or other literary, | 11 |
| commercial, educational, or artistic works, either | 12 |
| live or through the use of an audio tape, disc, or any | 13 |
| other format or medium. Each episode in a series of | 14 |
| radio programming produced for radio broadcast shall | 15 |
| constitute a separate "radio programming" | 16 |
| notwithstanding that the series relates to the same | 17 |
| principal subject and is produced during one or more | 18 |
| tax periods. | 19 |
| (i) In the case of advertising revenue from | 20 |
| broadcasting, the customer is the advertiser and | 21 |
| the service is received in this State if the | 22 |
| commercial domicile of the advertiser is in this | 23 |
| State. | 24 |
| (ii) In the case where film or radio | 25 |
| programming is broadcast by a station, a network, | 26 |
| or a cable system for a fee or other remuneration |
|
|
|
SB1739 Engrossed |
- 24 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| received from the recipient of the broadcast, the | 2 |
| portion of the service that is received in this | 3 |
| State is measured by the portion of the recipients | 4 |
| of the broadcast located in this State. | 5 |
| Accordingly, the fee or other remuneration for | 6 |
| such service that is included in the Illinois | 7 |
| numerator of the sales factor is the total of those | 8 |
| fees or other remuneration received from | 9 |
| recipients in Illinois. For purposes of this | 10 |
| paragraph, a taxpayer may determine the location | 11 |
| of the recipients of its broadcast using the | 12 |
| address of the recipient shown in its contracts | 13 |
| with the recipient or using the billing address of | 14 |
| the recipient in the taxpayer's records. | 15 |
| (iii) In the case where film or radio | 16 |
| programming is broadcast by a station, a network, | 17 |
| or a cable system for a fee or other remuneration | 18 |
| from the person providing the programming, the | 19 |
| portion of the broadcast service that is received | 20 |
| by such station, network, or cable system in this | 21 |
| State is measured by the portion of recipients of | 22 |
| the broadcast located in this State. Accordingly, | 23 |
| the amount of revenue related to such an | 24 |
| arrangement that is included in the Illinois | 25 |
| numerator of the sales factor is the total fee or | 26 |
| other total remuneration from the person providing |
|
|
|
SB1739 Engrossed |
- 25 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| the programming related to that broadcast | 2 |
| multiplied by the Illinois audience factor for | 3 |
| that broadcast. | 4 |
| (iv) In the case where film or radio | 5 |
| programming is provided by a taxpayer that is a | 6 |
| network or station to a customer for broadcast in | 7 |
| exchange for a fee or other remuneration from that | 8 |
| customer the broadcasting service is received at | 9 |
| the location of the office of the customer from | 10 |
| which the services were ordered in the regular | 11 |
| course of the customer's trade or business. | 12 |
| Accordingly, in such a case the revenue derived by | 13 |
| the taxpayer that is included in the taxpayer's | 14 |
| Illinois numerator of the sales factor is the | 15 |
| revenue from such customers who receive the | 16 |
| broadcasting service in Illinois. | 17 |
| (v) In the case where film or radio programming | 18 |
| is provided by a taxpayer that is not a network or | 19 |
| station to another person for broadcasting in | 20 |
| exchange for a fee or other remuneration from that | 21 |
| person, the broadcasting service is received at | 22 |
| the location of the office of the customer from | 23 |
| which the services were ordered in the regular | 24 |
| course of the customer's trade or business. | 25 |
| Accordingly, in such a case the revenue derived by | 26 |
| the taxpayer that is included in the taxpayer's |
|
|
|
SB1739 Engrossed |
- 26 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| Illinois numerator of the sales factor is the | 2 |
| revenue from such customers who receive the | 3 |
| broadcasting service in Illinois.
| 4 |
| (C) For taxable years ending before December 31, 2008, | 5 |
| sales, other than sales governed by paragraphs (B), (B-1), | 6 |
| and (B-2), are in
this State if:
| 7 |
| (i) The income-producing activity is performed in | 8 |
| this State; or
| 9 |
| (ii) The income-producing activity is performed | 10 |
| both within and
without this State and a greater | 11 |
| proportion of the income-producing
activity is | 12 |
| performed within this State than without this State, | 13 |
| based
on performance costs.
| 14 |
| (C-5) For taxable years ending on or after December 31, | 15 |
| 2008, sales, other than sales governed by paragraphs (B), | 16 |
| (B-1), (B-2), and (B-5) , and (B-7) , are in this State if | 17 |
| any of the following criteria are met: | 18 |
| (i) Sales from the sale or lease of real property | 19 |
| are in this State if the property is located in this | 20 |
| State. | 21 |
| (ii) Sales from the lease or rental of tangible | 22 |
| personal property are in this State if the property is | 23 |
| located in this State during the rental period. Sales | 24 |
| from the lease or rental of tangible personal property | 25 |
| that is characteristically moving property, including, | 26 |
| but not limited to, motor vehicles, rolling stock, |
|
|
|
SB1739 Engrossed |
- 27 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| aircraft, vessels, or mobile equipment are in this | 2 |
| State to the extent that the property is used in this | 3 |
| State. | 4 |
| (iii) In the case of interest, net gains (but not | 5 |
| less than zero) and other items of income from | 6 |
| intangible personal property, the sale is in this State | 7 |
| if: | 8 |
| (a) in the case of a taxpayer who is a dealer | 9 |
| in the item of intangible personal property within | 10 |
| the meaning of Section 475 of the Internal Revenue | 11 |
| Code, the income or gain is received from a | 12 |
| customer in this State. For purposes of this | 13 |
| subparagraph, a customer is in this State if the | 14 |
| customer is an individual, trust or estate who is a | 15 |
| resident of this State and, for all other | 16 |
| customers, if the customer's commercial domicile | 17 |
| is in this State. Unless the dealer has actual | 18 |
| knowledge of the residence or commercial domicile | 19 |
| of a customer during a taxable year, the customer | 20 |
| shall be deemed to be a customer in this State if | 21 |
| the billing address of the customer, as shown in | 22 |
| the records of the dealer, is in this State; or | 23 |
| (b) in all other cases, if the | 24 |
| income-producing activity of the taxpayer is | 25 |
| performed in this State or, if the | 26 |
| income-producing activity of the taxpayer is |
|
|
|
SB1739 Engrossed |
- 28 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| performed both within and without this State, if a | 2 |
| greater proportion of the income-producing | 3 |
| activity of the taxpayer is performed within this | 4 |
| State than in any other state, based on performance | 5 |
| costs. | 6 |
| (iv) Sales of services are in this State if the | 7 |
| services are received in this State. For the purposes | 8 |
| of this section, gross receipts from the performance of | 9 |
| services provided to a corporation, partnership, or | 10 |
| trust may only be attributed to a state where that | 11 |
| corporation, partnership, or trust has a fixed place of | 12 |
| business. If the state where the services are received | 13 |
| is not readily determinable or is a state where the | 14 |
| corporation, partnership, or trust receiving the | 15 |
| service does not have a fixed place of business, the | 16 |
| services shall be deemed to be received at the location | 17 |
| of the office of the customer from which the services | 18 |
| were ordered in the regular course of the customer's | 19 |
| trade or business. If the ordering office cannot be | 20 |
| determined, the services shall be deemed to be received | 21 |
| at the office of the customer to which the services are | 22 |
| billed. If the taxpayer is not taxable in the state in | 23 |
| which the services are received, the sale must be | 24 |
| excluded from both the numerator and the denominator of | 25 |
| the sales factor. The Department shall adopt rules | 26 |
| prescribing where specific types of service are |
|
|
|
SB1739 Engrossed |
- 29 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| received, including, but not limited to, broadcast, | 2 |
| cable, advertising, publishing, and utility service.
| 3 |
| (D) For taxable years ending on or after December 31, | 4 |
| 1995, the following
items of income shall not be included | 5 |
| in the numerator or denominator of the
sales factor: | 6 |
| dividends; amounts included under Section 78 of the | 7 |
| Internal
Revenue Code; and Subpart F income as defined in | 8 |
| Section 952 of the Internal
Revenue Code.
No inference | 9 |
| shall be drawn from the enactment of this paragraph (D) in
| 10 |
| construing this Section for taxable years ending before | 11 |
| December 31, 1995.
| 12 |
| (E) Paragraphs (B-1) and (B-2) shall apply to tax years | 13 |
| ending on or
after December 31, 1999, provided that a | 14 |
| taxpayer may elect to apply the
provisions of these | 15 |
| paragraphs to prior tax years. Such election shall be made
| 16 |
| in the form and manner prescribed by the Department, shall | 17 |
| be irrevocable, and
shall apply to all tax years; provided | 18 |
| that, if a taxpayer's Illinois income
tax liability for any | 19 |
| tax year, as assessed under Section 903 prior to January
1, | 20 |
| 1999, was computed in a manner contrary to the provisions | 21 |
| of paragraphs
(B-1) or (B-2), no refund shall be payable to | 22 |
| the taxpayer for that tax year to
the extent such refund is | 23 |
| the result of applying the provisions of paragraph
(B-1) or | 24 |
| (B-2) retroactively. In the case of a unitary business | 25 |
| group, such
election shall apply to all members of such | 26 |
| group for every tax year such group
is in existence, but |
|
|
|
SB1739 Engrossed |
- 30 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| shall not apply to any taxpayer for any period during
which | 2 |
| that taxpayer is not a member of such group.
| 3 |
| (b) Insurance companies.
| 4 |
| (1) In general. Except as otherwise
provided by | 5 |
| paragraph (2), business income of an insurance company for | 6 |
| a
taxable year shall be apportioned to this State by | 7 |
| multiplying such
income by a fraction, the numerator of | 8 |
| which is the direct premiums
written for insurance upon | 9 |
| property or risk in this State, and the
denominator of | 10 |
| which is the direct premiums written for insurance upon
| 11 |
| property or risk everywhere. For purposes of this | 12 |
| subsection, the term
"direct premiums written" means the | 13 |
| total amount of direct premiums
written, assessments and | 14 |
| annuity considerations as reported for the
taxable year on | 15 |
| the annual statement filed by the company with the
Illinois | 16 |
| Director of Insurance in the form approved by the National
| 17 |
| Convention of Insurance Commissioners
or such other form as | 18 |
| may be
prescribed in lieu thereof.
| 19 |
| (2) Reinsurance. If the principal source of premiums | 20 |
| written by an
insurance company consists of premiums for | 21 |
| reinsurance accepted by it,
the business income of such | 22 |
| company shall be apportioned to this State
by multiplying | 23 |
| such income by a fraction, the numerator of which is the
| 24 |
| sum of (i) direct premiums written for insurance upon | 25 |
| property or risk
in this State, plus (ii) premiums written | 26 |
| for reinsurance accepted in
respect of property or risk in |
|
|
|
SB1739 Engrossed |
- 31 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| this State, and the denominator of which
is the sum of | 2 |
| (iii) direct premiums written for insurance upon property
| 3 |
| or risk everywhere, plus (iv) premiums written for | 4 |
| reinsurance accepted
in respect of property or risk | 5 |
| everywhere. For taxable years ending before December 31, | 6 |
| 2008, for purposes of this
paragraph, premiums written for | 7 |
| reinsurance accepted in respect of
property or risk in this | 8 |
| State, whether or not otherwise determinable,
may, at the | 9 |
| election of the company, be determined on the basis of the
| 10 |
| proportion which premiums written for reinsurance accepted | 11 |
| from
companies commercially domiciled in Illinois bears to | 12 |
| premiums written
for reinsurance accepted from all | 13 |
| sources, or, alternatively, in the
proportion which the sum | 14 |
| of the direct premiums written for insurance
upon property | 15 |
| or risk in this State by each ceding company from which
| 16 |
| reinsurance is accepted bears to the sum of the total | 17 |
| direct premiums
written by each such ceding company for the | 18 |
| taxable year.
| 19 |
| (c) Financial organizations.
| 20 |
| (1) In general. For taxable years ending before | 21 |
| December 31, 2008, business income of a financial
| 22 |
| organization shall be apportioned to this State by | 23 |
| multiplying such
income by a fraction, the numerator of | 24 |
| which is its business income from
sources within this | 25 |
| State, and the denominator of which is its business
income | 26 |
| from all sources. For the purposes of this subsection, the
|
|
|
|
SB1739 Engrossed |
- 32 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| business income of a financial organization from sources | 2 |
| within this
State is the sum of the amounts referred to in | 3 |
| subparagraphs (A) through
(E) following, but excluding the | 4 |
| adjusted income of an international banking
facility as | 5 |
| determined in paragraph (2):
| 6 |
| (A) Fees, commissions or other compensation for | 7 |
| financial services
rendered within this State;
| 8 |
| (B) Gross profits from trading in stocks, bonds or | 9 |
| other securities
managed within this State;
| 10 |
| (C) Dividends, and interest from Illinois | 11 |
| customers, which are received
within this State;
| 12 |
| (D) Interest charged to customers at places of | 13 |
| business maintained
within this State for carrying | 14 |
| debit balances of margin accounts,
without deduction | 15 |
| of any costs incurred in carrying such accounts; and
| 16 |
| (E) Any other gross income resulting from the | 17 |
| operation as a
financial organization within this | 18 |
| State. In computing the amounts
referred to in | 19 |
| paragraphs (A) through (E) of this subsection, any | 20 |
| amount
received by a member of an affiliated group | 21 |
| (determined under Section
1504(a) of the Internal | 22 |
| Revenue Code but without reference to whether
any such | 23 |
| corporation is an "includible corporation" under | 24 |
| Section
1504(b) of the Internal Revenue Code) from | 25 |
| another member of such group
shall be included only to | 26 |
| the extent such amount exceeds expenses of the
|
|
|
|
SB1739 Engrossed |
- 33 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| recipient directly related thereto.
| 2 |
| (2) International Banking Facility. For taxable years | 3 |
| ending before December 31, 2008:
| 4 |
| (A) Adjusted Income. The adjusted income of an | 5 |
| international banking
facility is its income reduced | 6 |
| by the amount of the floor amount.
| 7 |
| (B) Floor Amount. The floor amount shall be the | 8 |
| amount, if any,
determined
by multiplying the income of | 9 |
| the international banking facility by a fraction,
not | 10 |
| greater than one, which is determined as follows:
| 11 |
| (i) The numerator shall be:
| 12 |
| The average aggregate, determined on a | 13 |
| quarterly basis, of the
financial
organization's | 14 |
| loans to banks in foreign countries, to foreign | 15 |
| domiciled
borrowers (except where secured | 16 |
| primarily by real estate) and to foreign
| 17 |
| governments and other foreign official | 18 |
| institutions, as reported for its
branches, | 19 |
| agencies and offices within the state on its | 20 |
| "Consolidated Report
of Condition", Schedule A, | 21 |
| Lines 2.c., 5.b., and 7.a., which was filed with
| 22 |
| the Federal Deposit Insurance Corporation and | 23 |
| other regulatory authorities,
for the year 1980, | 24 |
| minus
| 25 |
| The average aggregate, determined on a | 26 |
| quarterly basis, of such loans
(other
than loans of |
|
|
|
SB1739 Engrossed |
- 34 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| an international banking facility), as reported by | 2 |
| the financial
institution for its branches, | 3 |
| agencies and offices within the state, on
the | 4 |
| corresponding Schedule and lines of the | 5 |
| Consolidated Report of Condition
for the current | 6 |
| taxable year, provided, however, that in no case | 7 |
| shall the
amount determined in this clause (the | 8 |
| subtrahend) exceed the amount determined
in the | 9 |
| preceding clause (the minuend); and
| 10 |
| (ii) the denominator shall be the average | 11 |
| aggregate, determined on a
quarterly basis, of the | 12 |
| international banking facility's loans to banks in
| 13 |
| foreign countries, to foreign domiciled borrowers | 14 |
| (except where secured
primarily by real estate) | 15 |
| and to foreign governments and other foreign
| 16 |
| official institutions, which were recorded in its | 17 |
| financial accounts for
the current taxable year.
| 18 |
| (C) Change to Consolidated Report of Condition and | 19 |
| in Qualification.
In the event the Consolidated Report | 20 |
| of Condition which is filed with the
Federal Deposit | 21 |
| Insurance Corporation and other regulatory authorities | 22 |
| is
altered so that the information required for | 23 |
| determining the floor amount
is not found on Schedule | 24 |
| A, lines 2.c., 5.b. and 7.a., the financial
institution | 25 |
| shall notify the Department and the Department may, by
| 26 |
| regulations or otherwise, prescribe or authorize the |
|
|
|
SB1739 Engrossed |
- 35 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| use of an alternative
source for such information. The | 2 |
| financial institution shall also notify
the Department | 3 |
| should its international banking facility fail to | 4 |
| qualify as
such, in whole or in part, or should there | 5 |
| be any amendment or change to
the Consolidated Report | 6 |
| of Condition, as originally filed, to the extent
such | 7 |
| amendment or change alters the information used in | 8 |
| determining the floor
amount.
| 9 |
| (3) For taxable years ending on or after December 31, | 10 |
| 2008, the business income of a financial organization shall | 11 |
| be apportioned to this State by multiplying such income by | 12 |
| a fraction, the numerator of which is its gross receipts | 13 |
| from sources in this State or otherwise attributable to | 14 |
| this State's marketplace and the denominator of which is | 15 |
| its gross receipts everywhere during the taxable year. | 16 |
| "Gross receipts" for purposes of this subparagraph (3) | 17 |
| means gross income, including net taxable gain on | 18 |
| disposition of assets, including securities and money | 19 |
| market instruments, when derived from transactions and | 20 |
| activities in the regular course of the financial | 21 |
| organization's trade or business. The following examples | 22 |
| are illustrative:
| 23 |
| (i) Receipts from the lease or rental of real or | 24 |
| tangible personal property are in this State if the | 25 |
| property is located in this State during the rental | 26 |
| period. Receipts from the lease or rental of tangible |
|
|
|
SB1739 Engrossed |
- 36 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| personal property that is characteristically moving | 2 |
| property, including, but not limited to, motor | 3 |
| vehicles, rolling stock, aircraft, vessels, or mobile | 4 |
| equipment are from sources in this State to the extent | 5 |
| that the property is used in this State. | 6 |
| (ii) Interest income, commissions, fees, gains on | 7 |
| disposition, and other receipts from assets in the | 8 |
| nature of loans that are secured primarily by real | 9 |
| estate or tangible personal property are from sources | 10 |
| in this State if the security is located in this State. | 11 |
| (iii) Interest income, commissions, fees, gains on | 12 |
| disposition, and other receipts from consumer loans | 13 |
| that are not secured by real or tangible personal | 14 |
| property are from sources in this State if the debtor | 15 |
| is a resident of this State. | 16 |
| (iv) Interest income, commissions, fees, gains on | 17 |
| disposition, and other receipts from commercial loans | 18 |
| and installment obligations that are not secured by | 19 |
| real or tangible personal property are from sources in | 20 |
| this State if the proceeds of the loan are to be | 21 |
| applied in this State. If it cannot be determined where | 22 |
| the funds are to be applied, the income and receipts | 23 |
| are from sources in this State if the office of the | 24 |
| borrower from which the loan was negotiated in the | 25 |
| regular course of business is located in this State. If | 26 |
| the location of this office cannot be determined, the |
|
|
|
SB1739 Engrossed |
- 37 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| income and receipts shall be excluded from the | 2 |
| numerator and denominator of the sales factor.
| 3 |
| (v) Interest income, fees, gains on disposition, | 4 |
| service charges, merchant discount income, and other | 5 |
| receipts from credit card receivables are from sources | 6 |
| in this State if the card charges are regularly billed | 7 |
| to a customer in this State. | 8 |
| (vi) Receipts from the performance of services, | 9 |
| including, but not limited to, fiduciary, advisory, | 10 |
| and brokerage services, are in this State if the | 11 |
| services are received in this State within the meaning | 12 |
| of subparagraph (a)(3)(C-5)(iv) of this Section. | 13 |
| (vii) Receipts from the issuance of travelers | 14 |
| checks and money orders are from sources in this State | 15 |
| if the checks and money orders are issued from a | 16 |
| location within this State. | 17 |
| (viii) Receipts from investment assets and | 18 |
| activities and trading assets and activities are | 19 |
| included in the receipts factor as follows: | 20 |
| (1) Interest, dividends, net gains (but not | 21 |
| less than zero) and other income from investment | 22 |
| assets and activities from trading assets and | 23 |
| activities shall be included in the receipts | 24 |
| factor. Investment assets and activities and | 25 |
| trading assets and activities include but are not | 26 |
| limited to: investment securities; trading account |
|
|
|
SB1739 Engrossed |
- 38 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| assets; federal funds; securities purchased and | 2 |
| sold under agreements to resell or repurchase; | 3 |
| options; futures contracts; forward contracts; | 4 |
| notional principal contracts such as swaps; | 5 |
| equities; and foreign currency transactions. With | 6 |
| respect to the investment and trading assets and | 7 |
| activities described in subparagraphs (A) and (B) | 8 |
| of this paragraph, the receipts factor shall | 9 |
| include the amounts described in such | 10 |
| subparagraphs. | 11 |
| (A) The receipts factor shall include the | 12 |
| amount by which interest from federal funds | 13 |
| sold and securities purchased under resale | 14 |
| agreements exceeds interest expense on federal | 15 |
| funds purchased and securities sold under | 16 |
| repurchase agreements. | 17 |
| (B) The receipts factor shall include the | 18 |
| amount by which interest, dividends, gains and | 19 |
| other income from trading assets and | 20 |
| activities, including but not limited to | 21 |
| assets and activities in the matched book, in | 22 |
| the arbitrage book, and foreign currency | 23 |
| transactions, exceed amounts paid in lieu of | 24 |
| interest, amounts paid in lieu of dividends, | 25 |
| and losses from such assets and activities. | 26 |
| (2) The numerator of the receipts factor |
|
|
|
SB1739 Engrossed |
- 39 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| includes interest, dividends, net gains (but not | 2 |
| less than zero), and other income from investment | 3 |
| assets and activities and from trading assets and | 4 |
| activities described in paragraph (1) of this | 5 |
| subsection that are attributable to this State. | 6 |
| (A) The amount of interest, dividends, net | 7 |
| gains (but not less than zero), and other | 8 |
| income from investment assets and activities | 9 |
| in the investment account to be attributed to | 10 |
| this State and included in the numerator is | 11 |
| determined by multiplying all such income from | 12 |
| such assets and activities by a fraction, the | 13 |
| numerator of which is the gross income from | 14 |
| such assets and activities which are properly | 15 |
| assigned to a fixed place of business of the | 16 |
| taxpayer within this State and the denominator | 17 |
| of which is the gross income from all such | 18 |
| assets and activities. | 19 |
| (B) The amount of interest from federal | 20 |
| funds sold and purchased and from securities | 21 |
| purchased under resale agreements and | 22 |
| securities sold under repurchase agreements | 23 |
| attributable to this State and included in the | 24 |
| numerator is determined by multiplying the | 25 |
| amount described in subparagraph (A) of | 26 |
| paragraph (1) of this subsection from such |
|
|
|
SB1739 Engrossed |
- 40 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| funds and such securities by a fraction, the | 2 |
| numerator of which is the gross income from | 3 |
| such funds and such securities which are | 4 |
| properly assigned to a fixed place of business | 5 |
| of the taxpayer within this State and the | 6 |
| denominator of which is the gross income from | 7 |
| all such funds and such securities. | 8 |
| (C) The amount of interest, dividends, | 9 |
| gains, and other income from trading assets and | 10 |
| activities, including but not limited to | 11 |
| assets and activities in the matched book, in | 12 |
| the arbitrage book and foreign currency | 13 |
| transactions (but excluding amounts described | 14 |
| in subparagraphs (A) or (B) of this paragraph), | 15 |
| attributable to this State and included in the | 16 |
| numerator is determined by multiplying the | 17 |
| amount described in subparagraph (B) of | 18 |
| paragraph (1) of this subsection by a fraction, | 19 |
| the numerator of which is the gross income from | 20 |
| such trading assets and activities which are | 21 |
| properly assigned to a fixed place of business | 22 |
| of the taxpayer within this State and the | 23 |
| denominator of which is the gross income from | 24 |
| all such assets and activities. | 25 |
| (D) Properly assigned, for purposes of | 26 |
| this paragraph (2) of this subsection, means |
|
|
|
SB1739 Engrossed |
- 41 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| the investment or trading asset or activity is | 2 |
| assigned to the fixed place of business with | 3 |
| which it has a preponderance of substantive | 4 |
| contacts. An investment or trading asset or | 5 |
| activity assigned by the taxpayer to a fixed | 6 |
| place of business without the State shall be | 7 |
| presumed to have been properly assigned if: | 8 |
| (i) the taxpayer has assigned, in the | 9 |
| regular course of its business, such asset | 10 |
| or activity on its records to a fixed place | 11 |
| of business consistent with federal or | 12 |
| state regulatory requirements; | 13 |
| (ii) such assignment on its records is | 14 |
| based upon substantive contacts of the | 15 |
| asset or activity to such fixed place of | 16 |
| business; and | 17 |
| (iii) the taxpayer uses such records | 18 |
| reflecting assignment of such assets or | 19 |
| activities for the filing of all state and | 20 |
| local tax returns for which an assignment | 21 |
| of such assets or activities to a fixed | 22 |
| place of business is required. | 23 |
| (E) The presumption of proper assignment | 24 |
| of an investment or trading asset or activity | 25 |
| provided in subparagraph (D) of paragraph (2) | 26 |
| of this subsection may be rebutted upon a |
|
|
|
SB1739 Engrossed |
- 42 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| showing by the Department, supported by a | 2 |
| preponderance of the evidence, that the | 3 |
| preponderance of substantive contacts | 4 |
| regarding such asset or activity did not occur | 5 |
| at the fixed place of business to which it was | 6 |
| assigned on the taxpayer's records. If the | 7 |
| fixed place of business that has a | 8 |
| preponderance of substantive contacts cannot | 9 |
| be determined for an investment or trading | 10 |
| asset or activity to which the presumption in | 11 |
| subparagraph (D) of paragraph (2) of this | 12 |
| subsection does not apply or with respect to | 13 |
| which that presumption has been rebutted, that | 14 |
| asset or activity is properly assigned to the | 15 |
| state in which the taxpayer's commercial | 16 |
| domicile is located. For purposes of this | 17 |
| subparagraph (E), it shall be presumed, | 18 |
| subject to rebuttal, that taxpayer's | 19 |
| commercial domicile is in the state of the | 20 |
| United States or the District of Columbia to | 21 |
| which the greatest number of employees are | 22 |
| regularly connected with the management of the | 23 |
| investment or trading income or out of which | 24 |
| they are working, irrespective of where the | 25 |
| services of such employees are performed, as of | 26 |
| the last day of the taxable year.
|
|
|
|
SB1739 Engrossed |
- 43 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| (4) (Blank). | 2 |
| (5) (Blank). | 3 |
| (d) Transportation services. For taxable years ending | 4 |
| before December 31, 2008, business income derived from | 5 |
| furnishing
transportation services shall be apportioned to | 6 |
| this State in accordance
with paragraphs (1) and (2):
| 7 |
| (1) Such business income (other than that derived from
| 8 |
| transportation by pipeline) shall be apportioned to this | 9 |
| State by
multiplying such income by a fraction, the | 10 |
| numerator of which is the
revenue miles of the person in | 11 |
| this State, and the denominator of which
is the revenue | 12 |
| miles of the person everywhere. For purposes of this
| 13 |
| paragraph, a revenue mile is the transportation of 1 | 14 |
| passenger or 1 net
ton of freight the distance of 1 mile | 15 |
| for a consideration. Where a
person is engaged in the | 16 |
| transportation of both passengers and freight,
the | 17 |
| fraction above referred to shall be determined by means of | 18 |
| an
average of the passenger revenue mile fraction and the | 19 |
| freight revenue
mile fraction, weighted to reflect the | 20 |
| person's
| 21 |
| (A) relative railway operating income from total | 22 |
| passenger and total
freight service, as reported to the | 23 |
| Interstate Commerce Commission, in
the case of | 24 |
| transportation by railroad, and
| 25 |
| (B) relative gross receipts from passenger and | 26 |
| freight
transportation, in case of transportation |
|
|
|
SB1739 Engrossed |
- 44 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| other than by railroad.
| 2 |
| (2) Such business income derived from transportation | 3 |
| by pipeline
shall be apportioned to this State by | 4 |
| multiplying such income by a
fraction, the numerator of | 5 |
| which is the revenue miles of the person in
this State, and | 6 |
| the denominator of which is the revenue miles of the
person | 7 |
| everywhere. For the purposes of this paragraph, a revenue | 8 |
| mile is
the transportation by pipeline of 1 barrel of oil, | 9 |
| 1,000 cubic feet of
gas, or of any specified quantity of | 10 |
| any other substance, the distance
of 1 mile for a | 11 |
| consideration.
| 12 |
| (3) For taxable years ending on or after December 31, | 13 |
| 2008, business income derived from providing | 14 |
| transportation services other than airline services shall | 15 |
| be apportioned to this State by using a fraction, (a) the | 16 |
| numerator of which shall be (i) all receipts from any | 17 |
| movement or shipment of people, goods, mail, oil, gas, or | 18 |
| any other substance (other than by airline) that both | 19 |
| originates and terminates in this State, plus (ii) that | 20 |
| portion of the person's gross receipts from movements or | 21 |
| shipments of people, goods, mail, oil, gas, or any other | 22 |
| substance (other than by airline) that originates in one | 23 |
| state or jurisdiction and terminates in another state or | 24 |
| jurisdiction, that is determined by the ratio that the | 25 |
| miles traveled in this State bears to total miles | 26 |
| everywhere and (b) the denominator of which shall be all |
|
|
|
SB1739 Engrossed |
- 45 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| revenue derived from the movement or shipment of people, | 2 |
| goods, mail, oil, gas, or any other substance (other than | 3 |
| by airline). Where a taxpayer is engaged in the | 4 |
| transportation of both passengers and freight, the | 5 |
| fraction above referred to shall first be determined | 6 |
| separately for passenger miles and freight miles. Then an | 7 |
| average of the passenger miles fraction and the freight | 8 |
| miles fraction shall be weighted to reflect the taxpayer's: | 9 |
| (A) relative railway operating income from total | 10 |
| passenger and total freight service, as reported to the | 11 |
| Surface Transportation Board, in the case of | 12 |
| transportation by railroad; and
| 13 |
| (B) relative gross receipts from passenger and | 14 |
| freight transportation, in case of transportation | 15 |
| other than by railroad.
| 16 |
| (4) For taxable years ending on or after December 31, | 17 |
| 2008, business income derived from furnishing airline
| 18 |
| transportation services shall be apportioned to this State | 19 |
| by
multiplying such income by a fraction, the numerator of | 20 |
| which is the
revenue miles of the person in this State, and | 21 |
| the denominator of which
is the revenue miles of the person | 22 |
| everywhere. For purposes of this
paragraph, a revenue mile | 23 |
| is the transportation of one passenger or one net
ton of | 24 |
| freight the distance of one mile for a consideration. If a
| 25 |
| person is engaged in the transportation of both passengers | 26 |
| and freight,
the fraction above referred to shall be |
|
|
|
SB1739 Engrossed |
- 46 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| determined by means of an
average of the passenger revenue | 2 |
| mile fraction and the freight revenue
mile fraction, | 3 |
| weighted to reflect the person's relative gross receipts | 4 |
| from passenger and freight
airline transportation.
| 5 |
| (e) Combined apportionment. Where 2 or more persons are | 6 |
| engaged in
a unitary business as described in subsection | 7 |
| (a)(27) of
Section 1501,
a part of which is conducted in this | 8 |
| State by one or more members of the
group, the business income | 9 |
| attributable to this State by any such member
or members shall | 10 |
| be apportioned by means of the combined apportionment method.
| 11 |
| (f) Alternative allocation. If the allocation and | 12 |
| apportionment
provisions of subsections (a) through (e) and of | 13 |
| subsection (h) do not
fairly represent the
extent of a person's | 14 |
| business activity in this State, the person may
petition for, | 15 |
| or the Director may, without a petition, permit or require, in | 16 |
| respect of all or any part
of the person's business activity, | 17 |
| if reasonable:
| 18 |
| (1) Separate accounting;
| 19 |
| (2) The exclusion of any one or more factors;
| 20 |
| (3) The inclusion of one or more additional factors | 21 |
| which will
fairly represent the person's business | 22 |
| activities in this State; or
| 23 |
| (4) The employment of any other method to effectuate an | 24 |
| equitable
allocation and apportionment of the person's | 25 |
| business income.
| 26 |
| (g) Cross reference. For allocation of business income by |
|
|
|
SB1739 Engrossed |
- 47 - |
LRB096 09705 RCE 19866 b |
|
| 1 |
| residents,
see Section 301(a).
| 2 |
| (h) For tax years ending on or after December 31, 1998, the | 3 |
| apportionment
factor of persons who apportion their business | 4 |
| income to this State under
subsection (a) shall be equal to:
| 5 |
| (1) for tax years ending on or after December 31, 1998 | 6 |
| and before December
31, 1999, 16 2/3% of the property | 7 |
| factor plus 16 2/3% of the payroll factor
plus
66 2/3% of | 8 |
| the sales factor;
| 9 |
| (2) for tax years ending on or after December 31, 1999 | 10 |
| and before December
31,
2000, 8 1/3% of the property factor | 11 |
| plus 8 1/3% of the payroll factor plus 83
1/3%
of the sales | 12 |
| factor;
| 13 |
| (3) for tax years ending on or after December 31, 2000, | 14 |
| the sales factor.
| 15 |
| If, in any tax year ending on or after December 31, 1998 and | 16 |
| before December
31, 2000, the denominator of the payroll, | 17 |
| property, or sales factor is zero,
the apportionment
factor | 18 |
| computed in paragraph (1) or (2) of this subsection for that | 19 |
| year shall
be divided by an amount equal to 100% minus the | 20 |
| percentage weight given to each
factor whose denominator is | 21 |
| equal to zero.
| 22 |
| (Source: P.A. 94-247, eff. 1-1-06; 95-233, eff. 8-16-07; | 23 |
| 95-707, eff. 1-11-08.)
| 24 |
| Section 99. Effective date. This Act takes effect upon | 25 |
| becoming law.
|
|