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90_HB2363sam001
LRB9007368PTbdam03
1 AMENDMENT TO HOUSE BILL 2363
2 AMENDMENT NO. . Amend House Bill 2363 by replacing
3 the title with the following:
4 "AN ACT concerning taxes."; and
5 by replacing everything after the enacting clause with the
6 following:
7 "Section 5. The Illinois Income Tax Act is amended by
8 changing Sections 204, 304, 502, 702, 703, 804, 901, and 1501
9 as follows:
10 (35 ILCS 5/204) (from Ch. 120, par. 2-204)
11 Sec. 204. Standard Exemption.
12 (a) Allowance of exemption. In computing net income
13 under this Act, there shall be allowed as an exemption the
14 sum of the amounts determined under subsections (b), (c) and
15 (d), multiplied by a fraction the numerator of which is the
16 amount of the taxpayer's base income allocable to this State
17 for the taxable year and the denominator of which is the
18 taxpayer's total base income for the taxable year.
19 (b) Basic amount. For the purpose of subsection (a) of
20 this Section, except as provided by subsection (a) of Section
21 205 and in this subsection, each taxpayer shall be allowed a
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1 basic amount of $1000, except that for individuals the basic
2 amount shall be:
3 (1) for taxable years ending on or after December
4 31, 1998 and prior to December 31, 1999, $1,300;
5 (2) for taxable years ending on or after December
6 31, 1999 and prior to December 31, 2000, $1,650;
7 (3) for taxable years ending on or after December
8 31, 2000, $2,000.
9 For taxable years ending on or after December 31, 1992, a
10 taxpayer whose Illinois base income exceeds the basic amount
11 $1,000 and who is claimed as a dependent on another person's
12 tax return under the Internal Revenue Code of 1986 shall not
13 be allowed any basic amount under this subsection. The
14 provisions of Section 250 shall not apply to the amendments
15 made by this amendatory Act of 1998.
16 (c) Additional amount for individuals. In the case of an
17 individual taxpayer, there shall be allowed for the purpose
18 of subsection (a), in addition to the basic amount provided
19 by subsection (b), an additional exemption equal to the basic
20 amount in the amount of $1000 for each exemption in excess of
21 one allowable to such individual taxpayer for the taxable
22 year under Section 151 of the Internal Revenue Code. The
23 provisions of Section 250 shall not apply to the amendments
24 made by this amendatory Act of 1998.
25 (d) Additional exemptions for an individual taxpayer and
26 his or her spouse. In the case of an individual taxpayer and
27 his or her spouse, he or she shall each be allowed additional
28 exemptions as follows:
29 (1) Additional exemption for taxpayer or spouse 65
30 years of age or older.
31 (A) For taxpayer. An additional exemption of
32 $1,000 for the taxpayer if he or she has attained
33 the age of 65 before the end of the taxable year.
34 (B) For spouse when a joint return is not
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1 filed. An additional exemption of $1,000 for the
2 spouse of the taxpayer if a joint return is not made
3 by the taxpayer and his spouse, and if the spouse
4 has attained the age of 65 before the end of such
5 taxable year, and, for the calendar year in which
6 the taxable year of the taxpayer begins, has no
7 gross income and is not the dependent of another
8 taxpayer.
9 (2) Additional exemption for blindness of taxpayer
10 or spouse.
11 (A) For taxpayer. An additional exemption of
12 $1,000 for the taxpayer if he or she is blind at the
13 end of the taxable year.
14 (B) For spouse when a joint return is not
15 filed. An additional exemption of $1,000 for the
16 spouse of the taxpayer if a separate return is made
17 by the taxpayer, and if the spouse is blind and, for
18 the calendar year in which the taxable year of the
19 taxpayer begins, has no gross income and is not the
20 dependent of another taxpayer. For purposes of this
21 paragraph, the determination of whether the spouse
22 is blind shall be made as of the end of the taxable
23 year of the taxpayer; except that if the spouse dies
24 during such taxable year such determination shall be
25 made as of the time of such death.
26 (C) Blindness defined. For purposes of this
27 subsection, an individual is blind only if his or
28 her central visual acuity does not exceed 20/200 in
29 the better eye with correcting lenses, or if his or
30 her visual acuity is greater than 20/200 but is
31 accompanied by a limitation in the fields of vision
32 such that the widest diameter of the visual fields
33 subtends an angle no greater than 20 degrees.
34 (e) Cross reference. See Article 3 for the manner of
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1 determining base income allocable to this State.
2 (Source: P.A. 86-146; 87-880; 87-1246.)
3 (35 ILCS 5/304) (from Ch. 120, par. 3-304)
4 Sec. 304. Business income of persons other than
5 residents.
6 (a) In general. The business income of a person other
7 than a resident shall be allocated to this State if such
8 person's business income is derived solely from this State.
9 If a person other than a resident derives business income
10 from this State and one or more other states, then, for tax
11 years ending on or before December 30, 1998, and except as
12 otherwise provided by this Section, such person's business
13 income shall be apportioned to this State by multiplying the
14 income by a fraction, the numerator of which is the sum of
15 the property factor (if any), the payroll factor (if any) and
16 200% of the sales factor (if any), and the denominator of
17 which is 4 reduced by the number of factors other than the
18 sales factor which have a denominator of zero and by an
19 additional 2 if the sales factor has a denominator of zero.
20 For tax years ending on or after December 31, 1998, and
21 except as otherwise provided by this Section, persons other
22 than residents who derive business income from this State and
23 one or more other states shall compute their apportionment
24 factor by weighting their property, payroll, and sales
25 factors as provided in subsection (h) of this Section.
26 (1) Property factor.
27 (A) The property factor is a fraction, the
28 numerator of which is the average value of the person's
29 real and tangible personal property owned or rented and
30 used in the trade or business in this State during the
31 taxable year and the denominator of which is the average
32 value of all the person's real and tangible personal
33 property owned or rented and used in the trade or
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1 business during the taxable year.
2 (B) Property owned by the person is valued at its
3 original cost. Property rented by the person is valued at
4 8 times the net annual rental rate. Net annual rental
5 rate is the annual rental rate paid by the person less
6 any annual rental rate received by the person from
7 sub-rentals.
8 (C) The average value of property shall be
9 determined by averaging the values at the beginning and
10 ending of the taxable year but the Director may require
11 the averaging of monthly values during the taxable year
12 if reasonably required to reflect properly the average
13 value of the person's property.
14 (2) Payroll factor.
15 (A) The payroll factor is a fraction, the numerator
16 of which is the total amount paid in this State during
17 the taxable year by the person for compensation, and the
18 denominator of which is the total compensation paid
19 everywhere during the taxable year.
20 (B) Compensation is paid in this State if:
21 (i) The individual's service is performed
22 entirely within this State;
23 (ii) The individual's service is performed
24 both within and without this State, but the service
25 performed without this State is incidental to the
26 individual's service performed within this State; or
27 (iii) Some of the service is performed within
28 this State and either the base of operations, or if
29 there is no base of operations, the place from which
30 the service is directed or controlled is within this
31 State, or the base of operations or the place from
32 which the service is directed or controlled is not
33 in any state in which some part of the service is
34 performed, but the individual's residence is in this
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1 State.
2 Beginning with taxable years ending on or after
3 December 31, 1992, for residents of states that impose a
4 comparable tax liability on residents of this State, for
5 purposes of item (i) of this paragraph (B), in the case
6 of persons who perform personal services under personal
7 service contracts for sports performances, services by
8 that person at a sporting event taking place in Illinois
9 shall be deemed to be a performance entirely within this
10 State.
11 (3) Sales factor.
12 (A) The sales factor is a fraction, the numerator
13 of which is the total sales of the person in this State
14 during the taxable year, and the denominator of which is
15 the total sales of the person everywhere during the
16 taxable year.
17 (B) Sales of tangible personal property are in this
18 State if:
19 (i) The property is delivered or shipped to a
20 purchaser, other than the United States government,
21 within this State regardless of the f. o. b. point
22 or other conditions of the sale; or
23 (ii) The property is shipped from an office,
24 store, warehouse, factory or other place of storage
25 in this State and either the purchaser is the United
26 States government or the person is not taxable in
27 the state of the purchaser; provided, however, that
28 premises owned or leased by a person who has
29 independently contracted with the seller for the
30 printing of newspapers, periodicals or books shall
31 not be deemed to be an office, store, warehouse,
32 factory or other place of storage for purposes of
33 this Section. Sales of tangible personal property
34 are not in this State if the seller and purchaser
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1 would be members of the same unitary business group
2 but for the fact that either the seller or purchaser
3 is a person with 80% or more of total business
4 activity outside of the United States and the
5 property is purchased for resale.
6 (C) Sales, other than sales of tangible personal
7 property, are in this State if:
8 (i) The income-producing activity is performed
9 in this State; or
10 (ii) The income-producing activity is
11 performed both within and without this State and a
12 greater proportion of the income-producing activity
13 is performed within this State than without this
14 State, based on performance costs.
15 (D) For taxable years ending on or after December
16 31, 1995, the following items of income shall not be
17 included in the numerator or denominator of the sales
18 factor: dividends; amounts included under Section 78 of
19 the Internal Revenue Code; and Subpart F income as
20 defined in Section 952 of the Internal Revenue Code. No
21 inference shall be drawn from the enactment of this
22 paragraph (D) in construing this Section for taxable
23 years ending before December 31, 1995.
24 (b) Insurance companies.
25 (1) In general. Except as otherwise provided by
26 paragraph (2), business income of an insurance company for a
27 taxable year shall be apportioned to this State by
28 multiplying such income by a fraction, the numerator of which
29 is the direct premiums written for insurance upon property or
30 risk in this State, and the denominator of which is the
31 direct premiums written for insurance upon property or risk
32 everywhere. For purposes of this subsection, the term "direct
33 premiums written" means the total amount of direct premiums
34 written, assessments and annuity considerations as reported
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1 for the taxable year on the annual statement filed by the
2 company with the Illinois Director of Insurance in the form
3 approved by the National Convention of Insurance
4 Commissioners or such other form as may be prescribed in lieu
5 thereof.
6 (2) Reinsurance. If the principal source of premiums
7 written by an insurance company consists of premiums for
8 reinsurance accepted by it, the business income of such
9 company shall be apportioned to this State by multiplying
10 such income by a fraction, the numerator of which is the sum
11 of (i) direct premiums written for insurance upon property or
12 risk in this State, plus (ii) premiums written for
13 reinsurance accepted in respect of property or risk in this
14 State, and the denominator of which is the sum of (iii)
15 direct premiums written for insurance upon property or risk
16 everywhere, plus (iv) premiums written for reinsurance
17 accepted in respect of property or risk everywhere. For
18 purposes of this paragraph, premiums written for reinsurance
19 accepted in respect of property or risk in this State,
20 whether or not otherwise determinable, may, at the election
21 of the company, be determined on the basis of the proportion
22 which premiums written for reinsurance accepted from
23 companies commercially domiciled in Illinois bears to
24 premiums written for reinsurance accepted from all sources,
25 or, alternatively, in the proportion which the sum of the
26 direct premiums written for insurance upon property or risk
27 in this State by each ceding company from which reinsurance
28 is accepted bears to the sum of the total direct premiums
29 written by each such ceding company for the taxable year.
30 (c) Financial organizations.
31 (1) In general. Business income of a financial
32 organization shall be apportioned to this State by
33 multiplying such income by a fraction, the numerator of which
34 is its business income from sources within this State, and
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1 the denominator of which is its business income from all
2 sources. For the purposes of this subsection, the business
3 income of a financial organization from sources within this
4 State is the sum of the amounts referred to in subparagraphs
5 (A) through (E) following, but excluding the adjusted income
6 of an international banking facility as determined in
7 paragraph (2):
8 (A) Fees, commissions or other compensation for
9 financial services rendered within this State;
10 (B) Gross profits from trading in stocks, bonds or
11 other securities managed within this State;
12 (C) Dividends, and interest from Illinois
13 customers, which are received within this State;
14 (D) Interest charged to customers at places of
15 business maintained within this State for carrying debit
16 balances of margin accounts, without deduction of any
17 costs incurred in carrying such accounts; and
18 (E) Any other gross income resulting from the
19 operation as a financial organization within this State.
20 In computing the amounts referred to in paragraphs (A)
21 through (E) of this subsection, any amount received by a
22 member of an affiliated group (determined under Section
23 1504(a) of the Internal Revenue Code but without
24 reference to whether any such corporation is an
25 "includible corporation" under Section 1504(b) of the
26 Internal Revenue Code) from another member of such group
27 shall be included only to the extent such amount exceeds
28 expenses of the recipient directly related thereto.
29 (2) International Banking Facility.
30 (A) Adjusted Income. The adjusted income of an
31 international banking facility is its income reduced by
32 the amount of the floor amount.
33 (B) Floor Amount. The floor amount shall be the
34 amount, if any, determined by multiplying the income of
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1 the international banking facility by a fraction, not
2 greater than one, which is determined as follows:
3 (i) The numerator shall be:
4 The average aggregate, determined on a
5 quarterly basis, of the financial organization's
6 loans to banks in foreign countries, to foreign
7 domiciled borrowers (except where secured primarily
8 by real estate) and to foreign governments and other
9 foreign official institutions, as reported for its
10 branches, agencies and offices within the state on
11 its "Consolidated Report of Condition", Schedule A,
12 Lines 2.c., 5.b., and 7.a., which was filed with the
13 Federal Deposit Insurance Corporation and other
14 regulatory authorities, for the year 1980, minus
15 The average aggregate, determined on a
16 quarterly basis, of such loans (other than loans of
17 an international banking facility), as reported by
18 the financial institution for its branches, agencies
19 and offices within the state, on the corresponding
20 Schedule and lines of the Consolidated Report of
21 Condition for the current taxable year, provided,
22 however, that in no case shall the amount determined
23 in this clause (the subtrahend) exceed the amount
24 determined in the preceding clause (the minuend);
25 and
26 (ii) the denominator shall be the average
27 aggregate, determined on a quarterly basis, of the
28 international banking facility's loans to banks in
29 foreign countries, to foreign domiciled borrowers
30 (except where secured primarily by real estate) and
31 to foreign governments and other foreign official
32 institutions, which were recorded in its financial
33 accounts for the current taxable year.
34 (C) Change to Consolidated Report of Condition and
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1 in Qualification. In the event the Consolidated Report
2 of Condition which is filed with the Federal Deposit
3 Insurance Corporation and other regulatory authorities is
4 altered so that the information required for determining
5 the floor amount is not found on Schedule A, lines 2.c.,
6 5.b. and 7.a., the financial institution shall notify the
7 Department and the Department may, by regulations or
8 otherwise, prescribe or authorize the use of an
9 alternative source for such information. The financial
10 institution shall also notify the Department should its
11 international banking facility fail to qualify as such,
12 in whole or in part, or should there be any amendment or
13 change to the Consolidated Report of Condition, as
14 originally filed, to the extent such amendment or change
15 alters the information used in determining the floor
16 amount.
17 (d) Transportation services. Business income derived
18 from furnishing transportation services shall be apportioned
19 to this State in accordance with paragraphs (1) and (2):
20 (1) Such business income (other than that derived
21 from transportation by pipeline) shall be apportioned to
22 this State by multiplying such income by a fraction, the
23 numerator of which is the revenue miles of the person in
24 this State, and the denominator of which is the revenue
25 miles of the person everywhere. For purposes of this
26 paragraph, a revenue mile is the transportation of 1
27 passenger or 1 net ton of freight the distance of 1 mile
28 for a consideration. Where a person is engaged in the
29 transportation of both passengers and freight, the
30 fraction above referred to shall be determined by means
31 of an average of the passenger revenue mile fraction and
32 the freight revenue mile fraction, weighted to reflect
33 the person's
34 (A) relative railway operating income from
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1 total passenger and total freight service, as
2 reported to the Interstate Commerce Commission, in
3 the case of transportation by railroad, and
4 (B) relative gross receipts from passenger and
5 freight transportation, in case of transportation
6 other than by railroad.
7 (2) Such business income 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 the purposes of this
13 paragraph, a revenue mile is the transportation by
14 pipeline of 1 barrel of oil, 1,000 cubic feet of gas, or
15 of any specified quantity of any other substance, the
16 distance of 1 mile for a consideration.
17 (e) Combined apportionment. Where 2 or more persons are
18 engaged in a unitary business as described in subsection
19 (a)(27) of Section 1501, a part of which is conducted in this
20 State by one or more members of the group, the business
21 income attributable to this State by any such member or
22 members shall be apportioned by means of the combined
23 apportionment method.
24 (f) Alternative allocation. If the allocation and
25 apportionment provisions of subsections (a) through (e) and
26 of subsection (h) do not fairly represent the extent of a
27 person's business activity in this State, the person may
28 petition for, or the Director may require, in respect of all
29 or any part of the person's business activity, if reasonable:
30 (1) Separate accounting;
31 (2) The exclusion of any one or more factors;
32 (3) The inclusion of one or more additional factors
33 which will fairly represent the person's business
34 activities in this State; or
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1 (4) The employment of any other method to
2 effectuate an equitable allocation and apportionment of
3 the person's business income.
4 (g) Cross reference. For allocation of business income
5 by residents, see Section 301(a).
6 (h) For tax years ending on or after December 31, 1998,
7 the apportionment factor of persons who apportion their
8 business income to this State under subsection (a) shall be
9 equal to:
10 (1) for tax years ending on or after December 31,
11 1998 and before December 31, 1999, 16 2/3% of the
12 property factor plus 16 2/3% of the payroll factor plus
13 66 2/3% of the sales factor;
14 (2) for tax years ending on or after December 31,
15 1999 and before December 31, 2000, 8 1/3% of the property
16 factor plus 8 1/3% of the payroll factor plus 83 1/3% of
17 the sales factor;
18 (3) for tax years ending on or after December 31,
19 2000, the sales factor.
20 If, in any tax year ending on or after December 31, 1998 and
21 before December 31, 2000, the denominator of the payroll,
22 property, or sales factor is zero, the apportionment factor
23 computed in paragraph (1) or (2) of this subsection for that
24 year shall be divided by an amount equal to 100% minus the
25 percentage weight given to each factor whose denominator is
26 equal to zero.
27 (Source: P.A. 89-379, eff. 1-1-96; 89-399, eff. 8-20-95;
28 89-626, eff. 8-9-96; 90-562, eff. 12-16-97.)
29 (35 ILCS 5/502) (from Ch. 120, par. 5-502)
30 Sec. 502. Returns and notices.
31 (a) In general. A return with respect to the taxes
32 imposed by this Act shall be made by every person for any
33 taxable year:
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1 (1) For which such person is liable for a tax
2 imposed by this Act, or
3 (2) In the case of a resident or in the case of a
4 corporation which is qualified to do business in this
5 State, for which such person is required to make a
6 federal income tax return, regardless of whether such
7 person is liable for a tax imposed by this Act. However,
8 this paragraph shall not require a resident to make a
9 return if, unless such person has an Illinois base income
10 of the basic amount in Section 204(b) $1,000 or less and
11 is either claimed as a dependent on another person's tax
12 return under the Internal Revenue Code of 1986, or is
13 claimed as a dependent on another person's tax return
14 under this Act.
15 (b) Fiduciaries and receivers.
16 (1) Decedents. If an individual is deceased, any
17 return or notice required of such individual under this
18 Act shall be made by his executor, administrator, or
19 other person charged with the property of such decedent.
20 (2) Individuals under a disability. If an
21 individual is unable to make a return or notice required
22 under this Act, the return or notice required of such
23 individual shall be made by his duly authorized agent,
24 guardian, fiduciary or other person charged with the care
25 of the person or property of such individual.
26 (3) Estates and trusts. Returns or notices required
27 of an estate or a trust shall be made by the fiduciary
28 thereof.
29 (4) Receivers, trustees and assignees for
30 corporations. In a case where a receiver, trustee in
31 bankruptcy, or assignee, by order of a court of competent
32 jurisdiction, by operation of law, or otherwise, has
33 possession of or holds title to all or substantially all
34 the property or business of a corporation, whether or not
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1 such property or business is being operated, such
2 receiver, trustee, or assignee shall make the returns and
3 notices required of such corporation in the same manner
4 and form as corporations are required to make such
5 returns and notices.
6 (c) Joint returns by husband and wife.
7 (1) Except as provided in paragraph (3), if a
8 husband and wife file a joint federal income tax return
9 for a taxable year they shall file a joint return under
10 this Act for such taxable year and their liabilities
11 shall be joint and several, but if the federal income tax
12 liability of either spouse is determined on a separate
13 federal income tax return, they shall file separate
14 returns under this Act.
15 (2) If neither spouse is required to file a federal
16 income tax return and either or both are required to file
17 a return under this Act, they may elect to file separate
18 or joint returns and pursuant to such election their
19 liabilities shall be separate or joint and several.
20 (3) If either husband or wife is a resident and the
21 other is a nonresident, they shall file separate returns
22 in this State on such forms as may be required by the
23 Department in which event their tax liabilities shall be
24 separate; but they may elect to determine their joint net
25 income and file a joint return as if both were residents
26 and in such case, their liabilities shall be joint and
27 several.
28 (4) However, an innocent spouse shall be relieved
29 of liability for tax (including interest and penalties)
30 for any taxable year for which a joint return has been
31 made, upon submission of proof that the Internal Revenue
32 Service has made a determination under Section 6013(e) of
33 the Internal Revenue Code, for the same taxable year,
34 which determination relieved the spouse from liability
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1 for federal income taxes. If there is no federal income
2 tax liability at issue for the same taxable year, the
3 Department shall rely on the provisions of Section
4 6013(e) to determine whether the person requesting
5 innocent spouse abatement of tax, penalty, and interest
6 is entitled to that relief.
7 (d) Partnerships. Every partnership having any base
8 income allocable to this State in accordance with section
9 305(c) shall retain information concerning all items of
10 income, gain, loss and deduction; the names and addresses of
11 all of the partners, or names and addresses of members of a
12 limited liability company, or other persons who would be
13 entitled to share in the base income of the partnership if
14 distributed; the amount of the distributive share of each;
15 and such other pertinent information as the Department may by
16 forms or regulations prescribe. The partnership shall make
17 that information available to the Department when requested
18 by the Department.
19 (e) For taxable years ending on or after December 31,
20 1985, and before December 31, 1993, taxpayers that are
21 corporations (other than Subchapter S corporations) having
22 the same taxable year and that are members of the same
23 unitary business group may elect to be treated as one
24 taxpayer for purposes of any original return, amended return
25 which includes the same taxpayers of the unitary group which
26 joined in the election to file the original return,
27 extension, claim for refund, assessment, collection and
28 payment and determination of the group's tax liability under
29 this Act. This subsection (e) does not permit the election to
30 be made for some, but not all, of the purposes enumerated
31 above. For taxable years ending on or after December 31,
32 1987, corporate members (other than Subchapter S
33 corporations) of the same unitary business group making this
34 subsection (e) election are not required to have the same
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1 taxable year.
2 For taxable years ending on or after December 31, 1993,
3 taxpayers that are corporations (other than Subchapter S
4 corporations) and that are members of the same unitary
5 business group shall be treated as one taxpayer for purposes
6 of any original return, amended return which includes the
7 same taxpayers of the unitary group which joined in filing
8 the original return, extension, claim for refund, assessment,
9 collection and payment and determination of the group's tax
10 liability under this Act.
11 (f) The Department may promulgate regulations to permit
12 nonresident individual partners of the same partnership,
13 nonresident Subchapter S corporation shareholders of the same
14 Subchapter S corporation, and nonresident individuals
15 transacting an insurance business in Illinois under a Lloyds
16 plan of operation, and nonresident individual members of the
17 same limited liability company that is treated as a
18 partnership under Section 1501 (a)(16) of this Act, to file
19 composite individual income tax returns reflecting the
20 composite income of such individuals allocable to Illinois
21 and to make composite individual income tax payments. The
22 Department may by regulation also permit such composite
23 returns to include the income tax owed by Illinois residents
24 attributable to their income from partnerships, Subchapter S
25 corporations, insurance businesses organized under a Lloyds
26 plan of operation, or limited liability companies that are
27 treated as partnership under Section 1501 (a)(16) of this
28 Act, in which case such Illinois residents will be permitted
29 to claim credits on their individual returns for their shares
30 of the composite tax payments. This subsection (f) applies
31 to taxable years ending on or after December 31, 1987.
32 (g) The Department may adopt rules to authorize the
33 electronic filing of any return required to be filed under
34 this Section.
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1 (Source: P.A. 87-879; 87-1246; 88-195; 88-480; 88-669, eff.
2 11-29-94; 88-670, eff. 12-2-94.)
3 (35 ILCS 5/702) (from Ch. 120, par. 7-702)
4 Sec. 702. Amount Exempt from Withholding. For purposes of
5 this Section an employee shall be entitled to a withholding
6 exemption in an amount equal to the basic amount in Section
7 204(b) $1,000 for each personal or dependent exemption which
8 he is entitled to claim on his federal return pursuant to
9 Section 151 of the Internal Revenue Code of 1986; plus an
10 allowance equal to $1,000 for each $1,000 he is entitled to
11 deduct from gross income in arriving at adjusted gross income
12 pursuant to Section 62 of the Internal Revenue Code of 1986;
13 plus an additional allowance equal to $1,000 for each $1,000
14 eligible for subtraction on his Illinois income tax return as
15 Illinois real estate taxes paid during the taxable year; or
16 in any lesser amount claimed by him. Every employee shall
17 furnish to his employer such information as is required for
18 the employer to make an accurate withholding under this Act.
19 The employer may rely on this information for withholding
20 purposes. If any employee fails or refuses to furnish such
21 information, the employer shall withhold the full rate of tax
22 from the employee's total compensation.
23 (Source: P.A. 85-731.)
24 (35 ILCS 5/703) (from Ch. 120, par. 7-703)
25 Sec. 703. Information Statement. Every employer required
26 to deduct and withhold tax under this Act from compensation
27 of an employee, or who would have been required so to deduct
28 and withhold tax if the employee's withholding exemption were
29 not in excess of the basic amount in Section 204(b) $1,000,
30 shall furnish in duplicate to each such employee in respect
31 of the compensation paid by such employer to such employee
32 during the calendar year on or before January 31 of the
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1 succeeding year, or, if his employment is terminated before
2 the close of such calendar year, on the date on which the
3 last payment of compensation is made, a written statement in
4 such form as the Department may by regulation prescribe
5 showing the amount of compensation paid by the employer to
6 the employee, the amount deducted and withheld as tax, and
7 such other information as the Department shall prescribe. A
8 copy of such statement shall be filed by the employee with
9 his return for his taxable year to which it relates (as
10 determined under section 601(b) (1).
11 (Source: P.A. 76-261.)
12 (35 ILCS 5/804) (from Ch. 120, par. 8-804)
13 Sec. 804. Failure to Pay Estimated Tax.
14 (a) In general. In case of any underpayment of estimated
15 tax by a taxpayer, except as provided in subsection (d) or
16 (e), the taxpayer shall be liable to a penalty in an amount
17 determined at the rate prescribed by Section 3-3 of the
18 Uniform Penalty and Interest Act upon the amount of the
19 underpayment (determined under subsection (b)) for each
20 required installment.
21 (b) Amount of underpayment. For purposes of subsection
22 (a), the amount of the underpayment shall be the excess of:
23 (1) the amount of the installment which would be
24 required to be paid under subsection (c), over
25 (2) the amount, if any, of the installment paid on
26 or before the last date prescribed for payment.
27 (c) Amount of Required Installments.
28 (1) Amount.
29 (A) In General. Except as provided in
30 paragraph (2), the amount of any required
31 installment shall be 25% of the required annual
32 payment.
33 (B) Required Annual Payment. For purposes of
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1 subparagraph (A), the term "required annual payment"
2 means the lesser of
3 (i) 90% of the tax shown on the return
4 for the taxable year, or if no return is filed,
5 90% of the tax for such year, or
6 (ii) 100% of the tax shown on the return
7 of the taxpayer for the preceding taxable year
8 if a return showing a liability for tax was
9 filed by the taxpayer for the preceding taxable
10 year and such preceding year was a taxable year
11 of 12 months.
12 (2) Lower Required Installment where Annualized
13 Income Installment is Less Than Amount Determined Under
14 Paragraph (1).
15 (A) In General. In the case of any required
16 installment if a taxpayer establishes that the
17 annualized income installment is less than the
18 amount determined under paragraph (1),
19 (i) the amount of such required
20 installment shall be the annualized income
21 installment, and
22 (ii) any reduction in a required
23 installment resulting from the application of
24 this subparagraph shall be recaptured by
25 increasing the amount of the next required
26 installment determined under paragraph (1) by
27 the amount of such reduction, and by increasing
28 subsequent required installments to the extent
29 that the reduction has not previously been
30 recaptured under this clause.
31 (B) Determination of Annualized Income
32 Installment. In the case of any required
33 installment, the annualized income installment is
34 the excess, if any, of
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1 (i) an amount equal to the applicable
2 percentage of the tax for the taxable year
3 computed by placing on an annualized basis the
4 net income for months in the taxable year
5 ending before the due date for the installment,
6 over
7 (ii) the aggregate amount of any prior
8 required installments for the taxable year.
9 (C) Applicable Percentage.
10 In the case of the following The applicable
11 required installments: percentage is:
12 1st ............................... 22.5%
13 2nd ............................... 45%
14 3rd ............................... 67.5%
15 4th ............................... 90%
16 (D) Annualized Net Income; Individuals. For
17 individuals, net income shall be placed on an
18 annualized basis by:
19 (i) multiplying by 12, or in the case of
20 a taxable year of less than 12 months, by the
21 number of months in the taxable year, the net
22 income computed without regard to the standard
23 exemption for the months in the taxable year
24 ending before the month in which the
25 installment is required to be paid;
26 (ii) dividing the resulting amount by the
27 number of months in the taxable year ending
28 before the month in which such installment date
29 falls; and
30 (iii) deducting from such amount the
31 standard exemption allowable for the taxable
32 year, such standard exemption being determined
33 as of the last date prescribed for payment of
34 the installment.
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1 (E) Annualized Net Income; Corporations. For
2 corporations, net income shall be placed on an
3 annualized basis by multiplying by 12 the taxable
4 income
5 (i) for the first 3 months of the taxable
6 year, in the case of the installment required
7 to be paid in the 4th month,
8 (ii) for the first 3 months or for the
9 first 5 months of the taxable year, in the case
10 of the installment required to be paid in the
11 6th month,
12 (iii) for the first 6 months or for the
13 first 8 months of the taxable year, in the case
14 of the installment required to be paid in the
15 9th month, and
16 (iv) for the first 9 months or for the
17 first 11 months of the taxable year, in the
18 case of the installment required to be paid in
19 the 12th month of the taxable year,
20 then dividing the resulting amount by the number of
21 months in the taxable year (3, 5, 6, 8, 9, or 11 as
22 the case may be).
23 (d) Exceptions. Notwithstanding the provisions of the
24 preceding subsections, the penalty imposed by subsection (a)
25 shall not be imposed if the taxpayer was not required to file
26 an Illinois income tax return for the preceding taxable year,
27 or if the taxpayer has underpaid taxes solely because of the
28 increased rate in effect during the period from July 1, 1989
29 through December 1989, or, for individuals, if the taxpayer
30 had no tax liability for the preceding taxable year and such
31 year was a taxable year of 12 months. The penalty imposed by
32 subsection (a) shall also not be imposed on any underpayments
33 of estimated tax due before the effective date of this
34 amendatory Act of 1998 which underpayments are solely
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1 attributable to the change in apportionment from subsection
2 (a) to subsection (h) of Section 304. The provisions of this
3 amendatory Act of 1998 apply to tax years ending on or after
4 December 31, 1998.
5 (e) The penalty imposed for underpayment of estimated
6 tax by subsection (a) of this Section shall not be imposed to
7 the extent that the Department or his designate determines,
8 pursuant to Section 3-8 of the Uniform Penalty and Interest
9 Act that the penalty should not be imposed.
10 (f) Definition of tax. For purposes of subsections (b)
11 and (c), the term "tax" means the excess of the tax imposed
12 under Article 2 of this Act, over the amounts credited
13 against such tax under Sections 601(b) (3) and (4).
14 (g) Application of Section in case of tax withheld on
15 compensation. For purposes of applying this Section in the
16 case of an individual, tax withheld under Article 7 for the
17 taxable year shall be deemed a payment of estimated tax, and
18 an equal part of such amount shall be deemed paid on each
19 installment date for such taxable year, unless the taxpayer
20 establishes the dates on which all amounts were actually
21 withheld, in which case the amounts so withheld shall be
22 deemed payments of estimated tax on the dates on which such
23 amounts were actually withheld.
24 (g-5) Amounts withheld under the State Salary and
25 Annuity Withholding Act. An individual who has amounts
26 withheld under paragraph (10) of Section 4 of the State
27 Salary and Annuity Withholding Act may elect to have those
28 amounts treated as payments of estimated tax made on the
29 dates on which those amounts are actually withheld.
30 (i) Short taxable year. The application of this Section
31 to taxable years of less than 12 months shall be in
32 accordance with regulations prescribed by the Department.
33 The changes in this Section made by Public Act 84-127
34 shall apply to taxable years ending on or after January 1,
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1 1986.
2 (Source: P.A. 90-448, eff. 8-16-97.)
3 (35 ILCS 5/901) (from Ch. 120, par. 9-901)
4 Sec. 901. Collection Authority.
5 (a) In general.
6 The Department shall collect the taxes imposed by this
7 Act. The Department shall collect certified past due child
8 support amounts under Section 39b52 of the Civil
9 Administrative Code of Illinois. Except as provided in
10 subsections (c) and (e) of this Section, money collected
11 pursuant to subsections (a) and (b) of Section 201 of this
12 Act shall be paid into the General Revenue Fund in the State
13 treasury; money collected pursuant to subsections (c) and (d)
14 of Section 201 of this Act shall be paid into the Personal
15 Property Tax Replacement Fund, a special fund in the State
16 Treasury; and money collected under Section 39b52 of the
17 Civil Administrative Code of Illinois shall be paid into the
18 Child Support Enforcement Trust Fund, a special fund outside
19 the State Treasury.
20 (b) Local Governmental Distributive Fund.
21 Beginning August 1, 1969, and continuing through June 30,
22 1994, the Treasurer shall transfer each month from the
23 General Revenue Fund to a special fund in the State treasury,
24 to be known as the "Local Government Distributive Fund", an
25 amount equal to 1/12 of the net revenue realized from the tax
26 imposed by subsections (a) and (b) of Section 201 of this Act
27 during the preceding month. Beginning July 1, 1994, and
28 continuing through June 30, 1995, the Treasurer shall
29 transfer each month from the General Revenue Fund to the
30 Local Government Distributive Fund an amount equal to 1/11 of
31 the net revenue realized from the tax imposed by subsections
32 (a) and (b) of Section 201 of this Act during the preceding
33 month. Beginning July 1, 1995, the Treasurer shall transfer
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1 each month from the General Revenue Fund to the Local
2 Government Distributive Fund an amount equal to 1/10 of the
3 net revenue realized from the tax imposed by subsections (a)
4 and (b) of Section 201 of the Illinois Income Tax Act during
5 the preceding month. Net revenue realized for a month shall
6 be defined as the revenue from the tax imposed by subsections
7 (a) and (b) of Section 201 of this Act which is deposited in
8 the General Revenue Fund, the Educational Assistance Fund and
9 the Income Tax Surcharge Local Government Distributive Fund
10 during the month minus the amount paid out of the General
11 Revenue Fund in State warrants during that same month as
12 refunds to taxpayers for overpayment of liability under the
13 tax imposed by subsections (a) and (b) of Section 201 of this
14 Act.
15 (c) Deposits Into Income Tax Refund Fund.
16 (1) Beginning on January 1, 1989 and thereafter,
17 the Department shall deposit a percentage of the amounts
18 collected pursuant to subsections (a) and (b)(1), (2),
19 and (3), of Section 201 of this Act into a fund in the
20 State treasury known as the Income Tax Refund Fund. The
21 Department shall deposit 6% of such amounts during the
22 period beginning January 1, 1989 and ending on June 30,
23 1989. Beginning with State fiscal year 1990 and for each
24 fiscal year thereafter, the percentage deposited into the
25 Income Tax Refund Fund during a fiscal year shall be the
26 Annual Percentage. For fiscal years 1999 through 2001,
27 the Annual Percentage shall be 7.1%. For all other
28 fiscal years, the Annual Percentage shall be calculated
29 as a fraction, the numerator of which shall be the amount
30 of refunds approved for payment by the Department during
31 the preceding fiscal year as a result of overpayment of
32 tax liability under subsections (a) and (b)(1), (2), and
33 (3) of Section 201 of this Act plus the amount of such
34 refunds remaining approved but unpaid at the end of the
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1 preceding fiscal year minus any surplus which remains on
2 deposit in the Income Tax Refund Fund at the end of the
3 preceding year, the denominator of which shall be the
4 amounts which will be collected pursuant to subsections
5 (a) and (b)(1), (2), and (3) of Section 201 of this Act
6 during the preceding fiscal year. The Director of
7 Revenue shall certify the Annual Percentage to the
8 Comptroller on the last business day of the fiscal year
9 immediately preceding the fiscal year for which it is it
10 to be effective.
11 (2) Beginning on January 1, 1989 and thereafter,
12 the Department shall deposit a percentage of the amounts
13 collected pursuant to subsections (a) and (b)(6), (7),
14 and (8), (c) and (d) of Section 201 of this Act into a
15 fund in the State treasury known as the Income Tax Refund
16 Fund. The Department shall deposit 18% of such amounts
17 during the period beginning January 1, 1989 and ending on
18 June 30, 1989. Beginning with State fiscal year 1990 and
19 for each fiscal year thereafter, the percentage deposited
20 into the Income Tax Refund Fund during a fiscal year
21 shall be the Annual Percentage. For fiscal years 1999,
22 2000, and 2001, the Annual Percentage shall be 19%. For
23 all other fiscal years, the Annual Percentage shall be
24 calculated as a fraction, the numerator of which shall be
25 the amount of refunds approved for payment by the
26 Department during the preceding fiscal year as a result
27 of overpayment of tax liability under subsections (a) and
28 (b)(6), (7), and (8), (c) and (d) of Section 201 of this
29 Act plus the amount of such refunds remaining approved
30 but unpaid at the end of the preceding fiscal year, the
31 denominator of which shall be the amounts which will be
32 collected pursuant to subsections (a) and (b)(6), (7),
33 and (8), (c) and (d) of Section 201 of this Act during
34 the preceding fiscal year. The Director of Revenue shall
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1 certify the Annual Percentage to the Comptroller on the
2 last business day of the fiscal year immediately
3 preceding the fiscal year for which it is to be
4 effective.
5 (d) Expenditures from Income Tax Refund Fund.
6 (1) Beginning January 1, 1989, money in the Income
7 Tax Refund Fund shall be expended exclusively for the
8 purpose of paying refunds resulting from overpayment of
9 tax liability under Section 201 of this Act and for
10 making transfers pursuant to this subsection (d).
11 (2) The Director shall order payment of refunds
12 resulting from overpayment of tax liability under Section
13 201 of this Act from the Income Tax Refund Fund only to
14 the extent that amounts collected pursuant to Section 201
15 of this Act and transfers pursuant to this subsection (d)
16 have been deposited and retained in the Fund.
17 (3) As soon as possible after the end of On the
18 last business day of each fiscal year, the Director shall
19 order transferred and the State Treasurer and State
20 Comptroller shall transfer from the Income Tax Refund
21 Fund to the Personal Property Tax Replacement Fund an
22 amount, certified by the Director to the Comptroller,
23 equal to the excess of the amount collected pursuant to
24 subsections (c) and (d) of Section 201 of this Act
25 deposited into the Income Tax Refund Fund during the
26 fiscal year over the amount of refunds resulting from
27 overpayment of tax liability under subsections (c) and
28 (d) of Section 201 of this Act paid from the Income Tax
29 Refund Fund during the fiscal year.
30 (4) As soon as possible after the end of On the
31 last business day of each fiscal year, the Director shall
32 order transferred and the State Treasurer and State
33 Comptroller shall transfer from the Personal Property Tax
34 Replacement Fund to the Income Tax Refund Fund an amount,
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1 certified by the Director to the Comptroller, equal to
2 the excess of the amount of refunds resulting from
3 overpayment of tax liability under subsections (c) and
4 (d) of Section 201 of this Act paid from the Income Tax
5 Refund Fund during the fiscal year over the amount
6 collected pursuant to subsections (c) and (d) of Section
7 201 of this Act deposited into the Income Tax Refund Fund
8 during the fiscal year.
9 (4.5) As soon as possible after the end of fiscal
10 year 1999 and of each fiscal year thereafter, the
11 Director shall order transferred and the State Treasurer
12 and State Comptroller shall transfer from the Income Tax
13 Refund Fund to the General Revenue Fund any surplus
14 remaining in the Income Tax Refund Fund as of the end of
15 such fiscal year.
16 (5) This Act shall constitute an irrevocable and
17 continuing appropriation from the Income Tax Refund Fund
18 for the purpose of paying refunds upon the order of the
19 Director in accordance with the provisions of this
20 Section.
21 (e) Deposits into the Education Assistance Fund and the
22 Income Tax Surcharge Local Government Distributive Fund.
23 On July 1, 1991, and thereafter, of the amounts collected
24 pursuant to subsections (a) and (b) of Section 201 of this
25 Act, minus deposits into the Income Tax Refund Fund, the
26 Department shall deposit 7.3% into the Education Assistance
27 Fund in the State Treasury. Beginning July 1, 1991, and
28 continuing through January 31, 1993, of the amounts collected
29 pursuant to subsections (a) and (b) of Section 201 of the
30 Illinois Income Tax Act, minus deposits into the Income Tax
31 Refund Fund, the Department shall deposit 3.0% into the
32 Income Tax Surcharge Local Government Distributive Fund in
33 the State Treasury. Beginning February 1, 1993 and
34 continuing through June 30, 1993, of the amounts collected
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1 pursuant to subsections (a) and (b) of Section 201 of the
2 Illinois Income Tax Act, minus deposits into the Income Tax
3 Refund Fund, the Department shall deposit 4.4% into the
4 Income Tax Surcharge Local Government Distributive Fund in
5 the State Treasury. Beginning July 1, 1993, and continuing
6 through June 30, 1994, of the amounts collected under
7 subsections (a) and (b) of Section 201 of this Act, minus
8 deposits into the Income Tax Refund Fund, the Department
9 shall deposit 1.475% into the Income Tax Surcharge Local
10 Government Distributive Fund in the State Treasury.
11 (Source: P.A. 88-89; 89-6, eff. 12-31-95; revised 12-18-97.)
12 (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
13 Sec. 1501. Definitions.
14 (a) In general. When used in this Act, where not
15 otherwise distinctly expressed or manifestly incompatible
16 with the intent thereof:
17 (1) Business income. The term "business income"
18 means income arising from transactions and activity in
19 the regular course of the taxpayer's trade or business,
20 net of the deductions allocable thereto, and includes
21 income from tangible and intangible property if the
22 acquisition, management, and disposition of the property
23 constitute integral parts of the taxpayer's regular trade
24 or business operations. Such term does not include
25 compensation or the deductions allocable thereto.
26 (2) Commercial domicile. The term "commercial
27 domicile" means the principal place from which the trade
28 or business of the taxpayer is directed or managed.
29 (3) Compensation. The term "compensation" means
30 wages, salaries, commissions and any other form of
31 remuneration paid to employees for personal services.
32 (4) Corporation. The term "corporation" includes
33 associations, joint-stock companies, insurance companies
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1 and cooperatives. Any entity, including a limited
2 liability company formed under the Illinois Limited
3 Liability Company Act, shall be treated as a corporation
4 if it is so classified for federal income tax purposes.
5 (5) Department. The term "Department" means the
6 Department of Revenue of this State.
7 (6) Director. The term "Director" means the
8 Director of Revenue of this State.
9 (7) Fiduciary. The term "fiduciary" means a
10 guardian, trustee, executor, administrator, receiver, or
11 any person acting in any fiduciary capacity for any
12 person.
13 (8) Financial organization.
14 (A) The term "financial organization" means
15 any bank, bank holding company, trust company,
16 savings bank, industrial bank, land bank, safe
17 deposit company, private banker, savings and loan
18 association, building and loan association, credit
19 union, currency exchange, cooperative bank, small
20 loan company, sales finance company, investment
21 company, or any person which is owned by a bank or
22 bank holding company. For the purpose of this
23 Section a "person" will include only those persons
24 which a bank holding company may acquire and hold an
25 interest in, directly or indirectly, under the
26 provisions of the Bank Holding Company Act of 1956
27 (12 U.S.C. 1841, et seq.), except where interests in
28 any person must be disposed of within certain
29 required time limits under the Bank Holding Company
30 Act of 1956.
31 (B) For purposes of subparagraph (A) of this
32 paragraph, the term "bank" includes (i) any entity
33 that is regulated by the Comptroller of the Currency
34 under the National Bank Act, or by the Federal
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1 Reserve Board, or by the Federal Deposit Insurance
2 Corporation and (ii) any federally or State
3 chartered bank operating as a credit card bank.
4 (C) For purposes of subparagraph (A) of this
5 paragraph, the term "sales finance company" means a
6 person primarily engaged in the business of
7 purchasing or making loans upon the security of
8 retail installment contracts or retail charge
9 agreements or the outstanding balances under such
10 contracts or agreements. The term includes but is
11 not limited to persons: (i) to whom the Sales
12 Finance Agency Act is rendered inapplicable by
13 subsection (b) of Section 17 thereof; (ii) engaged
14 in consumer sales finance activities governed by the
15 Sales Finance Agency Act or that would be governed
16 by that Act if conducted in this State; (iii)
17 engaged in activities governed by the Retail
18 Installment Sales Act, including the making or
19 purchasing of retail installment contracts or retail
20 charge agreements for "goods" or "services" as
21 defined in that Act, or activities that would be
22 governed by that Act if conducted in this State;
23 (iv) engaged in activities governed by the Motor
24 Vehicle Retail Installment Sales Act or that would
25 be governed by that Act if conducted in this State;
26 (v) engaged in commercial finance activities
27 governed by the Illinois Uniform Commercial Code or
28 that would be governed by that Code if conducted in
29 this State; or (vi) engaged in the finance leasing
30 of tangible personal property where "finance
31 leasing" is activity that is the economic equivalent
32 of an extension of credit and for which a deduction
33 for depreciation under Section 167 of the Internal
34 Revenue Code of 1986 is not available to a lessor.
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1 (D) Subparagraphs (B) and (C) of this
2 paragraph are declaratory of existing law and apply
3 retroactively, for all tax years beginning on or
4 before December 31, 1996, to all original returns,
5 to all amended returns filed no later than 30 days
6 after the effective date of this amendatory Act of
7 1996, and to all notices issued on or before the
8 effective date of this amendatory Act of 1996 under
9 subsection (a) of Section 903, subsection (a) of
10 Section 904, subsection (e) of Section 909, or
11 Section 912. A taxpayer that is a "financial
12 organization" that engages in any transaction with
13 an affiliate shall be a "financial organization" for
14 all purposes of this Act.
15 (E) For all tax years beginning on or before
16 December 31, 1996, a taxpayer that falls within the
17 definition of a "financial organization" under
18 subparagraphs (B) or (C) of this paragraph, but who
19 does not fall within the definition of a "financial
20 organization" under the Proposed Regulations issued
21 by the Department of Revenue on July 19, 1996, may
22 irrevocably elect to apply the Proposed Regulations
23 for all of those years as though the Proposed
24 Regulations had been lawfully promulgated, adopted,
25 and in effect for all of those years. For purposes
26 of applying subparagraphs (B) or (C) of this
27 paragraph to all of those years, the election
28 allowed by this subparagraph applies only to the
29 taxpayer making the election and to those members of
30 the taxpayer's unitary business group who are
31 ordinarily required to apportion business income
32 under the same subsection of Section 304 of this Act
33 as the taxpayer making the election. No election
34 allowed by this subparagraph shall be made under a
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1 claim filed under subsection (d) of Section 909 more
2 than 30 days after the effective date of this
3 amendatory Act of 1996.
4 (9) Fiscal year. The term "fiscal year" means an
5 accounting period of 12 months ending on the last day of
6 any month other than December.
7 (10) Includes and including. The terms "includes"
8 and "including" when used in a definition contained in
9 this Act shall not be deemed to exclude other things
10 otherwise within the meaning of the term defined.
11 (11) Internal Revenue Code. The term "Internal
12 Revenue Code" means the United States Internal Revenue
13 Code of 1954 or any successor law or laws relating to
14 federal income taxes in effect for the taxable year.
15 (12) Mathematical error. The term "mathematical
16 error" includes the following types of errors, omissions,
17 or defects in a return filed by a taxpayer which prevents
18 acceptance of the return as filed for processing:
19 (A) arithmetic errors or incorrect
20 computations on the return or supporting schedules;
21 (B) entries on the wrong lines;
22 (C) omission of required supporting forms or
23 schedules or the omission of the information in
24 whole or in part called for thereon; and
25 (D) an attempt to claim, exclude, deduct, or
26 improperly report, in a manner directly contrary to
27 the provisions of the Act and regulations thereunder
28 any item of income, exemption, deduction, or credit.
29 (13) Nonbusiness income. The term "nonbusiness
30 income" means all income other than business income or
31 compensation.
32 (14) Nonresident. The term "nonresident" means a
33 person who is not a resident.
34 (15) Paid, incurred and accrued. The terms "paid",
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1 "incurred" and "accrued" shall be construed according to
2 the method of accounting upon the basis of which the
3 person's base income is computed under this Act.
4 (16) Partnership and partner. The term
5 "partnership" includes a syndicate, group, pool, joint
6 venture or other unincorporated organization, through or
7 by means of which any business, financial operation, or
8 venture is carried on, and which is not, within the
9 meaning of this Act, a trust or estate or a corporation;
10 and the term "partner" includes a member in such
11 syndicate, group, pool, joint venture or organization.
12 Any entity, including a limited liability company
13 formed under the Illinois Limited Liability Company Act,
14 shall be treated as a partnership if it is so classified
15 for federal income tax purposes.
16 For purposes of the tax imposed at subsection (c) of
17 Section 201 of this Act, the term "partnership" does not
18 include a syndicate, group, pool, joint venture or other
19 unincorporated organization established for the sole
20 purpose of playing the Illinois State Lottery.
21 (17) Part-year resident. The term "part-year
22 resident" means an individual who became a resident
23 during the taxable year or ceased to be a resident during
24 the taxable year. Under Section 1501 (a) (20) (A) (i)
25 residence commences with presence in this State for other
26 than a temporary or transitory purpose and ceases with
27 absence from this State for other than a temporary or
28 transitory purpose. Under Section 1501 (a) (20) (A) (ii)
29 residence commences with the establishment of domicile in
30 this State and ceases with the establishment of domicile
31 in another State.
32 (18) Person. The term "person" shall be construed
33 to mean and include an individual, a trust, estate,
34 partnership, association, firm, company, corporation,
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1 limited liability company, or fiduciary. For purposes of
2 Section 1301 and 1302 of this Act, a "person" means (i)
3 an individual, (ii) a corporation, (iii) an officer,
4 agent, or employee of a corporation, (iv) a member, agent
5 or employee of a partnership, or (v) a member, manager,
6 employee, officer, director, or agent of a limited
7 liability company who in such capacity commits an offense
8 specified in Section 1301 and 1302.
9 (18A) Records. The term "records" includes all
10 data maintained by the taxpayer, whether on paper,
11 microfilm, microfiche, or any type of machine-sensible
12 data compilation.
13 (19) Regulations. The term "regulations" includes
14 rules promulgated and forms prescribed by the Department.
15 (20) Resident. The term "resident" means:
16 (A) an individual (i) who is in this State for
17 other than a temporary or transitory purpose during
18 the taxable year; or (ii) who is domiciled in this
19 State but is absent from the State for a temporary
20 or transitory purpose during the taxable year;
21 (B) The estate of a decedent who at his or her
22 death was domiciled in this State;
23 (C) A trust created by a will of a decedent
24 who at his death was domiciled in this State; and
25 (D) An irrevocable trust, the grantor of which
26 was domiciled in this State at the time such trust
27 became irrevocable. For purpose of this
28 subparagraph, a trust shall be considered
29 irrevocable to the extent that the grantor is not
30 treated as the owner thereof under Sections 671
31 through 678 of the Internal Revenue Code.
32 (21) Sales. The term "sales" means all gross
33 receipts of the taxpayer not allocated under Sections
34 301, 302 and 303.
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1 (22) State. The term "state" when applied to a
2 jurisdiction other than this State means any state of the
3 United States, the District of Columbia, the Commonwealth
4 of Puerto Rico, any Territory or Possession of the United
5 States, and any foreign country, or any political
6 subdivision of any of the foregoing. For purposes of the
7 foreign tax credit under Section 601, the term "state"
8 means any state of the United States, the District of
9 Columbia, the Commonwealth of Puerto Rico, and any
10 territory or possession of the United States, or any
11 political subdivision of any of the foregoing, effective
12 for tax years ending on or after December 31, 1989.
13 (23) Taxable year. The term "taxable year" means
14 the calendar year, or the fiscal year ending during such
15 calendar year, upon the basis of which the base income is
16 computed under this Act. "Taxable year" means, in the
17 case of a return made for a fractional part of a year
18 under the provisions of this Act, the period for which
19 such return is made.
20 (24) Taxpayer. The term "taxpayer" means any person
21 subject to the tax imposed by this Act.
22 (25) International banking facility. The term
23 international banking facility shall have the same
24 meaning as is set forth in the Illinois Banking Act or as
25 is set forth in the laws of the United States or
26 regulations of the Board of Governors of the Federal
27 Reserve System.
28 (26) Income Tax Return Preparer.
29 (A) The term "income tax return preparer"
30 means any person who prepares for compensation, or
31 who employs one or more persons to prepare for
32 compensation, any return of tax imposed by this Act
33 or any claim for refund of tax imposed by this Act.
34 The preparation of a substantial portion of a return
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1 or claim for refund shall be treated as the
2 preparation of that return or claim for refund.
3 (B) A person is not an income tax return
4 preparer if all he or she does is
5 (i) furnish typing, reproducing, or other
6 mechanical assistance;
7 (ii) prepare returns or claims for
8 refunds for the employer by whom he or she is
9 regularly and continuously employed;
10 (iii) prepare as a fiduciary returns or
11 claims for refunds for any person; or
12 (iv) prepare claims for refunds for a
13 taxpayer in response to any notice of
14 deficiency issued to that taxpayer or in
15 response to any waiver of restriction after the
16 commencement of an audit of that taxpayer or of
17 another taxpayer if a determination in the
18 audit of the other taxpayer directly or
19 indirectly affects the tax liability of the
20 taxpayer whose claims he or she is preparing.
21 (27) Unitary business group. The term "unitary
22 business group" means a group of persons related through
23 common ownership whose business activities are integrated
24 with, dependent upon and contribute to each other. The
25 group will not include those members whose business
26 activity outside the United States is 80% or more of any
27 such member's total business activity; for purposes of
28 this paragraph and clause (a) (3) (B) (ii) of Section
29 304, business activity within the United States shall be
30 measured by means of the factors ordinarily applicable
31 under subsections (a), (b), (c), and (d), or (h) of
32 Section 304 except that, in the case of members
33 ordinarily required to apportion business income by means
34 of the 3 factor formula of property, payroll and sales
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1 specified in subsection (a) of Section 304, including the
2 formula as weighted in subsection (h) of Section 304,
3 such members shall not use the sales factor in the
4 computation and the results of the property and payroll
5 factor computations of subsection (a) of Section 304
6 shall be divided by 2 (by one if either the property or
7 payroll factor has a denominator of zero). The
8 computation required by the preceding sentence shall, in
9 each case, involve the division of the member's property,
10 payroll, or revenue miles in the United States, insurance
11 premiums on property or risk in the United States, or
12 financial organization business income from sources
13 within the United States, as the case may be, by the
14 respective worldwide figures for such items. Common
15 ownership in the case of corporations is the direct or
16 indirect control or ownership of more than 50% of the
17 outstanding voting stock of the persons carrying on
18 unitary business activity. Unitary business activity can
19 ordinarily be illustrated where the activities of the
20 members are: (1) in the same general line (such as
21 manufacturing, wholesaling, retailing of tangible
22 personal property, insurance, transportation or finance);
23 or (2) are steps in a vertically structured enterprise or
24 process (such as the steps involved in the production of
25 natural resources, which might include exploration,
26 mining, refining, and marketing); and, in either
27 instance, the members are functionally integrated through
28 the exercise of strong centralized management (where, for
29 example, authority over such matters as purchasing,
30 financing, tax compliance, product line, personnel,
31 marketing and capital investment is not left to each
32 member). In no event, however, will any unitary business
33 group include members which are ordinarily required to
34 apportion business income under different subsections of
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1 Section 304 except that for tax years ending on or after
2 December 31, 1987 this prohibition shall not apply to a
3 unitary business group composed of one or more taxpayers
4 all of which apportion business income pursuant to
5 subsection (b) of Section 304, or all of which apportion
6 business income pursuant to subsection (d) of Section
7 304, and a holding company of such single-factor
8 taxpayers (see definition of "financial organization" for
9 rule regarding holding companies of financial
10 organizations). If a unitary business group would, but
11 for the preceding sentence, include members that are
12 ordinarily required to apportion business income under
13 different subsections of Section 304, then for each
14 subsection of Section 304 for which there are two or more
15 members, there shall be a separate unitary business group
16 composed of such members. For purposes of the preceding
17 two sentences, a member is "ordinarily required to
18 apportion business income" under a particular subsection
19 of Section 304 if it would be required to use the
20 apportionment method prescribed by such subsection except
21 for the fact that it derives business income solely from
22 Illinois. If the unitary business group members'
23 accounting periods differ, the common parent's accounting
24 period or, if there is no common parent, the accounting
25 period of the member that is expected to have, on a
26 recurring basis, the greatest Illinois income tax
27 liability must be used to determine whether to use the
28 apportionment method provided in subsection (a) or
29 subsection (h) of Section 304. The prohibition against
30 membership in a unitary business group for taxpayers
31 ordinarily required to apportion income under different
32 subsections of Section 304 does not apply to taxpayers
33 required to apportion income under subsection (a) and
34 subsection (h) of Section 304. The provisions of this
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1 amendatory Act of 1998 apply to tax years ending on or
2 after December 31, 1998.
3 (28) Subchapter S corporation. The term
4 "Subchapter S corporation" means a corporation for which
5 there is in effect an election under Section 1362 of the
6 Internal Revenue Code, or for which there is a federal
7 election to opt out of the provisions of the Subchapter S
8 Revision Act of 1982 and have applied instead the prior
9 federal Subchapter S rules as in effect on July 1, 1982.
10 (b) Other definitions.
11 (1) Words denoting number, gender, and so forth,
12 when used in this Act, where not otherwise distinctly
13 expressed or manifestly incompatible with the intent
14 thereof:
15 (A) Words importing the singular include and
16 apply to several persons, parties or things;
17 (B) Words importing the plural include the
18 singular; and
19 (C) Words importing the masculine gender
20 include the feminine as well.
21 (2) "Company" or "association" as including
22 successors and assigns. The word "company" or
23 "association", when used in reference to a corporation,
24 shall be deemed to embrace the words "successors and
25 assigns of such company or association", and in like
26 manner as if these last-named words, or words of similar
27 import, were expressed.
28 (3) Other terms. Any term used in any Section of
29 this Act with respect to the application of, or in
30 connection with, the provisions of any other Section of
31 this Act shall have the same meaning as in such other
32 Section.
33 (Source: P.A. 88-480; 89-399, eff. 8-20-95; 89-711, eff.
34 2-14-97.)
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1 Section 99. Effective date. This Act takes effect upon
2 becoming law.".