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90_HB2403
35 ILCS 5/201 from Ch. 120, par. 2-201
35 ILCS 5/202.5 new
35 ILCS 5/901 from Ch. 120, par. 9-901
Amends the Illinois Income Tax Act to decrease the
individual rate from 3% to 2.75% and to decrease the
corporate rate from 4.8% to 4.4% beginning January 1, 1998.
Effective January 1, 1998.
LRB9007722KDks
LRB9007722KDks
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Sections 201 and 901 and adding Section 202.5.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Sections 201 and 901 and adding Sections 202.5 as
7 follows:
8 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
9 Sec. 201. Tax Imposed.
10 (a) In general. A tax measured by net income is hereby
11 imposed on every individual, corporation, trust and estate
12 for each taxable year ending after July 31, 1969 on the
13 privilege of earning or receiving income in or as a resident
14 of this State. Such tax shall be in addition to all other
15 occupation or privilege taxes imposed by this State or by any
16 municipal corporation or political subdivision thereof.
17 (b) Rates. The tax imposed by subsection (a) of this
18 Section shall be determined as follows:
19 (1) In the case of an individual, trust or estate,
20 for taxable years ending prior to July 1, 1989, an amount
21 equal to 2 1/2% of the taxpayer's net income for the
22 taxable year.
23 (2) In the case of an individual, trust or estate,
24 for taxable years beginning prior to July 1, 1989 and
25 ending after June 30, 1989, an amount equal to the sum of
26 (i) 2 1/2% of the taxpayer's net income for the period
27 prior to July 1, 1989, as calculated under Section 202.3,
28 and (ii) 3% of the taxpayer's net income for the period
29 after June 30, 1989, as calculated under Section 202.3.
30 (3) In the case of an individual, trust or estate,
31 for taxable years beginning after June 30, 1989, and
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1 ending prior to January 1, 1998, an amount equal to 3% of
2 the taxpayer's net income for the taxable year.
3 (4) In the case of an individual, trust or estate,
4 for taxable years beginning prior to January 1, 1998, and
5 ending after December 31, 1997, an amount equal to the
6 sum of (i) 3% of the taxpayer's net income for the period
7 prior to January 1, 1998, as calculated under Section
8 202.5, and (ii) 2.75% of the taxpayer's net income for
9 the period after December 31, 1997, as calculated under
10 Section 202.5 (Blank).
11 (5) In the case of an individual, trust or estate,
12 for taxable years beginning after December 31, 1997, an
13 amount equal to 2.75% of the taxpayer's net income for
14 the taxable year (Blank).
15 (6) In the case of a corporation, for taxable years
16 ending prior to July 1, 1989, an amount equal to 4% of
17 the taxpayer's net income for the taxable year.
18 (7) In the case of a corporation, for taxable years
19 beginning prior to July 1, 1989 and ending after June 30,
20 1989, an amount equal to the sum of (i) 4% of the
21 taxpayer's net income for the period prior to July 1,
22 1989, as calculated under Section 202.3, and (ii) 4.8% of
23 the taxpayer's net income for the period after June 30,
24 1989, as calculated under Section 202.3.
25 (8) In the case of a corporation, for taxable years
26 beginning after June 30, 1989, and ending prior to
27 January 1, 1998, an amount equal to 4.8% of the
28 taxpayer's net income for the taxable year.
29 (9) In the case of a corporation, for taxable years
30 beginning prior to January 1, 1998, and ending after
31 December 31, 1997, an amount equal to the sum of (i) 4.8%
32 of the taxpayer's net income for the period prior to
33 January 1, 1998, as calculated under Section 202.5, and
34 (ii) 4.4% of the taxpayer's net income for the period
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1 after December 31, 1997, as calculated under Section
2 202.5.
3 (10) In case of a corporation, for taxable years
4 beginning after December 31, 1997, an amount equal to
5 4.4% of the taxpayer's net income for the taxable year.
6 (c) Beginning on July 1, 1979 and thereafter, in
7 addition to such income tax, there is also hereby imposed the
8 Personal Property Tax Replacement Income Tax measured by net
9 income on every corporation (including Subchapter S
10 corporations), partnership and trust, for each taxable year
11 ending after June 30, 1979. Such taxes are imposed on the
12 privilege of earning or receiving income in or as a resident
13 of this State. The Personal Property Tax Replacement Income
14 Tax shall be in addition to the income tax imposed by
15 subsections (a) and (b) of this Section and in addition to
16 all other occupation or privilege taxes imposed by this State
17 or by any municipal corporation or political subdivision
18 thereof.
19 (d) Additional Personal Property Tax Replacement Income
20 Tax Rates. The personal property tax replacement income tax
21 imposed by this subsection and subsection (c) of this Section
22 in the case of a corporation, other than a Subchapter S
23 corporation, shall be an additional amount equal to 2.85% of
24 such taxpayer's net income for the taxable year, except that
25 beginning on January 1, 1981, and thereafter, the rate of
26 2.85% specified in this subsection shall be reduced to 2.5%,
27 and in the case of a partnership, trust or a Subchapter S
28 corporation shall be an additional amount equal to 1.5% of
29 such taxpayer's net income for the taxable year.
30 (e) Investment credit. A taxpayer shall be allowed a
31 credit against the Personal Property Tax Replacement Income
32 Tax for investment in qualified property.
33 (1) A taxpayer shall be allowed a credit equal to
34 .5% of the basis of qualified property placed in service
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1 during the taxable year, provided such property is placed
2 in service on or after July 1, 1984. There shall be
3 allowed an additional credit equal to .5% of the basis of
4 qualified property placed in service during the taxable
5 year, provided such property is placed in service on or
6 after July 1, 1986, and the taxpayer's base employment
7 within Illinois has increased by 1% or more over the
8 preceding year as determined by the taxpayer's employment
9 records filed with the Illinois Department of Employment
10 Security. Taxpayers who are new to Illinois shall be
11 deemed to have met the 1% growth in base employment for
12 the first year in which they file employment records with
13 the Illinois Department of Employment Security. The
14 provisions added to this Section by Public Act 85-1200
15 (and restored by Public Act 87-895) shall be construed as
16 declaratory of existing law and not as a new enactment.
17 If, in any year, the increase in base employment within
18 Illinois over the preceding year is less than 1%, the
19 additional credit shall be limited to that percentage
20 times a fraction, the numerator of which is .5% and the
21 denominator of which is 1%, but shall not exceed .5%.
22 The investment credit shall not be allowed to the extent
23 that it would reduce a taxpayer's liability in any tax
24 year below zero, nor may any credit for qualified
25 property be allowed for any year other than the year in
26 which the property was placed in service in Illinois. For
27 tax years ending on or after December 31, 1987, and on or
28 before December 31, 1988, the credit shall be allowed for
29 the tax year in which the property is placed in service,
30 or, if the amount of the credit exceeds the tax liability
31 for that year, whether it exceeds the original liability
32 or the liability as later amended, such excess may be
33 carried forward and applied to the tax liability of the 5
34 taxable years following the excess credit years if the
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1 taxpayer (i) makes investments which cause the creation
2 of a minimum of 2,000 full-time equivalent jobs in
3 Illinois, (ii) is located in an enterprise zone
4 established pursuant to the Illinois Enterprise Zone Act
5 and (iii) is certified by the Department of Commerce and
6 Community Affairs as complying with the requirements
7 specified in clause (i) and (ii) by July 1, 1986. The
8 Department of Commerce and Community Affairs shall notify
9 the Department of Revenue of all such certifications
10 immediately. For tax years ending after December 31,
11 1988, the credit shall be allowed for the tax year in
12 which the property is placed in service, or, if the
13 amount of the credit exceeds the tax liability for that
14 year, whether it exceeds the original liability or the
15 liability as later amended, such excess may be carried
16 forward and applied to the tax liability of the 5 taxable
17 years following the excess credit years. The credit shall
18 be applied to the earliest year for which there is a
19 liability. If there is credit from more than one tax year
20 that is available to offset a liability, earlier credit
21 shall be applied first.
22 (2) The term "qualified property" means property
23 which:
24 (A) is tangible, whether new or used,
25 including buildings and structural components of
26 buildings and signs that are real property, but not
27 including land or improvements to real property that
28 are not a structural component of a building such as
29 landscaping, sewer lines, local access roads,
30 fencing, parking lots, and other appurtenances;
31 (B) is depreciable pursuant to Section 167 of
32 the Internal Revenue Code, except that "3-year
33 property" as defined in Section 168(c)(2)(A) of that
34 Code is not eligible for the credit provided by this
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1 subsection (e);
2 (C) is acquired by purchase as defined in
3 Section 179(d) of the Internal Revenue Code;
4 (D) is used in Illinois by a taxpayer who is
5 primarily engaged in manufacturing, or in mining
6 coal or fluorite, or in retailing; and
7 (E) has not previously been used in Illinois
8 in such a manner and by such a person as would
9 qualify for the credit provided by this subsection
10 (e) or subsection (f).
11 (3) For purposes of this subsection (e),
12 "manufacturing" means the material staging and production
13 of tangible personal property by procedures commonly
14 regarded as manufacturing, processing, fabrication, or
15 assembling which changes some existing material into new
16 shapes, new qualities, or new combinations. For purposes
17 of this subsection (e) the term "mining" shall have the
18 same meaning as the term "mining" in Section 613(c) of
19 the Internal Revenue Code. For purposes of this
20 subsection (e), the term "retailing" means the sale of
21 tangible personal property or services rendered in
22 conjunction with the sale of tangible consumer goods or
23 commodities.
24 (4) The basis of qualified property shall be the
25 basis used to compute the depreciation deduction for
26 federal income tax purposes.
27 (5) If the basis of the property for federal income
28 tax depreciation purposes is increased after it has been
29 placed in service in Illinois by the taxpayer, the amount
30 of such increase shall be deemed property placed in
31 service on the date of such increase in basis.
32 (6) The term "placed in service" shall have the
33 same meaning as under Section 46 of the Internal Revenue
34 Code.
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1 (7) If during any taxable year, any property ceases
2 to be qualified property in the hands of the taxpayer
3 within 48 months after being placed in service, or the
4 situs of any qualified property is moved outside Illinois
5 within 48 months after being placed in service, the
6 Personal Property Tax Replacement Income Tax for such
7 taxable year shall be increased. Such increase shall be
8 determined by (i) recomputing the investment credit which
9 would have been allowed for the year in which credit for
10 such property was originally allowed by eliminating such
11 property from such computation and, (ii) subtracting such
12 recomputed credit from the amount of credit previously
13 allowed. For the purposes of this paragraph (7), a
14 reduction of the basis of qualified property resulting
15 from a redetermination of the purchase price shall be
16 deemed a disposition of qualified property to the extent
17 of such reduction.
18 (8) Unless the investment credit is extended by
19 law, the basis of qualified property shall not include
20 costs incurred after December 31, 2003, except for costs
21 incurred pursuant to a binding contract entered into on
22 or before December 31, 2003.
23 (9) Each taxable year, a partnership may elect to
24 pass through to its partners the credits to which the
25 partnership is entitled under this subsection (e) for the
26 taxable year. A partner may use the credit allocated to
27 him or her under this paragraph only against the tax
28 imposed in subsections (c) and (d) of this Section. If
29 the partnership makes that election, those credits shall
30 be allocated among the partners in the partnership in
31 accordance with the rules set forth in Section 704(b) of
32 the Internal Revenue Code, and the rules promulgated
33 under that Section, and the allocated amount of the
34 credits shall be allowed to the partners for that taxable
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1 year. The partnership shall make this election on its
2 Personal Property Tax Replacement Income Tax return for
3 that taxable year. The election to pass through the
4 credits shall be irrevocable.
5 (f) Investment credit; Enterprise Zone.
6 (1) A taxpayer shall be allowed a credit against
7 the tax imposed by subsections (a) and (b) of this
8 Section for investment in qualified property which is
9 placed in service in an Enterprise Zone created pursuant
10 to the Illinois Enterprise Zone Act. For partners and for
11 shareholders of Subchapter S corporations, there shall be
12 allowed a credit under this subsection (f) to be
13 determined in accordance with the determination of income
14 and distributive share of income under Sections 702 and
15 704 and Subchapter S of the Internal Revenue Code. The
16 credit shall be .5% of the basis for such property. The
17 credit shall be available only in the taxable year in
18 which the property is placed in service in the Enterprise
19 Zone and shall not be allowed to the extent that it would
20 reduce a taxpayer's liability for the tax imposed by
21 subsections (a) and (b) of this Section to below zero.
22 For tax years ending on or after December 31, 1985, the
23 credit shall be allowed for the tax year in which the
24 property is placed in service, or, if the amount of the
25 credit exceeds the tax liability for that year, whether
26 it exceeds the original liability or the liability as
27 later amended, such excess may be carried forward and
28 applied to the tax liability of the 5 taxable years
29 following the excess credit year. The credit shall be
30 applied to the earliest year for which there is a
31 liability. If there is credit from more than one tax year
32 that is available to offset a liability, the credit
33 accruing first in time shall be applied first.
34 (2) The term qualified property means property
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1 which:
2 (A) is tangible, whether new or used,
3 including buildings and structural components of
4 buildings;
5 (B) is depreciable pursuant to Section 167 of
6 the Internal Revenue Code, except that "3-year
7 property" as defined in Section 168(c)(2)(A) of that
8 Code is not eligible for the credit provided by this
9 subsection (f);
10 (C) is acquired by purchase as defined in
11 Section 179(d) of the Internal Revenue Code;
12 (D) is used in the Enterprise Zone by the
13 taxpayer; and
14 (E) has not been previously used in Illinois
15 in such a manner and by such a person as would
16 qualify for the credit provided by this subsection
17 (f) or subsection (e).
18 (3) The basis of qualified property shall be the
19 basis used to compute the depreciation deduction for
20 federal income tax purposes.
21 (4) If the basis of the property for federal income
22 tax depreciation purposes is increased after it has been
23 placed in service in the Enterprise Zone by the taxpayer,
24 the amount of such increase shall be deemed property
25 placed in service on the date of such increase in basis.
26 (5) The term "placed in service" shall have the
27 same meaning as under Section 46 of the Internal Revenue
28 Code.
29 (6) If during any taxable year, any property ceases
30 to be qualified property in the hands of the taxpayer
31 within 48 months after being placed in service, or the
32 situs of any qualified property is moved outside the
33 Enterprise Zone within 48 months after being placed in
34 service, the tax imposed under subsections (a) and (b) of
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1 this Section for such taxable year shall be increased.
2 Such increase shall be determined by (i) recomputing the
3 investment credit which would have been allowed for the
4 year in which credit for such property was originally
5 allowed by eliminating such property from such
6 computation, and (ii) subtracting such recomputed credit
7 from the amount of credit previously allowed. For the
8 purposes of this paragraph (6), a reduction of the basis
9 of qualified property resulting from a redetermination of
10 the purchase price shall be deemed a disposition of
11 qualified property to the extent of such reduction.
12 (g) Jobs Tax Credit; Enterprise Zone and Foreign
13 Trade Zone or Sub-Zone.
14 (1) A taxpayer conducting a trade or business in an
15 enterprise zone or a High Impact Business designated by
16 the Department of Commerce and Community Affairs
17 conducting a trade or business in a federally designated
18 Foreign Trade Zone or Sub-Zone shall be allowed a credit
19 against the tax imposed by subsections (a) and (b) of
20 this Section in the amount of $500 per eligible employee
21 hired to work in the zone during the taxable year.
22 (2) To qualify for the credit:
23 (A) the taxpayer must hire 5 or more eligible
24 employees to work in an enterprise zone or federally
25 designated Foreign Trade Zone or Sub-Zone during the
26 taxable year;
27 (B) the taxpayer's total employment within the
28 enterprise zone or federally designated Foreign
29 Trade Zone or Sub-Zone must increase by 5 or more
30 full-time employees beyond the total employed in
31 that zone at the end of the previous tax year for
32 which a jobs tax credit under this Section was
33 taken, or beyond the total employed by the taxpayer
34 as of December 31, 1985, whichever is later; and
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1 (C) the eligible employees must be employed
2 180 consecutive days in order to be deemed hired for
3 purposes of this subsection.
4 (3) An "eligible employee" means an employee who
5 is:
6 (A) Certified by the Department of Commerce
7 and Community Affairs as "eligible for services"
8 pursuant to regulations promulgated in accordance
9 with Title II of the Job Training Partnership Act,
10 Training Services for the Disadvantaged or Title III
11 of the Job Training Partnership Act, Employment and
12 Training Assistance for Dislocated Workers Program.
13 (B) Hired after the enterprise zone or
14 federally designated Foreign Trade Zone or Sub-Zone
15 was designated or the trade or business was located
16 in that zone, whichever is later.
17 (C) Employed in the enterprise zone or Foreign
18 Trade Zone or Sub-Zone. An employee is employed in
19 an enterprise zone or federally designated Foreign
20 Trade Zone or Sub-Zone if his services are rendered
21 there or it is the base of operations for the
22 services performed.
23 (D) A full-time employee working 30 or more
24 hours per week.
25 (4) For tax years ending on or after December 31,
26 1985 and prior to December 31, 1988, the credit shall be
27 allowed for the tax year in which the eligible employees
28 are hired. For tax years ending on or after December 31,
29 1988, the credit shall be allowed for the tax year
30 immediately following the tax year in which the eligible
31 employees are hired. If the amount of the credit exceeds
32 the tax liability for that year, whether it exceeds the
33 original liability or the liability as later amended,
34 such excess may be carried forward and applied to the tax
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1 liability of the 5 taxable years following the excess
2 credit year. The credit shall be applied to the earliest
3 year for which there is a liability. If there is credit
4 from more than one tax year that is available to offset a
5 liability, earlier credit shall be applied first.
6 (5) The Department of Revenue shall promulgate such
7 rules and regulations as may be deemed necessary to carry
8 out the purposes of this subsection (g).
9 (6) The credit shall be available for eligible
10 employees hired on or after January 1, 1986.
11 (h) Investment credit; High Impact Business.
12 (1) Subject to subsection (b) of Section 5.5 of the
13 Illinois Enterprise Zone Act, a taxpayer shall be allowed
14 a credit against the tax imposed by subsections (a) and
15 (b) of this Section for investment in qualified property
16 which is placed in service by a Department of Commerce
17 and Community Affairs designated High Impact Business.
18 The credit shall be .5% of the basis for such property.
19 The credit shall not be available until the minimum
20 investments in qualified property set forth in Section
21 5.5 of the Illinois Enterprise Zone Act have been
22 satisfied and shall not be allowed to the extent that it
23 would reduce a taxpayer's liability for the tax imposed
24 by subsections (a) and (b) of this Section to below zero.
25 The credit applicable to such minimum investments shall
26 be taken in the taxable year in which such minimum
27 investments have been completed. The credit for
28 additional investments beyond the minimum investment by a
29 designated high impact business shall be available only
30 in the taxable year in which the property is placed in
31 service and shall not be allowed to the extent that it
32 would reduce a taxpayer's liability for the tax imposed
33 by subsections (a) and (b) of this Section to below zero.
34 For tax years ending on or after December 31, 1987, the
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1 credit shall be allowed for the tax year in which the
2 property is placed in service, or, if the amount of the
3 credit exceeds the tax liability for that year, whether
4 it exceeds the original liability or the liability as
5 later amended, such excess may be carried forward and
6 applied to the tax liability of the 5 taxable years
7 following the excess credit year. The credit shall be
8 applied to the earliest year for which there is a
9 liability. If there is credit from more than one tax
10 year that is available to offset a liability, the credit
11 accruing first in time shall be applied first.
12 Changes made in this subdivision (h)(1) by Public
13 Act 88-670 restore changes made by Public Act 85-1182 and
14 reflect existing law.
15 (2) The term qualified property means property
16 which:
17 (A) is tangible, whether new or used,
18 including buildings and structural components of
19 buildings;
20 (B) is depreciable pursuant to Section 167 of
21 the Internal Revenue Code, except that "3-year
22 property" as defined in Section 168(c)(2)(A) of that
23 Code is not eligible for the credit provided by this
24 subsection (h);
25 (C) is acquired by purchase as defined in
26 Section 179(d) of the Internal Revenue Code; and
27 (D) is not eligible for the Enterprise Zone
28 Investment Credit provided by subsection (f) of this
29 Section.
30 (3) The basis of qualified property shall be the
31 basis used to compute the depreciation deduction for
32 federal income tax purposes.
33 (4) If the basis of the property for federal income
34 tax depreciation purposes is increased after it has been
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1 placed in service in a federally designated Foreign Trade
2 Zone or Sub-Zone located in Illinois by the taxpayer, the
3 amount of such increase shall be deemed property placed
4 in service on the date of such increase in basis.
5 (5) The term "placed in service" shall have the
6 same meaning as under Section 46 of the Internal Revenue
7 Code.
8 (6) If during any taxable year ending on or before
9 December 31, 1996, any property ceases to be qualified
10 property in the hands of the taxpayer within 48 months
11 after being placed in service, or the situs of any
12 qualified property is moved outside Illinois within 48
13 months after being placed in service, the tax imposed
14 under subsections (a) and (b) of this Section for such
15 taxable year shall be increased. Such increase shall be
16 determined by (i) recomputing the investment credit which
17 would have been allowed for the year in which credit for
18 such property was originally allowed by eliminating such
19 property from such computation, and (ii) subtracting such
20 recomputed credit from the amount of credit previously
21 allowed. For the purposes of this paragraph (6), a
22 reduction of the basis of qualified property resulting
23 from a redetermination of the purchase price shall be
24 deemed a disposition of qualified property to the extent
25 of such reduction.
26 (7) Beginning with tax years ending after December
27 31, 1996, if a taxpayer qualifies for the credit under
28 this subsection (h) and thereby is granted a tax
29 abatement and the taxpayer relocates its entire facility
30 in violation of the explicit terms and length of the
31 contract under Section 18-183 of the Property Tax Code,
32 the tax imposed under subsections (a) and (b) of this
33 Section shall be increased for the taxable year in which
34 the taxpayer relocated its facility by an amount equal to
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1 the amount of credit received by the taxpayer under this
2 subsection (h).
3 (i) A credit shall be allowed against the tax imposed by
4 subsections (a) and (b) of this Section for the tax imposed
5 by subsections (c) and (d) of this Section. This credit
6 shall be computed by multiplying the tax imposed by
7 subsections (c) and (d) of this Section by a fraction, the
8 numerator of which is base income allocable to Illinois and
9 the denominator of which is Illinois base income, and further
10 multiplying the product by the tax rate imposed by
11 subsections (a) and (b) of this Section.
12 Any credit earned on or after December 31, 1986 under
13 this subsection which is unused in the year the credit is
14 computed because it exceeds the tax liability imposed by
15 subsections (a) and (b) for that year (whether it exceeds the
16 original liability or the liability as later amended) may be
17 carried forward and applied to the tax liability imposed by
18 subsections (a) and (b) of the 5 taxable years following the
19 excess credit year. This credit shall be applied first to
20 the earliest year for which there is a liability. If there
21 is a credit under this subsection from more than one tax year
22 that is available to offset a liability the earliest credit
23 arising under this subsection shall be applied first.
24 If, during any taxable year ending on or after December
25 31, 1986, the tax imposed by subsections (c) and (d) of this
26 Section for which a taxpayer has claimed a credit under this
27 subsection (i) is reduced, the amount of credit for such tax
28 shall also be reduced. Such reduction shall be determined by
29 recomputing the credit to take into account the reduced tax
30 imposed by subsection (c) and (d). If any portion of the
31 reduced amount of credit has been carried to a different
32 taxable year, an amended return shall be filed for such
33 taxable year to reduce the amount of credit claimed.
34 (j) Training expense credit. Beginning with tax years
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1 ending on or after December 31, 1986, a taxpayer shall be
2 allowed a credit against the tax imposed by subsection (a)
3 and (b) under this Section for all amounts paid or accrued,
4 on behalf of all persons employed by the taxpayer in Illinois
5 or Illinois residents employed outside of Illinois by a
6 taxpayer, for educational or vocational training in
7 semi-technical or technical fields or semi-skilled or skilled
8 fields, which were deducted from gross income in the
9 computation of taxable income. The credit against the tax
10 imposed by subsections (a) and (b) shall be 1.6% of such
11 training expenses. For partners and for shareholders of
12 subchapter S corporations, there shall be allowed a credit
13 under this subsection (j) to be determined in accordance with
14 the determination of income and distributive share of income
15 under Sections 702 and 704 and subchapter S of the Internal
16 Revenue Code.
17 Any credit allowed under this subsection which is unused
18 in the year the credit is earned may be carried forward to
19 each of the 5 taxable years following the year for which the
20 credit is first computed until it is used. This credit shall
21 be applied first to the earliest year for which there is a
22 liability. If there is a credit under this subsection from
23 more than one tax year that is available to offset a
24 liability the earliest credit arising under this subsection
25 shall be applied first.
26 (k) Research and development credit.
27 Beginning with tax years ending after July 1, 1990, a
28 taxpayer shall be allowed a credit against the tax imposed by
29 subsections (a) and (b) of this Section for increasing
30 research activities in this State. The credit allowed
31 against the tax imposed by subsections (a) and (b) shall be
32 equal to 6 1/2% of the qualifying expenditures for increasing
33 research activities in this State.
34 For purposes of this subsection, "qualifying
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1 expenditures" means the qualifying expenditures as defined
2 for the federal credit for increasing research activities
3 which would be allowable under Section 41 of the Internal
4 Revenue Code and which are conducted in this State,
5 "qualifying expenditures for increasing research activities
6 in this State" means the excess of qualifying expenditures
7 for the taxable year in which incurred over qualifying
8 expenditures for the base period, "qualifying expenditures
9 for the base period" means the average of the qualifying
10 expenditures for each year in the base period, and "base
11 period" means the 3 taxable years immediately preceding the
12 taxable year for which the determination is being made.
13 Any credit in excess of the tax liability for the taxable
14 year may be carried forward. A taxpayer may elect to have the
15 unused credit shown on its final completed return carried
16 over as a credit against the tax liability for the following
17 5 taxable years or until it has been fully used, whichever
18 occurs first.
19 If an unused credit is carried forward to a given year
20 from 2 or more earlier years, that credit arising in the
21 earliest year will be applied first against the tax liability
22 for the given year. If a tax liability for the given year
23 still remains, the credit from the next earliest year will
24 then be applied, and so on, until all credits have been used
25 or no tax liability for the given year remains. Any
26 remaining unused credit or credits then will be carried
27 forward to the next following year in which a tax liability
28 is incurred, except that no credit can be carried forward to
29 a year which is more than 5 years after the year in which the
30 expense for which the credit is given was incurred.
31 Unless extended by law, the credit shall not include
32 costs incurred after December 31, 1999, except for costs
33 incurred pursuant to a binding contract entered into on or
34 before December 31, 1999.
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1 (l) Environmental Remediation Tax Credit.
2 (i) For tax years ending after December 31, 1997
3 and on or before December 31, 2001, a taxpayer shall be
4 allowed a credit against the tax imposed by subsections
5 (a) and (b) of this Section for certain amounts paid for
6 unreimbursed eligible remediation costs, as specified in
7 this subsection. For purposes of this Section,
8 "unreimbursed eligible remediation costs" means costs
9 approved by the Illinois Environmental Protection Agency
10 ("Agency") under Section 58.14 of the Environmental
11 Protection Act that were paid in performing environmental
12 remediation at a site for which a No Further Remediation
13 Letter was issued by the Agency and recorded under
14 Section 58.10 of the Environmental Protection Act, and
15 does not mean approved eligible remediation costs that
16 are at any time deducted under the provisions of the
17 Internal Revenue Code. The credit must be claimed for
18 the taxable year in which Agency approval of the eligible
19 remediation costs is granted. In no event shall
20 unreimbursed eligible remediation costs include any costs
21 taken into account in calculating an environmental
22 remediation credit granted against a tax imposed under
23 the provisions of the Internal Revenue Code. The credit
24 is not available to any taxpayer if the taxpayer or any
25 related party caused or contributed to, in any material
26 respect, a release of regulated substances on, in, or
27 under the site that was identified and addressed by the
28 remedial action pursuant to the Site Remediation Program
29 of the Environmental Protection Act. After the Pollution
30 Control Board rules are adopted pursuant to the Illinois
31 Administrative Procedure Act for the administration and
32 enforcement of Section 58.9 of the Environmental
33 Protection Act, determinations as to credit availability
34 for purposes of this Section shall be made consistent
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1 with those rules. For purposes of this Section,
2 "taxpayer" includes a person whose tax attributes the
3 taxpayer has succeeded to under Section 381 of the
4 Internal Revenue Code and "related party" includes the
5 persons disallowed a deduction for losses by paragraphs
6 (b), (c), and (f)(1) of Section 267 of the Internal
7 Revenue Code by virtue of being a related taxpayer, as
8 well as any of its partners. The credit allowed against
9 the tax imposed by subsections (a) and (b) shall be equal
10 to 25% of the unreimbursed eligible remediation costs in
11 excess of $100,000 per site, except that the $100,000
12 threshold shall not apply to any site contained in an
13 enterprise zone and located in a census tract that is
14 located in a minor civil division and place or county
15 that has been determined by the Department of Commerce
16 and Community Affairs to contain a majority of households
17 consisting of low and moderate income persons. The total
18 credit allowed shall not exceed $40,000 per year with a
19 maximum total of $150,000 per site. For partners and
20 shareholders of subchapter S corporations, there shall be
21 allowed a credit under this subsection to be determined
22 in accordance with the determination of income and
23 distributive share of income under Sections 702 and 704
24 of subchapter S of the Internal Revenue Code.
25 (ii) A credit allowed under this subsection that is
26 unused in the year the credit is earned may be carried
27 forward to each of the 5 taxable years following the year
28 for which the credit is first earned until it is used.
29 The term "unused credit" does not include any amounts of
30 unreimbursed eligible remediation costs in excess of the
31 maximum credit per site authorized under paragraph (i).
32 This credit shall be applied first to the earliest year
33 for which there is a liability. If there is a credit
34 under this subsection from more than one tax year that is
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1 available to offset a liability, the earliest credit
2 arising under this subsection shall be applied first. A
3 credit allowed under this subsection may be sold to a
4 buyer as part of a sale of all or part of the remediation
5 site for which the credit was granted. The purchaser of
6 a remediation site and the tax credit shall succeed to
7 the unused credit and remaining carry-forward period of
8 the seller. To perfect the transfer, the assignor shall
9 record the transfer in the chain of title for the site
10 and provide written notice to the Director of the
11 Illinois Department of Revenue of the assignor's intent
12 to sell the remediation site and the amount of the tax
13 credit to be transferred as a portion of the sale. In no
14 event may a credit be transferred to any taxpayer if the
15 taxpayer or a related party would not be eligible under
16 the provisions of subsection (i).
17 (iii) For purposes of this Section, the term "site"
18 shall have the same meaning as under Section 58.2 of the
19 Environmental Protection Act.
20 (Source: P.A. 89-235, eff. 8-4-95; 89-519, eff. 7-18-96;
21 89-591, eff. 8-1-96; 90-123, eff. 7-21-97; 90-458, eff.
22 8-17-97; revised 10-16-97.)
23 (35 ILCS 5/202.5 new)
24 Sec. 202.5. Net income attributable to the period prior
25 to January 1, 1998, and net income attributable to the period
26 after December 31, 1997.
27 (a) In general. With respect to the taxable year of a
28 taxpayer beginning prior to January 1, 1998, and ending after
29 December 31, 1997, net income for the period after December
30 31, 1997, shall be that amount which bears the same ratio to
31 the taxpayer's net income for the entire taxable year as the
32 number of days in such year after December 31, 1997, bears to
33 the total number of days in such year, and the net income for
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1 the period prior to January 1, 1998, shall be that amount
2 which bears the same ratio to the taxpayer's net income for
3 the entire taxable year as the number of days in such year
4 prior to January 1, 1998, bears to the total number of days
5 in such year.
6 (b) Election to attribute income and deduction items
7 specifically to the respective portions of a taxable year
8 prior to January 1, 1998, and after December 31, 1997. In the
9 case of a taxpayer with a taxable year beginning prior to
10 January 1, 1998, and ending after December 31, 1997, the
11 taxpayer may elect, in lieu of the procedure established in
12 subsection (a) of this Section, to determine net income on a
13 specific accounting basis for the 2 portions of his taxable
14 year:
15 (i) from the beginning of the taxable year through
16 December 31, 1997, and
17 (ii) from January 1, 1998, through the end of the
18 taxable year.
19 If the taxpayer elects specific accounting under this
20 subsection, there shall be taken into account in computing
21 base income for each of the 2 portions of the taxable year
22 only those items earned, received, paid, incurred or accrued
23 in each such period. The standard exemption provided by
24 Section 204 shall be divided between the respective periods
25 in amounts which bear the same ratio to the total exemption
26 allowable under Section 204 (determined without regard to
27 this Section) as the total number of days in each such period
28 bears to the total number of days in the taxable year. The
29 election provided by this subsection shall be made in such
30 manner and at such time as the Department may by forms or
31 regulations prescribe, but shall be made not later than the
32 due date (including any extensions thereof) for the filing of
33 the return for the taxable year, and shall be irrevocable.
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1 (35 ILCS 5/901) (from Ch. 120, par. 9-901)
2 Sec. 901. Collection Authority.
3 (a) In general.
4 The Department shall collect the taxes imposed by this
5 Act. The Department shall collect certified past due child
6 support amounts under Section 39b52 of the Civil
7 Administrative Code of Illinois. Except as provided in
8 subsections (c) and (e) of this Section, money collected
9 pursuant to subsections (a) and (b) of Section 201 of this
10 Act shall be paid into the General Revenue Fund in the State
11 treasury; money collected pursuant to subsections (c) and (d)
12 of Section 201 of this Act shall be paid into the Personal
13 Property Tax Replacement Fund, a special fund in the State
14 Treasury; and money collected under Section 39b52 of the
15 Civil Administrative Code of Illinois shall be paid into the
16 Child Support Enforcement Trust Fund, a special fund outside
17 the State Treasury.
18 (b) Local Governmental Distributive Fund.
19 Beginning August 1, 1969, and continuing through June 30,
20 1994, the Treasurer shall transfer each month from the
21 General Revenue Fund to a special fund in the State treasury,
22 to be known as the "Local Government Distributive Fund", an
23 amount equal to 1/12 of the net revenue realized from the tax
24 imposed by subsections (a) and (b) of Section 201 of this Act
25 during the preceding month. Beginning July 1, 1994, and
26 continuing through June 30, 1995, the Treasurer shall
27 transfer each month from the General Revenue Fund to the
28 Local Government Distributive Fund an amount equal to 1/11 of
29 the net revenue realized from the tax imposed by subsections
30 (a) and (b) of Section 201 of this Act during the preceding
31 month. Beginning July 1, 1995, the Treasurer shall transfer
32 each month from the General Revenue Fund to the Local
33 Government Distributive Fund an amount equal to 1/10 of the
34 net revenue realized from the tax imposed by subsections (a)
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1 and (b) of Section 201 of the Illinois Income Tax Act during
2 the preceding month. Net revenue realized for a month shall
3 be defined as the revenue from the tax imposed by subsections
4 (a) and (b) of Section 201 of this Act which is deposited in
5 the General Revenue Fund, the Educational Assistance Fund and
6 the Income Tax Surcharge Local Government Distributive Fund
7 during the month minus the amount paid out of the General
8 Revenue Fund in State warrants during that same month as
9 refunds to taxpayers for overpayment of liability under the
10 tax imposed by subsections (a) and (b) of Section 201 of this
11 Act.
12 (c) Deposits Into Income Tax Refund Fund.
13 (1) Beginning on January 1, 1989 and thereafter,
14 the Department shall deposit a percentage of the amounts
15 collected pursuant to subsections (a) and (b)(1), (2),
16 and (3), (4), and (5) of Section 201 of this Act into a
17 fund in the State treasury known as the Income Tax Refund
18 Fund. The Department shall deposit 6% of such amounts
19 during the period beginning January 1, 1989 and ending on
20 June 30, 1989. Beginning with State fiscal year 1990 and
21 for each fiscal year thereafter, the percentage deposited
22 into the Income Tax Refund Fund during a fiscal year
23 shall be the Annual Percentage. The Annual Percentage
24 shall be calculated as a fraction, the numerator of which
25 shall be the amount of refunds approved for payment by
26 the Department during the preceding fiscal year as a
27 result of overpayment of tax liability under subsections
28 (a) and (b)(1), (2), and (3), (4), and (5) of Section 201
29 of this Act plus the amount of such refunds remaining
30 approved but unpaid at the end of the preceding fiscal
31 year minus any surplus which remains on deposit in the
32 Income Tax Refund Fund at the end of the preceding year,
33 the denominator of which shall be the amounts which will
34 be collected pursuant to subsections (a) and (b)(1), (2),
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1 and (3), (4), and (5) of Section 201 of this Act during
2 the preceding fiscal year. The Director of Revenue shall
3 certify the Annual Percentage to the Comptroller on the
4 last business day of the fiscal year immediately
5 preceding the fiscal year for which is it to be
6 effective.
7 (2) Beginning on January 1, 1989 and thereafter,
8 the Department shall deposit a percentage of the amounts
9 collected pursuant to subsections (a) and (b)(6), (7),
10 and (8), (9), and 10, (c) and (d) of Section 201 of this
11 Act into a fund in the State treasury known as the Income
12 Tax Refund Fund. The Department shall deposit 18% of
13 such amounts during the period beginning January 1, 1989
14 and ending on June 30, 1989. Beginning with State fiscal
15 year 1990 and for each fiscal year thereafter, the
16 percentage deposited into the Income Tax Refund Fund
17 during a fiscal year shall be the Annual Percentage. The
18 Annual Percentage shall be calculated as a fraction, the
19 numerator of which shall be the amount of refunds
20 approved for payment by the Department during the
21 preceding fiscal year as a result of overpayment of tax
22 liability under subsections (a) and (b)(6), (7), and (8),
23 (9), and 10, (c) and (d) of Section 201 of this Act plus
24 the amount of such refunds remaining approved but unpaid
25 at the end of the preceding fiscal year, the denominator
26 of which shall be the amounts which will be collected
27 pursuant to subsections (a) and (b)(6), (7), and (8),
28 (9), and (10), (c) and (d) of Section 201 of this Act
29 during the preceding fiscal year. The Director of
30 Revenue shall certify the Annual Percentage to the
31 Comptroller on the last business day of the fiscal year
32 immediately preceding the fiscal year for which it is to
33 be effective.
34 (d) Expenditures from Income Tax Refund Fund.
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1 (1) Beginning January 1, 1989, money in the Income
2 Tax Refund Fund shall be expended exclusively for the
3 purpose of paying refunds resulting from overpayment of
4 tax liability under Section 201 of this Act and for
5 making transfers pursuant to this subsection (d).
6 (2) The Director shall order payment of refunds
7 resulting from overpayment of tax liability under Section
8 201 of this Act from the Income Tax Refund Fund only to
9 the extent that amounts collected pursuant to Section 201
10 of this Act and transfers pursuant to this subsection (d)
11 have been deposited and retained in the Fund.
12 (3) On the last business day of each fiscal year,
13 the Director shall order transferred and the State
14 Treasurer and State Comptroller shall transfer from the
15 Income Tax Refund Fund to the Personal Property Tax
16 Replacement Fund an amount, certified by the Director to
17 the Comptroller, equal to the excess of the amount
18 collected pursuant to subsections (c) and (d) of Section
19 201 of this Act deposited into the Income Tax Refund Fund
20 during the fiscal year over the amount of refunds
21 resulting from overpayment of tax liability under
22 subsections (c) and (d) of Section 201 of this Act paid
23 from the Income Tax Refund Fund during the fiscal year.
24 (4) On the last business day of each fiscal year,
25 the Director shall order transferred and the State
26 Treasurer and State Comptroller shall transfer from the
27 Personal Property Tax Replacement Fund to the Income Tax
28 Refund Fund an amount, certified by the Director to the
29 Comptroller, equal to the excess of the amount of refunds
30 resulting from overpayment of tax liability under
31 subsections (c) and (d) of Section 201 of this Act paid
32 from the Income Tax Refund Fund during the fiscal year
33 over the amount collected pursuant to subsections (c) and
34 (d) of Section 201 of this Act deposited into the Income
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1 Tax Refund Fund during the fiscal year.
2 (5) This Act shall constitute an irrevocable and
3 continuing appropriation from the Income Tax Refund Fund
4 for the purpose of paying refunds upon the order of the
5 Director in accordance with the provisions of this
6 Section.
7 (e) Deposits into the Education Assistance Fund and the
8 Income Tax Surcharge Local Government Distributive Fund.
9 On July 1, 1991, and thereafter, of the amounts collected
10 pursuant to subsections (a) and (b) of Section 201 of this
11 Act minus deposits into the Income Tax Refund Fund, the
12 Department shall deposit 7.3% into the Education Assistance
13 Fund in the State Treasury. Beginning July 1, 1991, and
14 continuing through January 31, 1993, of the amounts collected
15 pursuant to subsections (a) and (b) of Section 201 of the
16 Illinois Income Tax Act, minus deposits into the Income Tax
17 Refund Fund, the Department shall deposit 3.0% into the
18 Income Tax Surcharge Local Government Distributive Fund in
19 the State Treasury. Beginning February 1, 1993 and
20 continuing through June 30, 1993, of the amounts collected
21 pursuant to subsections (a) and (b) of Section 201 of the
22 Illinois Income Tax Act, minus deposits into the Income Tax
23 Refund Fund, the Department shall deposit 4.4% into the
24 Income Tax Surcharge Local Government Distributive Fund in
25 the State Treasury. Beginning July 1, 1993, and continuing
26 through June 30, 1994, of the amounts collected under
27 subsections (a) and (b) of Section 201 of this Act, minus
28 deposits into the Income Tax Refund Fund, the Department
29 shall deposit 1.475% into the Income Tax Surcharge Local
30 Government Distributive Fund in the State Treasury.
31 (Source: P.A. 88-89; 89-6, eff. 12-31-95.)
32 Section 99. Effective date. This Act takes effect
33 January 1, 1998.