Illinois General Assembly - Full Text of SB1719
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Full Text of SB1719  100th General Assembly


Sen. Daniel Biss

Filed: 5/23/2017





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2    AMENDMENT NO. ______. Amend Senate Bill 1719, AS AMENDED,
3by replacing everything after the enacting clause with the
5    "Section 5. The Illinois Income Tax Act is amended by
6changing Section 205 as follows:
7    (35 ILCS 5/205)  (from Ch. 120, par. 2-205)
8    Sec. 205. Exempt organizations.
9    (a) Charitable, etc. organizations. The base income of an
10organization which is exempt from the federal income tax by
11reason of the Internal Revenue Code shall not be determined
12under section 203 of this Act, but shall be its unrelated
13business taxable income as determined under section 512 of the
14Internal Revenue Code, without any deduction for the tax
15imposed by this Act. The standard exemption provided by section
16204 of this Act shall not be allowed in determining the net



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1income of an organization to which this subsection applies.
2    (b) Partnerships. A partnership as such shall not be
3subject to the tax imposed by subsection 201 (a) and (b) of
4this Act, but shall be subject to the replacement tax imposed
5by subsection 201 (c) and (d) of this Act and shall compute its
6base income as described in subsection (d) of Section 203 of
7this Act. For taxable years ending on or after December 31,
82004, an investment partnership, as defined in Section
91501(a)(11.5) of this Act, shall not be subject to the tax
10imposed by subsections (c) and (d) of Section 201 of this Act.
11A partnership shall file such returns and other information at
12such time and in such manner as may be required under Article 5
13of this Act. The partners in a partnership shall be liable for
14the replacement tax imposed by subsection 201 (c) and (d) of
15this Act on such partnership, to the extent such tax is not
16paid by the partnership, as provided under the laws of Illinois
17governing the liability of partners for the obligations of a
18partnership. Persons carrying on business as partners shall be
19liable for the tax imposed by subsection 201 (a) and (b) of
20this Act only in their separate or individual capacities.
21    (c) Subchapter S corporations. A Subchapter S corporation
22shall not be subject to the tax imposed by subsection 201 (a)
23and (b) of this Act but shall be subject to the replacement tax
24imposed by subsection 201 (c) and (d) of this Act and shall
25file such returns and other information at such time and in
26such manner as may be required under Article 5 of this Act.



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1    (c-5) Surcharge. Notwithstanding any provision of law to
2the contrary and in addition to any other tax imposed under
3this Act, beginning July 1, 2017, a privilege tax is imposed on
4partnerships, including investment partnerships, and S
5corporations engaged in the business of conducting investment
6management services at the rate of 20% of the fees calculated
7by reference to the performance of the investment portfolio
8funds and not from the investment itself. The privilege tax
9shall not be imposed on fees calculated by reference to the
10total assets under management of the business engaged in
11investment management services. Persons carrying on business
12as partners conducing investment management services shall be
13liable for the tax imposed by subsections 201 (a) and (b) of
14this Act in their separate or individual capacities in
15accordance with subsection 205 (b) of this Act.
16    For the purposes of this subsection (c-5), "Investment
17Management Services" means a business which is held by any
18person if such person provides, directly or indirectly, in the
19active conduct of a trade or business, a substantial quantity
20of any of the following services to the business:
21        (1) advising the business (partnership, S corporation
22    or any business entity) as to the advisability of investing
23    in, purchasing, or selling any specified asset;
24        (2) managing, acquiring, or disposing of any specified
25    asset;
26        (3) arranging financing with respect to acquiring



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1    specified assets; or
2        (4) any activity in support of any service described in
3    items (1) through (3) of this paragraph.
4    For the purposes of this definition, the term specified
5asset means securities (as defined in section 475(c)(2) of the
6Internal Revenue Code) real estate held for rental or
7investment, interest in partnerships, commodities (as defined
8in section 475(E)(2) of the Internal Revenue Code) or options
9or derivative contracts to any of these.
10    A partner or shareholder will not be deemed to hold an
11investment management services interest if at least 80% of the
12average fair market value of the specified assets of business
13during the taxable year consists of real estate.
14    (d) Combat zone, terrorist attack, and certain other
15deaths. An individual relieved from the federal income tax for
16any taxable year by reason of section 692 of the Internal
17Revenue Code shall not be subject to the tax imposed by this
18Act for such taxable year.
19    (e) Certain trusts. A common trust fund described in
20Section 584 of the Internal Revenue Code, and any other trust
21to the extent that the grantor is treated as the owner thereof
22under sections 671 through 678 of the Internal Revenue Code
23shall not be subject to the tax imposed by this Act.
24    (f) Certain business activities. A person not otherwise
25subject to the tax imposed by this Act shall not become subject
26to the tax imposed by this Act by reason of:



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1        (1) that person's ownership of tangible personal
2    property located at the premises of a printer in this State
3    with which the person has contracted for printing, or
4        (2) activities of the person's employees or agents
5    located solely at the premises of a printer and related to
6    quality control, distribution, or printing services
7    performed by a printer in the State with which the person
8    has contracted for printing.
9    (g) A nonprofit risk organization that holds a certificate
10of authority under Article VIID of the Illinois Insurance Code
11is exempt from the tax imposed under this Act with respect to
12its activities or operations in furtherance of the powers
13conferred upon it under that Article VIID of the Illinois
14Insurance Code.
15(Source: P.A. 97-507, eff. 8-23-11.)".