State of Illinois
91st General Assembly
Legislation

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[ Introduced ][ Engrossed ][ Senate Amendment 001 ]

91_SB0110ham001

 










                                           LRB9101029PTpkam03

 1                    AMENDMENT TO SENATE BILL 110

 2        AMENDMENT NO.     .  Amend Senate Bill 110  by  replacing
 3    everything after the enacting clause with the following:

 4        "Section  5.   The  Illinois Income Tax Act is amended by
 5    changing Section 201 as follows:

 6        (35 ILCS 5/201) (from Ch. 120, par. 2-201)
 7        Sec. 201.  Tax Imposed.
 8        (a)  In general. A tax measured by net income  is  hereby
 9    imposed  on  every  individual, corporation, trust and estate
10    for each taxable year ending  after  July  31,  1969  on  the
11    privilege  of earning or receiving income in or as a resident
12    of this State. Such tax shall be in  addition  to  all  other
13    occupation or privilege taxes imposed by this State or by any
14    municipal corporation or political subdivision thereof.
15        (b)  Rates.  The  tax  imposed  by subsection (a) of this
16    Section shall be determined as follows:
17             (1)  In the case of an individual, trust or  estate,
18        for taxable years ending prior to July 1, 1989, an amount
19        equal  to  2  1/2%  of  the taxpayer's net income for the
20        taxable year.
21             (2)  In the case of an individual, trust or  estate,
22        for  taxable  years  beginning  prior to July 1, 1989 and
 
                            -2-            LRB9101029PTpkam03
 1        ending after June 30, 1989, an amount equal to the sum of
 2        (i) 2 1/2% of the taxpayer's net income  for  the  period
 3        prior to July 1, 1989, as calculated under Section 202.3,
 4        and  (ii)  3% of the taxpayer's net income for the period
 5        after June 30, 1989, as calculated under Section 202.3.
 6             (3)  In the case of an individual, trust or  estate,
 7        for  taxable  years  beginning  after  June  30, 1989, an
 8        amount equal to 3% of the taxpayer's net income  for  the
 9        taxable year.
10             (4)  (Blank).
11             (5)  (Blank).
12             (6)  In the case of a corporation, for taxable years
13        ending  prior  to  July 1, 1989, an amount equal to 4% of
14        the taxpayer's net income for the taxable year.
15             (7)  In the case of a corporation, for taxable years
16        beginning prior to July 1, 1989 and ending after June 30,
17        1989, an amount equal  to  the  sum  of  (i)  4%  of  the
18        taxpayer's  net  income  for  the period prior to July 1,
19        1989, as calculated under Section 202.3, and (ii) 4.8% of
20        the taxpayer's net income for the period after  June  30,
21        1989, as calculated under Section 202.3.
22             (8)  In the case of a corporation, for taxable years
23        beginning after June 30, 1989, an amount equal to 4.8% of
24        the taxpayer's net income for the taxable year.
25        (c)  Beginning   on  July  1,  1979  and  thereafter,  in
26    addition to such income tax, there is also hereby imposed the
27    Personal Property Tax Replacement Income Tax measured by  net
28    income   on   every   corporation   (including  Subchapter  S
29    corporations), partnership and trust, for each  taxable  year
30    ending  after  June  30, 1979.  Such taxes are imposed on the
31    privilege of earning or receiving income in or as a  resident
32    of  this State.  The Personal Property Tax Replacement Income
33    Tax shall be  in  addition  to  the  income  tax  imposed  by
34    subsections  (a)  and  (b) of this Section and in addition to
 
                            -3-            LRB9101029PTpkam03
 1    all other occupation or privilege taxes imposed by this State
 2    or by any  municipal  corporation  or  political  subdivision
 3    thereof.
 4        (d)  Additional  Personal Property Tax Replacement Income
 5    Tax Rates.  The personal property tax replacement income  tax
 6    imposed by this subsection and subsection (c) of this Section
 7    in  the  case  of  a  corporation,  other than a Subchapter S
 8    corporation, shall be an additional amount equal to 2.85%  of
 9    such  taxpayer's net income for the taxable year, except that
10    beginning on January 1, 1981, and  thereafter,  the  rate  of
11    2.85%  specified in this subsection shall be reduced to 2.5%,
12    and in the case of a partnership, trust  or  a  Subchapter  S
13    corporation  shall  be  an additional amount equal to 1.5% of
14    such taxpayer's net income for the taxable year.
15        (e)  Investment credit.  A taxpayer shall  be  allowed  a
16    credit  against  the Personal Property Tax Replacement Income
17    Tax for investment in qualified property.
18             (1)  A taxpayer shall be allowed a credit  equal  to
19        .5%  of the basis of qualified property placed in service
20        during the taxable year, provided such property is placed
21        in service on or after July  1,  1984.   There  shall  be
22        allowed an additional credit equal to .5% of the basis of
23        qualified  property  placed in service during the taxable
24        year, provided such property is placed in service  on  or
25        after  July  1,  1986, and the taxpayer's base employment
26        within Illinois has increased by  1%  or  more  over  the
27        preceding year as determined by the taxpayer's employment
28        records  filed with the Illinois Department of Employment
29        Security.  Taxpayers who are new  to  Illinois  shall  be
30        deemed  to  have met the 1% growth in base employment for
31        the first year in which they file employment records with
32        the Illinois  Department  of  Employment  Security.   The
33        provisions  added  to  this Section by Public Act 85-1200
34        (and restored by Public Act 87-895) shall be construed as
 
                            -4-            LRB9101029PTpkam03
 1        declaratory of existing law and not as a  new  enactment.
 2        If,  in  any year, the increase in base employment within
 3        Illinois over the preceding year is  less  than  1%,  the
 4        additional  credit  shall  be  limited to that percentage
 5        times a fraction, the numerator of which is .5%  and  the
 6        denominator  of  which  is  1%, but shall not exceed .5%.
 7        The investment credit shall not be allowed to the  extent
 8        that  it  would  reduce a taxpayer's liability in any tax
 9        year  below  zero,  nor  may  any  credit  for  qualified
10        property be allowed for any year other than the  year  in
11        which the property was placed in service in Illinois. For
12        tax years ending on or after December 31, 1987, and on or
13        before December 31, 1988, the credit shall be allowed for
14        the  tax year in which the property is placed in service,
15        or, if the amount of the credit exceeds the tax liability
16        for that year, whether it exceeds the original  liability
17        or  the  liability  as  later amended, such excess may be
18        carried forward and applied to the tax liability of the 5
19        taxable years following the excess credit  years  if  the
20        taxpayer  (i)  makes investments which cause the creation
21        of a  minimum  of  2,000  full-time  equivalent  jobs  in
22        Illinois,   (ii)   is   located  in  an  enterprise  zone
23        established pursuant to the Illinois Enterprise Zone  Act
24        and  (iii) is certified by the Department of Commerce and
25        Community Affairs  as  complying  with  the  requirements
26        specified  in  clause  (i) and (ii) by July 1, 1986.  The
27        Department of Commerce and Community Affairs shall notify
28        the Department of  Revenue  of  all  such  certifications
29        immediately.  For  tax  years  ending  after December 31,
30        1988, the credit shall be allowed for  the  tax  year  in
31        which  the  property  is  placed  in  service, or, if the
32        amount of the credit exceeds the tax liability  for  that
33        year,  whether  it  exceeds the original liability or the
34        liability as later amended, such excess  may  be  carried
 
                            -5-            LRB9101029PTpkam03
 1        forward and applied to the tax liability of the 5 taxable
 2        years following the excess credit years. The credit shall
 3        be  applied  to  the  earliest  year for which there is a
 4        liability. If there is credit from more than one tax year
 5        that is available to offset a liability,  earlier  credit
 6        shall be applied first.
 7             (2)  The  term  "qualified  property" means property
 8        which:
 9                  (A)  is  tangible,   whether   new   or   used,
10             including  buildings  and  structural  components of
11             buildings and signs that are real property, but  not
12             including land or improvements to real property that
13             are not a structural component of a building such as
14             landscaping,   sewer   lines,  local  access  roads,
15             fencing, parking lots, and other appurtenances;
16                  (B)  is depreciable pursuant to Section 167  of
17             the  Internal  Revenue  Code,  except  that  "3-year
18             property" as defined in Section 168(c)(2)(A) of that
19             Code is not eligible for the credit provided by this
20             subsection (e);
21                  (C)  is  acquired  by  purchase  as  defined in
22             Section 179(d) of the Internal Revenue Code;
23                  (D)  is used in Illinois by a taxpayer  who  is
24             primarily  engaged  in  manufacturing,  or in mining
25             coal or fluorite, or in retailing; and
26                  (E)  has not previously been used  in  Illinois
27             in  such  a  manner  and  by  such a person as would
28             qualify for the credit provided by  this  subsection
29             (e) or subsection (f).
30             (3)  For    purposes   of   this   subsection   (e),
31        "manufacturing" means the material staging and production
32        of tangible  personal  property  by  procedures  commonly
33        regarded  as  manufacturing,  processing, fabrication, or
34        assembling which changes some existing material into  new
 
                            -6-            LRB9101029PTpkam03
 1        shapes, new qualities, or new combinations.  For purposes
 2        of  this  subsection (e) the term "mining" shall have the
 3        same meaning as the term "mining" in  Section  613(c)  of
 4        the   Internal   Revenue  Code.   For  purposes  of  this
 5        subsection (e), the term "retailing" means  the  sale  of
 6        tangible   personal  property  or  services  rendered  in
 7        conjunction with the sale of tangible consumer  goods  or
 8        commodities.
 9             (4)  The  basis  of  qualified property shall be the
10        basis used to  compute  the  depreciation  deduction  for
11        federal income tax purposes.
12             (5)  If the basis of the property for federal income
13        tax  depreciation purposes is increased after it has been
14        placed in service in Illinois by the taxpayer, the amount
15        of such increase  shall  be  deemed  property  placed  in
16        service on the date of such increase in basis.
17             (6)  The  term  "placed  in  service" shall have the
18        same meaning as under Section 46 of the Internal  Revenue
19        Code.
20             (7)  If during any taxable year, any property ceases
21        to  be  qualified  property  in the hands of the taxpayer
22        within 48 months after being placed in  service,  or  the
23        situs of any qualified property is moved outside Illinois
24        within  48  months  after  being  placed  in service, the
25        Personal Property Tax Replacement  Income  Tax  for  such
26        taxable  year shall be increased.  Such increase shall be
27        determined by (i) recomputing the investment credit which
28        would have been allowed for the year in which credit  for
29        such  property was originally allowed by eliminating such
30        property from such computation and, (ii) subtracting such
31        recomputed credit from the amount  of  credit  previously
32        allowed.  For  the  purposes  of  this  paragraph  (7), a
33        reduction of the basis of  qualified  property  resulting
34        from  a  redetermination  of  the purchase price shall be
 
                            -7-            LRB9101029PTpkam03
 1        deemed a disposition of qualified property to the  extent
 2        of such reduction.
 3             (8)  Unless  the  investment  credit  is extended by
 4        law, the basis of qualified property  shall  not  include
 5        costs  incurred after December 31, 2003, except for costs
 6        incurred pursuant to a binding contract entered  into  on
 7        or before December 31, 2003.
 8             (9)  Each  taxable  year, a partnership may elect to
 9        pass through to its partners the  credits  to  which  the
10        partnership is entitled under this subsection (e) for the
11        taxable  year.  A partner may use the credit allocated to
12        him or her under this  paragraph  only  against  the  tax
13        imposed  in  subsections (c) and (d) of this Section.  If
14        the partnership makes that election, those credits  shall
15        be  allocated  among  the  partners in the partnership in
16        accordance with the rules set forth in Section 704(b)  of
17        the  Internal  Revenue  Code,  and  the rules promulgated
18        under that Section,  and  the  allocated  amount  of  the
19        credits shall be allowed to the partners for that taxable
20        year.   The  partnership  shall make this election on its
21        Personal Property Tax Replacement Income Tax  return  for
22        that  taxable  year.  The  election  to  pass through the
23        credits shall be irrevocable.
24        (f)  Investment credit; Enterprise Zone.
25             (1)  A taxpayer shall be allowed  a  credit  against
26        the  tax  imposed  by  subsections  (a)  and  (b) of this
27        Section for investment in  qualified  property  which  is
28        placed  in service in an Enterprise Zone created pursuant
29        to the Illinois Enterprise Zone Act. For partners and for
30        shareholders of Subchapter S corporations, there shall be
31        allowed  a  credit  under  this  subsection  (f)  to   be
32        determined in accordance with the determination of income
33        and  distributive  share of income under Sections 702 and
34        704 and Subchapter S of the Internal  Revenue  Code.  The
 
                            -8-            LRB9101029PTpkam03
 1        credit  shall be .5% of the basis for such property.  The
 2        credit shall be available only in  the  taxable  year  in
 3        which the property is placed in service in the Enterprise
 4        Zone and shall not be allowed to the extent that it would
 5        reduce  a  taxpayer's  liability  for  the tax imposed by
 6        subsections (a) and (b) of this Section  to  below  zero.
 7        For  tax  years ending on or after December 31, 1985, the
 8        credit shall be allowed for the tax  year  in  which  the
 9        property  is  placed in service, or, if the amount of the
10        credit exceeds the tax liability for that  year,  whether
11        it  exceeds  the  original  liability or the liability as
12        later amended, such excess may  be  carried  forward  and
13        applied  to  the  tax  liability  of  the 5 taxable years
14        following the excess credit year.  The  credit  shall  be
15        applied  to  the  earliest  year  for  which  there  is a
16        liability. If there is credit from more than one tax year
17        that is available  to  offset  a  liability,  the  credit
18        accruing first in time shall be applied first.
19             (2)  The  term  qualified  property  means  property
20        which:
21                  (A)  is   tangible,   whether   new   or  used,
22             including buildings  and  structural  components  of
23             buildings;
24                  (B)  is  depreciable pursuant to Section 167 of
25             the  Internal  Revenue  Code,  except  that  "3-year
26             property" as defined in Section 168(c)(2)(A) of that
27             Code is not eligible for the credit provided by this
28             subsection (f);
29                  (C)  is acquired  by  purchase  as  defined  in
30             Section 179(d) of the Internal Revenue Code;
31                  (D)  is  used  in  the  Enterprise  Zone by the
32             taxpayer; and
33                  (E)  has not been previously used  in  Illinois
34             in  such  a  manner  and  by  such a person as would
 
                            -9-            LRB9101029PTpkam03
 1             qualify for the credit provided by  this  subsection
 2             (f) or subsection (e).
 3             (3)  The  basis  of  qualified property shall be the
 4        basis used to  compute  the  depreciation  deduction  for
 5        federal income tax purposes.
 6             (4)  If the basis of the property for federal income
 7        tax  depreciation purposes is increased after it has been
 8        placed in service in the Enterprise Zone by the taxpayer,
 9        the amount of such  increase  shall  be  deemed  property
10        placed in service on the date of such increase in basis.
11             (5)  The  term  "placed  in  service" shall have the
12        same meaning as under Section 46 of the Internal  Revenue
13        Code.
14             (6)  If during any taxable year, any property ceases
15        to  be  qualified  property  in the hands of the taxpayer
16        within 48 months after being placed in  service,  or  the
17        situs  of  any  qualified  property  is moved outside the
18        Enterprise Zone within 48 months after  being  placed  in
19        service, the tax imposed under subsections (a) and (b) of
20        this  Section  for  such taxable year shall be increased.
21        Such increase shall be determined by (i) recomputing  the
22        investment  credit  which would have been allowed for the
23        year in which credit for  such  property  was  originally
24        allowed   by   eliminating   such   property   from  such
25        computation, and (ii) subtracting such recomputed  credit
26        from  the  amount  of credit previously allowed.  For the
27        purposes of this paragraph (6), a reduction of the  basis
28        of qualified property resulting from a redetermination of
29        the  purchase  price  shall  be  deemed  a disposition of
30        qualified property to the extent of such reduction.
31             (g)  Jobs Tax Credit; Enterprise  Zone  and  Foreign
32    Trade Zone or Sub-Zone.
33             (1)  A taxpayer conducting a trade or business in an
34        enterprise  zone  or a High Impact Business designated by
 
                            -10-           LRB9101029PTpkam03
 1        the  Department  of  Commerce   and   Community   Affairs
 2        conducting  a trade or business in a federally designated
 3        Foreign Trade Zone or Sub-Zone shall be allowed a  credit
 4        against  the  tax  imposed  by subsections (a) and (b) of
 5        this Section in the amount of $500 per eligible  employee
 6        hired to work in the zone during the taxable year.
 7             (2)  To qualify for the credit:
 8                  (A)  the  taxpayer must hire 5 or more eligible
 9             employees to work in an enterprise zone or federally
10             designated Foreign Trade Zone or Sub-Zone during the
11             taxable year;
12                  (B)  the taxpayer's total employment within the
13             enterprise  zone  or  federally  designated  Foreign
14             Trade Zone or Sub-Zone must increase by  5  or  more
15             full-time  employees  beyond  the  total employed in
16             that zone at the end of the previous  tax  year  for
17             which  a  jobs  tax  credit  under  this Section was
18             taken, or beyond the total employed by the  taxpayer
19             as of December 31, 1985, whichever is later; and
20                  (C)  the  eligible  employees  must be employed
21             180 consecutive days in order to be deemed hired for
22             purposes of this subsection.
23             (3)  An "eligible employee" means  an  employee  who
24        is:
25                  (A)  Certified  by  the  Department of Commerce
26             and Community Affairs  as  "eligible  for  services"
27             pursuant  to  regulations  promulgated in accordance
28             with Title II of the Job Training  Partnership  Act,
29             Training Services for the Disadvantaged or Title III
30             of  the Job Training Partnership Act, Employment and
31             Training Assistance for Dislocated Workers Program.
32                  (B)  Hired  after  the   enterprise   zone   or
33             federally  designated Foreign Trade Zone or Sub-Zone
34             was designated or the trade or business was  located
 
                            -11-           LRB9101029PTpkam03
 1             in that zone, whichever is later.
 2                  (C)  Employed in the enterprise zone or Foreign
 3             Trade  Zone  or Sub-Zone. An employee is employed in
 4             an enterprise zone or federally  designated  Foreign
 5             Trade  Zone or Sub-Zone if his services are rendered
 6             there or it  is  the  base  of  operations  for  the
 7             services performed.
 8                  (D)  A  full-time  employee  working 30 or more
 9             hours per week.
10             (4)  For tax years ending on or after  December  31,
11        1985  and prior to December 31, 1988, the credit shall be
12        allowed for the tax year in which the eligible  employees
13        are hired.  For tax years ending on or after December 31,
14        1988,  the  credit  shall  be  allowed  for  the tax year
15        immediately following the tax year in which the  eligible
16        employees are hired.  If the amount of the credit exceeds
17        the  tax  liability for that year, whether it exceeds the
18        original liability or the  liability  as  later  amended,
19        such excess may be carried forward and applied to the tax
20        liability  of  the  5  taxable years following the excess
21        credit year.  The credit shall be applied to the earliest
22        year for which there is a liability. If there  is  credit
23        from more than one tax year that is available to offset a
24        liability, earlier credit shall be applied first.
25             (5)  The Department of Revenue shall promulgate such
26        rules and regulations as may be deemed necessary to carry
27        out the purposes of this subsection (g).
28             (6)  The  credit  shall  be  available  for eligible
29        employees hired on or after January 1, 1986.
30             (h)  Investment credit; High Impact Business.
31             (1)  Subject to subsection (b) of Section 5.5 of the
32        Illinois Enterprise Zone Act, a taxpayer shall be allowed
33        a credit against the tax imposed by subsections  (a)  and
34        (b)  of this Section for investment in qualified property
 
                            -12-           LRB9101029PTpkam03
 1        which is placed in service by a  Department  of  Commerce
 2        and  Community  Affairs  designated High Impact Business.
 3        The credit shall be .5% of the basis for  such  property.
 4        The  credit  shall  not  be  available  until the minimum
 5        investments in qualified property set  forth  in  Section
 6        5.5  of  the  Illinois  Enterprise  Zone  Act  have  been
 7        satisfied  and shall not be allowed to the extent that it
 8        would reduce a taxpayer's liability for the  tax  imposed
 9        by subsections (a) and (b) of this Section to below zero.
10        The  credit  applicable to such minimum investments shall
11        be taken in  the  taxable  year  in  which  such  minimum
12        investments   have   been   completed.   The  credit  for
13        additional investments beyond the minimum investment by a
14        designated high impact business shall be  available  only
15        in  the  taxable  year in which the property is placed in
16        service and shall not be allowed to the  extent  that  it
17        would  reduce  a taxpayer's liability for the tax imposed
18        by subsections (a) and (b) of this Section to below zero.
19        For tax years ending on or after December 31,  1987,  the
20        credit  shall  be  allowed  for the tax year in which the
21        property is placed in service, or, if the amount  of  the
22        credit  exceeds  the tax liability for that year, whether
23        it exceeds the original liability  or  the  liability  as
24        later  amended,  such  excess  may be carried forward and
25        applied to the tax  liability  of  the  5  taxable  years
26        following  the  excess  credit year.  The credit shall be
27        applied to  the  earliest  year  for  which  there  is  a
28        liability.   If  there  is  credit from more than one tax
29        year that is available to offset a liability, the  credit
30        accruing first in time shall be applied first.
31             Changes  made  in  this subdivision (h)(1) by Public
32        Act 88-670 restore changes made by Public Act 85-1182 and
33        reflect existing law.
34             (2)  The  term  qualified  property  means  property
 
                            -13-           LRB9101029PTpkam03
 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 (h);
10                  (C)  is  acquired  by  purchase  as  defined in
11             Section 179(d) of the Internal Revenue Code; and
12                  (D)  is not eligible for  the  Enterprise  Zone
13             Investment Credit provided by subsection (f) of this
14             Section.
15             (3)  The  basis  of  qualified property shall be the
16        basis used to  compute  the  depreciation  deduction  for
17        federal income tax purposes.
18             (4)  If the basis of the property for federal income
19        tax  depreciation purposes is increased after it has been
20        placed in service in a federally designated Foreign Trade
21        Zone or Sub-Zone located in Illinois by the taxpayer, the
22        amount of such increase shall be deemed  property  placed
23        in service on the date of such increase in basis.
24             (5)  The  term  "placed  in  service" shall have the
25        same meaning as under Section 46 of the Internal  Revenue
26        Code.
27             (6)  If  during any taxable year ending on or before
28        December 31, 1996, any property ceases  to  be  qualified
29        property  in  the  hands of the taxpayer within 48 months
30        after being placed  in  service,  or  the  situs  of  any
31        qualified  property  is  moved outside Illinois within 48
32        months after being placed in  service,  the  tax  imposed
33        under  subsections  (a)  and (b) of this Section for such
34        taxable year shall be increased.  Such increase shall  be
 
                            -14-           LRB9101029PTpkam03
 1        determined by (i) recomputing the investment credit which
 2        would  have been allowed for the year in which credit for
 3        such property was originally allowed by eliminating  such
 4        property from such computation, and (ii) subtracting such
 5        recomputed  credit  from  the amount of credit previously
 6        allowed.  For the  purposes  of  this  paragraph  (6),  a
 7        reduction  of  the  basis of qualified property resulting
 8        from a redetermination of the  purchase  price  shall  be
 9        deemed  a disposition of qualified property to the extent
10        of such reduction.
11             (7)  Beginning with tax years ending after  December
12        31,  1996,  if  a taxpayer qualifies for the credit under
13        this  subsection  (h)  and  thereby  is  granted  a   tax
14        abatement  and the taxpayer relocates its entire facility
15        in violation of the explicit  terms  and  length  of  the
16        contract  under  Section 18-183 of the Property Tax Code,
17        the tax imposed under subsections (a)  and  (b)  of  this
18        Section  shall be increased for the taxable year in which
19        the taxpayer relocated its facility by an amount equal to
20        the amount of credit received by the taxpayer under  this
21        subsection (h).
22        (i)  A credit shall be allowed against the tax imposed by
23    subsections  (a)  and (b) of this Section for the tax imposed
24    by subsections (c) and (d)  of  this  Section.   This  credit
25    shall   be   computed  by  multiplying  the  tax  imposed  by
26    subsections (c) and (d) of this Section by  a  fraction,  the
27    numerator  of  which is base income allocable to Illinois and
28    the denominator of which is Illinois base income, and further
29    multiplying  the  product  by  the  tax   rate   imposed   by
30    subsections (a) and (b) of this Section.
31        Any  credit  earned  on  or after December 31, 1986 under
32    this subsection which is unused in the  year  the  credit  is
33    computed  because  it  exceeds  the  tax liability imposed by
34    subsections (a) and (b) for that year (whether it exceeds the
 
                            -15-           LRB9101029PTpkam03
 1    original liability or the liability as later amended) may  be
 2    carried  forward  and applied to the tax liability imposed by
 3    subsections (a) and (b) of the 5 taxable years following  the
 4    excess  credit  year.   This credit shall be applied first to
 5    the earliest year for which there is a liability.   If  there
 6    is a credit under this subsection from more than one tax year
 7    that  is  available to offset a liability the earliest credit
 8    arising under this subsection shall be applied first.
 9        If, during any taxable year ending on or  after  December
10    31,  1986, the tax imposed by subsections (c) and (d) of this
11    Section for which a taxpayer has claimed a credit under  this
12    subsection  (i) is reduced, the amount of credit for such tax
13    shall also be reduced.  Such reduction shall be determined by
14    recomputing the credit to take into account the  reduced  tax
15    imposed  by  subsection  (c)  and (d).  If any portion of the
16    reduced amount of credit has  been  carried  to  a  different
17    taxable  year,  an  amended  return  shall  be filed for such
18    taxable year to reduce the amount of credit claimed.
19        (j)  Training expense credit.  Beginning with  tax  years
20    ending  on  or  after  December 31, 1986, a taxpayer shall be
21    allowed a credit against the tax imposed  by  subsection  (a)
22    and  (b)  under this Section for all amounts paid or accrued,
23    on behalf of all persons employed by the taxpayer in Illinois
24    or Illinois residents  employed  outside  of  Illinois  by  a
25    taxpayer,   for   educational   or   vocational  training  in
26    semi-technical or technical fields or semi-skilled or skilled
27    fields,  which  were  deducted  from  gross  income  in   the
28    computation  of  taxable  income.  The credit against the tax
29    imposed by subsections (a) and (b)  shall  be  1.6%  of  such
30    training  expenses.   For  partners  and  for shareholders of
31    subchapter S corporations, there shall be  allowed  a  credit
32    under this subsection (j) to be determined in accordance with
33    the  determination of income and distributive share of income
34    under Sections 702 and 704 and subchapter S of  the  Internal
 
                            -16-           LRB9101029PTpkam03
 1    Revenue Code.
 2        Any  credit allowed under this subsection which is unused
 3    in the year the credit is earned may be  carried  forward  to
 4    each  of the 5 taxable years following the year for which the
 5    credit is first computed until it is used.  This credit shall
 6    be applied first to the earliest year for which  there  is  a
 7    liability.   If  there is a credit under this subsection from
 8    more than  one  tax  year  that  is  available  to  offset  a
 9    liability  the  earliest credit arising under this subsection
10    shall be applied first.
11        (k)  Research and development credit.
12        Beginning with tax years ending after  July  1,  1990,  a
13    taxpayer shall be allowed a credit against the tax imposed by
14    subsections  (a)  and  (b)  of  this  Section  for increasing
15    research  activities  in  this  State.   The  credit  allowed
16    against the tax imposed by subsections (a) and (b)  shall  be
17    equal to 6 1/2% of the qualifying expenditures for increasing
18    research activities in this State.
19        For    purposes    of    this   subsection,   "qualifying
20    expenditures" means the qualifying  expenditures  as  defined
21    for  the  federal  credit  for increasing research activities
22    which would be allowable under Section  41  of  the  Internal
23    Revenue   Code   and  which  are  conducted  in  this  State,
24    "qualifying expenditures for increasing  research  activities
25    in  this  State"  means the excess of qualifying expenditures
26    for the  taxable  year  in  which  incurred  over  qualifying
27    expenditures  for  the  base period, "qualifying expenditures
28    for the base period" means  the  average  of  the  qualifying
29    expenditures  for  each  year  in  the base period, and "base
30    period" means the 3 taxable years immediately  preceding  the
31    taxable year for which the determination is being made.
32        Any credit in excess of the tax liability for the taxable
33    year may be carried forward. A taxpayer may elect to have the
34    unused  credit  shown  on  its final completed return carried
 
                            -17-           LRB9101029PTpkam03
 1    over as a credit against the tax liability for the  following
 2    5  taxable  years  or until it has been fully used, whichever
 3    occurs first.
 4        If an unused credit is carried forward to  a  given  year
 5    from  2  or  more  earlier  years, that credit arising in the
 6    earliest year will be applied first against the tax liability
 7    for the given year.  If a tax liability for  the  given  year
 8    still  remains,  the  credit from the next earliest year will
 9    then be applied, and so on, until all credits have been  used
10    or  no  tax  liability  for  the  given  year  remains.   Any
11    remaining  unused  credit  or  credits  then  will be carried
12    forward to the next following year in which a  tax  liability
13    is  incurred, except that no credit can be carried forward to
14    a year which is more than 5 years after the year in which the
15    expense for which the credit is given was incurred.
16        Unless extended by law,  the  credit  shall  not  include
17    costs  incurred  after  December  31,  2004, except for costs
18    incurred pursuant to a binding contract entered  into  on  or
19    before December 31, 2004.
20        (l)  Environmental Remediation Tax Credit.
21             (i)  For  tax   years ending after December 31, 1997
22        and on or before December 31, 2001, a taxpayer  shall  be
23        allowed  a  credit against the tax imposed by subsections
24        (a) and (b) of this Section for certain amounts paid  for
25        unreimbursed  eligible remediation costs, as specified in
26        this  subsection.   For   purposes   of   this   Section,
27        "unreimbursed  eligible  remediation  costs"  means costs
28        approved by the Illinois Environmental Protection  Agency
29        ("Agency")  under  Section  58.14  of  the  Environmental
30        Protection Act that were paid in performing environmental
31        remediation  at a site for which a No Further Remediation
32        Letter was  issued  by  the  Agency  and  recorded  under
33        Section  58.10  of the Environmental Protection Act.  The
34        credit must be claimed for  the  taxable  year  in  which
 
                            -18-           LRB9101029PTpkam03
 1        Agency  approval  of  the  eligible  remediation costs is
 2        granted.  The credit is not available to any taxpayer  if
 3        the  taxpayer  or any related party caused or contributed
 4        to, in any  material  respect,  a  release  of  regulated
 5        substances  on, in, or under the site that was identified
 6        and addressed by the remedial action pursuant to the Site
 7        Remediation Program of the Environmental Protection  Act.
 8        After  the  Pollution  Control  Board  rules  are adopted
 9        pursuant to the Illinois Administrative Procedure Act for
10        the administration and enforcement of Section 58.9 of the
11        Environmental Protection Act, determinations as to credit
12        availability for purposes of this Section shall  be  made
13        consistent  with  those  rules.   For  purposes  of  this
14        Section,   "taxpayer"   includes   a   person  whose  tax
15        attributes the taxpayer has succeeded  to  under  Section
16        381  of  the  Internal  Revenue  Code and "related party"
17        includes the persons disallowed a deduction for losses by
18        paragraphs (b), (c), and (f)(1) of  Section  267  of  the
19        Internal  Revenue  Code  by  virtue  of  being  a related
20        taxpayer, as well as any of  its  partners.   The  credit
21        allowed  against  the  tax imposed by subsections (a) and
22        (b) shall be equal to 25% of  the  unreimbursed  eligible
23        remediation  costs in excess of $100,000 per site, except
24        that the $100,000 threshold shall not apply to  any  site
25        contained  in  an  enterprise  zone  as determined by the
26        Department of Commerce and Community Affairs.  The  total
27        credit  allowed  shall not exceed $40,000 per year with a
28        maximum total of $150,000 per  site.   For  partners  and
29        shareholders of subchapter S corporations, there shall be
30        allowed  a  credit under this subsection to be determined
31        in  accordance  with  the  determination  of  income  and
32        distributive share of income under Sections 702  and  704
33        of subchapter S of the Internal Revenue Code.
34             (ii)  A credit allowed under this subsection that is
 
                            -19-           LRB9101029PTpkam03
 1        unused  in  the  year the credit is earned may be carried
 2        forward to each of the 5 taxable years following the year
 3        for which the credit is first earned until  it  is  used.
 4        The  term "unused credit" does not include any amounts of
 5        unreimbursed eligible remediation costs in excess of  the
 6        maximum  credit  per site authorized under paragraph (i).
 7        This credit shall be applied first to the  earliest  year
 8        for  which  there  is  a liability.  If there is a credit
 9        under this subsection from more than one tax year that is
10        available to offset  a  liability,  the  earliest  credit
11        arising  under this subsection shall be applied first.  A
12        credit allowed under this subsection may  be  sold  to  a
13        buyer as part of a sale of all or part of the remediation
14        site  for which the credit was granted.  The purchaser of
15        a remediation site and the tax credit  shall  succeed  to
16        the  unused  credit and remaining carry-forward period of
17        the seller.  To perfect the transfer, the assignor  shall
18        record  the  transfer  in the chain of title for the site
19        and  provide  written  notice  to  the  Director  of  the
20        Illinois Department of Revenue of the  assignor's  intent
21        to  sell  the  remediation site and the amount of the tax
22        credit to be transferred as a portion of the sale.  In no
23        event may a credit be transferred to any taxpayer if  the
24        taxpayer  or  a related party would not be eligible under
25        the provisions of subsection (i).
26             (iii)  For purposes of this Section, the term "site"
27        shall have the same meaning as under Section 58.2 of  the
28        Environmental Protection Act.
29    (Source:  P.A.  89-235,  eff.  8-4-95;  89-519, eff. 7-18-96;
30    89-591, eff.  8-1-96;  90-123,  eff.  7-21-97;  90-458,  eff.
31    8-17-97;  90-605, eff. 6-30-98; 90-655, eff. 7-30-98; 90-717,
32    eff. 8-7-98; 90-792, eff. 1-1-99; revised 9-16-98.)".

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