Public Act 094-0247
 
HB0310 Enrolled LRB094 05254 BDD 35296 b

    AN ACT concerning revenue.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Illinois Income Tax Act is amended by
changing Sections 304 and 601 as follows:
 
    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
    Sec. 304. Business income of persons other than residents.
    (a) In general. The business income of a person other than
a resident shall be allocated to this State if such person's
business income is derived solely from this State. If a person
other than a resident derives business income from this State
and one or more other states, then, for tax years ending on or
before December 30, 1998, and except as otherwise provided by
this Section, such person's business income shall be
apportioned to this State by multiplying the income by a
fraction, the numerator of which is the sum of the property
factor (if any), the payroll factor (if any) and 200% of the
sales factor (if any), and the denominator of which is 4
reduced by the number of factors other than the sales factor
which have a denominator of zero and by an additional 2 if the
sales factor has a denominator of zero. For tax years ending on
or after December 31, 1998, and except as otherwise provided by
this Section, persons other than residents who derive business
income from this State and one or more other states shall
compute their apportionment factor by weighting their
property, payroll, and sales factors as provided in subsection
(h) of this Section.
    (1) Property factor.
        (A) The property factor is a fraction, the numerator of
    which is the average value of the person's real and
    tangible personal property owned or rented and used in the
    trade or business in this State during the taxable year and
    the denominator of which is the average value of all the
    person's real and tangible personal property owned or
    rented and used in the trade or business during the taxable
    year.
        (B) Property owned by the person is valued at its
    original cost. Property rented by the person is valued at 8
    times the net annual rental rate. Net annual rental rate is
    the annual rental rate paid by the person less any annual
    rental rate received by the person from sub-rentals.
        (C) The average value of property shall be determined
    by averaging the values at the beginning and ending of the
    taxable year but the Director may require the averaging of
    monthly values during the taxable year if reasonably
    required to reflect properly the average value of the
    person's property.
    (2) Payroll factor.
        (A) The payroll factor is a fraction, the numerator of
    which is the total amount paid in this State during the
    taxable year by the person for compensation, and the
    denominator of which is the total compensation paid
    everywhere during the taxable year.
        (B) Compensation is paid in this State if:
            (i) The individual's service is performed entirely
        within this State;
            (ii) The individual's service is performed both
        within and without this State, but the service
        performed without this State is incidental to the
        individual's service performed within this State; or
            (iii) Some of the service is performed within this
        State and either the base of operations, or if there is
        no base of operations, the place from which the service
        is directed or controlled is within this State, or the
        base of operations or the place from which the service
        is directed or controlled is not in any state in which
        some part of the service is performed, but the
        individual's residence is in this State.
            (iv) Compensation paid to nonresident professional
        athletes.
            (a) General. The Illinois source income of a
        nonresident individual who is a member of a
        professional athletic team includes the portion of the
        individual's total compensation for services performed
        as a member of a professional athletic team during the
        taxable year which the number of duty days spent within
        this State performing services for the team in any
        manner during the taxable year bears to the total
        number of duty days spent both within and without this
        State during the taxable year.
            (b) Travel days. Travel days that do not involve
        either a game, practice, team meeting, or other similar
        team event are not considered duty days spent in this
        State. However, such travel days are considered in the
        total duty days spent both within and without this
        State.
            (c) Definitions. For purposes of this subpart
        (iv):
                (1) The term "professional athletic team"
            includes, but is not limited to, any professional
            baseball, basketball, football, soccer, or hockey
            team.
                (2) The term "member of a professional
            athletic team" includes those employees who are
            active players, players on the disabled list, and
            any other persons required to travel and who travel
            with and perform services on behalf of a
            professional athletic team on a regular basis.
            This includes, but is not limited to, coaches,
            managers, and trainers.
                (3) Except as provided in items (C) and (D) of
            this subpart (3), the term "duty days" means all
            days during the taxable year from the beginning of
            the professional athletic team's official
            pre-season training period through the last game
            in which the team competes or is scheduled to
            compete. Duty days shall be counted for the year in
            which they occur, including where a team's
            official pre-season training period through the
            last game in which the team competes or is
            scheduled to compete, occurs during more than one
            tax year.
                    (A) Duty days shall also include days on
                which a member of a professional athletic team
                performs service for a team on a date that does
                not fall within the foregoing period (e.g.,
                participation in instructional leagues, the
                "All Star Game", or promotional "caravans").
                Performing a service for a professional
                athletic team includes conducting training and
                rehabilitation activities, when such
                activities are conducted at team facilities.
                    (B) Also included in duty days are game
                days, practice days, days spent at team
                meetings, promotional caravans, preseason
                training camps, and days served with the team
                through all post-season games in which the team
                competes or is scheduled to compete.
                    (C) Duty days for any person who joins a
                team during the period from the beginning of
                the professional athletic team's official
                pre-season training period through the last
                game in which the team competes, or is
                scheduled to compete, shall begin on the day
                that person joins the team. Conversely, duty
                days for any person who leaves a team during
                this period shall end on the day that person
                leaves the team. Where a person switches teams
                during a taxable year, a separate duty-day
                calculation shall be made for the period the
                person was with each team.
                    (D) Days for which a member of a
                professional athletic team is not compensated
                and is not performing services for the team in
                any manner, including days when such member of
                a professional athletic team has been
                suspended without pay and prohibited from
                performing any services for the team, shall not
                be treated as duty days.
                    (E) Days for which a member of a
                professional athletic team is on the disabled
                list and does not conduct rehabilitation
                activities at facilities of the team, and is
                not otherwise performing services for the team
                in Illinois, shall not be considered duty days
                spent in this State. All days on the disabled
                list, however, are considered to be included in
                total duty days spent both within and without
                this State.
                (4) The term "total compensation for services
            performed as a member of a professional athletic
            team" means the total compensation received during
            the taxable year for services performed:
                    (A) from the beginning of the official
                pre-season training period through the last
                game in which the team competes or is scheduled
                to compete during that taxable year; and
                    (B) during the taxable year on a date which
                does not fall within the foregoing period
                (e.g., participation in instructional leagues,
                the "All Star Game", or promotional caravans).
                This compensation shall include, but is not
            limited to, salaries, wages, bonuses as described
            in this subpart, and any other type of compensation
            paid during the taxable year to a member of a
            professional athletic team for services performed
            in that year. This compensation does not include
            strike benefits, severance pay, termination pay,
            contract or option year buy-out payments,
            expansion or relocation payments, or any other
            payments not related to services performed for the
            team.
                For purposes of this subparagraph, "bonuses"
            included in "total compensation for services
            performed as a member of a professional athletic
            team" subject to the allocation described in
            Section 302(c)(1) are: bonuses earned as a result
            of play (i.e., performance bonuses) during the
            season, including bonuses paid for championship,
            playoff or "bowl" games played by a team, or for
            selection to all-star league or other honorary
            positions; and bonuses paid for signing a
            contract, unless the payment of the signing bonus
            is not conditional upon the signee playing any
            games for the team or performing any subsequent
            services for the team or even making the team, the
            signing bonus is payable separately from the
            salary and any other compensation, and the signing
            bonus is nonrefundable.
        Beginning with taxable years ending on or after
    December 31, 1992, for residents of states that impose a
    comparable tax liability on residents of this State, for
    purposes of item (i) of this paragraph (B), in the case of
    persons who perform personal services under personal
    service contracts for sports performances, services by
    that person at a sporting event taking place in Illinois
    shall be deemed to be a performance entirely within this
    State.
    (3) Sales factor.
        (A) The sales factor is a fraction, the numerator of
    which is the total sales of the person in this State during
    the taxable year, and the denominator of which is the total
    sales of the person everywhere during the taxable year.
        (B) Sales of tangible personal property are in this
    State if:
            (i) The property is delivered or shipped to a
        purchaser, other than the United States government,
        within this State regardless of the f. o. b. point or
        other conditions of the sale; or
            (ii) The property is shipped from an office, store,
        warehouse, factory or other place of storage in this
        State and either the purchaser is the United States
        government or the person is not taxable in the state of
        the purchaser; provided, however, that premises owned
        or leased by a person who has independently contracted
        with the seller for the printing of newspapers,
        periodicals or books shall not be deemed to be an
        office, store, warehouse, factory or other place of
        storage for purposes of this Section. Sales of tangible
        personal property are not in this State if the seller
        and purchaser would be members of the same unitary
        business group but for the fact that either the seller
        or purchaser is a person with 80% or more of total
        business activity outside of the United States and the
        property is purchased for resale.
        (B-1) Patents, copyrights, trademarks, and similar
    items of intangible personal property.
            (i) Gross receipts from the licensing, sale, or
        other disposition of a patent, copyright, trademark,
        or similar item of intangible personal property are in
        this State to the extent the item is utilized in this
        State during the year the gross receipts are included
        in gross income.
            (ii) Place of utilization.
                (I) A patent is utilized in a state to the
            extent that it is employed in production,
            fabrication, manufacturing, or other processing in
            the state or to the extent that a patented product
            is produced in the state. If a patent is utilized
            in more than one state, the extent to which it is
            utilized in any one state shall be a fraction equal
            to the gross receipts of the licensee or purchaser
            from sales or leases of items produced,
            fabricated, manufactured, or processed within that
            state using the patent and of patented items
            produced within that state, divided by the total of
            such gross receipts for all states in which the
            patent is utilized.
                (II) A copyright is utilized in a state to the
            extent that printing or other publication
            originates in the state. If a copyright is utilized
            in more than one state, the extent to which it is
            utilized in any one state shall be a fraction equal
            to the gross receipts from sales or licenses of
            materials printed or published in that state
            divided by the total of such gross receipts for all
            states in which the copyright is utilized.
                (III) Trademarks and other items of intangible
            personal property governed by this paragraph (B-1)
            are utilized in the state in which the commercial
            domicile of the licensee or purchaser is located.
            (iii) If the state of utilization of an item of
        property governed by this paragraph (B-1) cannot be
        determined from the taxpayer's books and records or
        from the books and records of any person related to the
        taxpayer within the meaning of Section 267(b) of the
        Internal Revenue Code, 26 U.S.C. 267, the gross
        receipts attributable to that item shall be excluded
        from both the numerator and the denominator of the
        sales factor.
        (B-2) Gross receipts from the license, sale, or other
    disposition of patents, copyrights, trademarks, and
    similar items of intangible personal property may be
    included in the numerator or denominator of the sales
    factor only if gross receipts from licenses, sales, or
    other disposition of such items comprise more than 50% of
    the taxpayer's total gross receipts included in gross
    income during the tax year and during each of the 2
    immediately preceding tax years; provided that, when a
    taxpayer is a member of a unitary business group, such
    determination shall be made on the basis of the gross
    receipts of the entire unitary business group.
        (C) Sales, other than sales governed by paragraphs (B)
    and (B-1), are in this State if:
            (i) The income-producing activity is performed in
        this State; or
            (ii) The income-producing activity is performed
        both within and without this State and a greater
        proportion of the income-producing activity is
        performed within this State than without this State,
        based on performance costs.
        (D) For taxable years ending on or after December 31,
    1995, the following items of income shall not be included
    in the numerator or denominator of the sales factor:
    dividends; amounts included under Section 78 of the
    Internal Revenue Code; and Subpart F income as defined in
    Section 952 of the Internal Revenue Code. No inference
    shall be drawn from the enactment of this paragraph (D) in
    construing this Section for taxable years ending before
    December 31, 1995.
        (E) Paragraphs (B-1) and (B-2) shall apply to tax years
    ending on or after December 31, 1999, provided that a
    taxpayer may elect to apply the provisions of these
    paragraphs to prior tax years. Such election shall be made
    in the form and manner prescribed by the Department, shall
    be irrevocable, and shall apply to all tax years; provided
    that, if a taxpayer's Illinois income tax liability for any
    tax year, as assessed under Section 903 prior to January 1,
    1999, was computed in a manner contrary to the provisions
    of paragraphs (B-1) or (B-2), no refund shall be payable to
    the taxpayer for that tax year to the extent such refund is
    the result of applying the provisions of paragraph (B-1) or
    (B-2) retroactively. In the case of a unitary business
    group, such election shall apply to all members of such
    group for every tax year such group is in existence, but
    shall not apply to any taxpayer for any period during which
    that taxpayer is not a member of such group.
    (b) Insurance companies.
        (1) In general. Except as otherwise provided by
    paragraph (2), business income of an insurance company for
    a taxable year shall be apportioned to this State by
    multiplying such income by a fraction, the numerator of
    which is the direct premiums written for insurance upon
    property or risk in this State, and the denominator of
    which is the direct premiums written for insurance upon
    property or risk everywhere. For purposes of this
    subsection, the term "direct premiums written" means the
    total amount of direct premiums written, assessments and
    annuity considerations as reported for the taxable year on
    the annual statement filed by the company with the Illinois
    Director of Insurance in the form approved by the National
    Convention of Insurance Commissioners or such other form as
    may be prescribed in lieu thereof.
        (2) Reinsurance. If the principal source of premiums
    written by an insurance company consists of premiums for
    reinsurance accepted by it, the business income of such
    company shall be apportioned to this State by multiplying
    such income by a fraction, the numerator of which is the
    sum of (i) direct premiums written for insurance upon
    property or risk in this State, plus (ii) premiums written
    for reinsurance accepted in respect of property or risk in
    this State, and the denominator of which is the sum of
    (iii) direct premiums written for insurance upon property
    or risk everywhere, plus (iv) premiums written for
    reinsurance accepted in respect of property or risk
    everywhere. For purposes of this paragraph, premiums
    written for reinsurance accepted in respect of property or
    risk in this State, whether or not otherwise determinable,
    may, at the election of the company, be determined on the
    basis of the proportion which premiums written for
    reinsurance accepted from companies commercially domiciled
    in Illinois bears to premiums written for reinsurance
    accepted from all sources, or, alternatively, in the
    proportion which the sum of the direct premiums written for
    insurance upon property or risk in this State by each
    ceding company from which reinsurance is accepted bears to
    the sum of the total direct premiums written by each such
    ceding company for the taxable year.
    (c) Financial organizations.
        (1) In general. Business income of a financial
    organization shall be apportioned to this State by
    multiplying such income by a fraction, the numerator of
    which is its business income from sources within this
    State, and the denominator of which is its business income
    from all sources. For the purposes of this subsection, the
    business income of a financial organization from sources
    within this State is the sum of the amounts referred to in
    subparagraphs (A) through (E) following, but excluding the
    adjusted income of an international banking facility as
    determined in paragraph (2):
            (A) Fees, commissions or other compensation for
        financial services rendered within this State;
            (B) Gross profits from trading in stocks, bonds or
        other securities managed within this State;
            (C) Dividends, and interest from Illinois
        customers, which are received within this State;
            (D) Interest charged to customers at places of
        business maintained within this State for carrying
        debit balances of margin accounts, without deduction
        of any costs incurred in carrying such accounts; and
            (E) Any other gross income resulting from the
        operation as a financial organization within this
        State. In computing the amounts referred to in
        paragraphs (A) through (E) of this subsection, any
        amount received by a member of an affiliated group
        (determined under Section 1504(a) of the Internal
        Revenue Code but without reference to whether any such
        corporation is an "includible corporation" under
        Section 1504(b) of the Internal Revenue Code) from
        another member of such group shall be included only to
        the extent such amount exceeds expenses of the
        recipient directly related thereto.
        (2) International Banking Facility.
            (A) Adjusted Income. The adjusted income of an
        international banking facility is its income reduced
        by the amount of the floor amount.
            (B) Floor Amount. The floor amount shall be the
        amount, if any, determined by multiplying the income of
        the international banking facility by a fraction, not
        greater than one, which is determined as follows:
                (i) The numerator shall be:
                The average aggregate, determined on a
            quarterly basis, of the financial organization's
            loans to banks in foreign countries, to foreign
            domiciled borrowers (except where secured
            primarily by real estate) and to foreign
            governments and other foreign official
            institutions, as reported for its branches,
            agencies and offices within the state on its
            "Consolidated Report of Condition", Schedule A,
            Lines 2.c., 5.b., and 7.a., which was filed with
            the Federal Deposit Insurance Corporation and
            other regulatory authorities, for the year 1980,
            minus
                The average aggregate, determined on a
            quarterly basis, of such loans (other than loans of
            an international banking facility), as reported by
            the financial institution for its branches,
            agencies and offices within the state, on the
            corresponding Schedule and lines of the
            Consolidated Report of Condition for the current
            taxable year, provided, however, that in no case
            shall the amount determined in this clause (the
            subtrahend) exceed the amount determined in the
            preceding clause (the minuend); and
                (ii) the denominator shall be the average
            aggregate, determined on a quarterly basis, of the
            international banking facility's loans to banks in
            foreign countries, to foreign domiciled borrowers
            (except where secured primarily by real estate)
            and to foreign governments and other foreign
            official institutions, which were recorded in its
            financial accounts for the current taxable year.
            (C) Change to Consolidated Report of Condition and
        in Qualification. In the event the Consolidated Report
        of Condition which is filed with the Federal Deposit
        Insurance Corporation and other regulatory authorities
        is altered so that the information required for
        determining the floor amount is not found on Schedule
        A, lines 2.c., 5.b. and 7.a., the financial institution
        shall notify the Department and the Department may, by
        regulations or otherwise, prescribe or authorize the
        use of an alternative source for such information. The
        financial institution shall also notify the Department
        should its international banking facility fail to
        qualify as such, in whole or in part, or should there
        be any amendment or change to the Consolidated Report
        of Condition, as originally filed, to the extent such
        amendment or change alters the information used in
        determining the floor amount.
    (d) Transportation services. Business income derived from
furnishing transportation services shall be apportioned to
this State in accordance with paragraphs (1) and (2):
        (1) Such business income (other than that derived from
    transportation by pipeline) shall be apportioned to this
    State by multiplying such income by a fraction, the
    numerator of which is the revenue miles of the person in
    this State, and the denominator of which is the revenue
    miles of the person everywhere. For purposes of this
    paragraph, a revenue mile is the transportation of 1
    passenger or 1 net ton of freight the distance of 1 mile
    for a consideration. Where a person is engaged in the
    transportation of both passengers and freight, the
    fraction above referred to shall be determined by means of
    an average of the passenger revenue mile fraction and the
    freight revenue mile fraction, weighted to reflect the
    person's
            (A) relative railway operating income from total
        passenger and total freight service, as reported to the
        Interstate Commerce Commission, in the case of
        transportation by railroad, and
            (B) relative gross receipts from passenger and
        freight transportation, in case of transportation
        other than by railroad.
        (2) Such business income derived from transportation
    by pipeline shall be apportioned to this State by
    multiplying such income by a fraction, the numerator of
    which is the revenue miles of the person in this State, and
    the denominator of which is the revenue miles of the person
    everywhere. For the purposes of this paragraph, a revenue
    mile is the transportation by pipeline of 1 barrel of oil,
    1,000 cubic feet of gas, or of any specified quantity of
    any other substance, the distance of 1 mile for a
    consideration.
    (e) Combined apportionment. Where 2 or more persons are
engaged in a unitary business as described in subsection
(a)(27) of Section 1501, a part of which is conducted in this
State by one or more members of the group, the business income
attributable to this State by any such member or members shall
be apportioned by means of the combined apportionment method.
    (f) Alternative allocation. If the allocation and
apportionment provisions of subsections (a) through (e) and of
subsection (h) do not fairly represent the extent of a person's
business activity in this State, the person may petition for,
or the Director may require, in respect of all or any part of
the person's business activity, if reasonable:
        (1) Separate accounting;
        (2) The exclusion of any one or more factors;
        (3) The inclusion of one or more additional factors
    which will fairly represent the person's business
    activities in this State; or
        (4) The employment of any other method to effectuate an
    equitable allocation and apportionment of the person's
    business income.
    (g) Cross reference. For allocation of business income by
residents, see Section 301(a).
    (h) For tax years ending on or after December 31, 1998, the
apportionment factor of persons who apportion their business
income to this State under subsection (a) shall be equal to:
        (1) for tax years ending on or after December 31, 1998
    and before December 31, 1999, 16 2/3% of the property
    factor plus 16 2/3% of the payroll factor plus 66 2/3% of
    the sales factor;
        (2) for tax years ending on or after December 31, 1999
    and before December 31, 2000, 8 1/3% of the property factor
    plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
    factor;
        (3) for tax years ending on or after December 31, 2000,
    the sales factor.
If, in any tax year ending on or after December 31, 1998 and
before December 31, 2000, the denominator of the payroll,
property, or sales factor is zero, the apportionment factor
computed in paragraph (1) or (2) of this subsection for that
year shall be divided by an amount equal to 100% minus the
percentage weight given to each factor whose denominator is
equal to zero.
(Source: P.A. 90-562, eff. 12-16-97; 90-613, eff. 7-9-98;
91-541, eff. 8-13-99.)
 
    (35 ILCS 5/601)  (from Ch. 120, par. 6-601)
    Sec. 601. Payment on Due Date of Return.
    (a) In general. Every taxpayer required to file a return
under this Act shall, without assessment, notice or demand, pay
any tax due thereon to the Department, at the place fixed for
filing, on or before the date fixed for filing such return
(determined without regard to any extension of time for filing
the return) pursuant to regulations prescribed by the
Department. If, however, the due date for payment of a
taxpayer's federal income tax liability for a tax year (as
provided in the Internal Revenue Code or by Treasury
regulation, or as extended by the Internal Revenue Service) is
later than the date fixed for filing the taxpayer's Illinois
income tax return for that tax year, the Department may, by
rule, prescribe a due date for payment that is not later than
the due date for payment of the taxpayer's federal income tax
liability. For purposes of the Illinois Administrative
Procedure Act, the adoption of rules to prescribe a later due
date for payment shall be deemed an emergency and necessary for
the public interest, safety, and welfare.
    (b) Amount payable. In making payment as provided in this
section there shall remain payable only the balance of such tax
remaining due after giving effect to the following:
        (1) Withheld tax. Any amount withheld during any
    calendar year pursuant to Article 7 from compensation paid
    to a taxpayer shall be deemed to have been paid on account
    of any tax imposed by subsections 201(a) and (b) of this
    Act on such taxpayer for his taxable year beginning in such
    calendar year. If more than one taxable year begins in a
    calendar year, such amount shall be deemed to have been
    paid on account of such tax for the last taxable year so
    beginning.
        (2) Estimated and tentative tax payments. Any amount of
    estimated tax paid by a taxpayer pursuant to Article 8 for
    a taxable year shall be deemed to have been paid on account
    of the tax imposed by this Act for such taxable year.
        (3) Foreign tax. The aggregate amount of tax which is
    imposed upon or measured by income and which is paid by a
    resident for a taxable year to another state or states on
    income which is also subject to the tax imposed by
    subsections 201(a) and (b) of this Act shall be credited
    against the tax imposed by subsections 201(a) and (b)
    otherwise due under this Act for such taxable year. The
    aggregate credit provided under this paragraph shall not
    exceed that amount which bears the same ratio to the tax
    imposed by subsections 201(a) and (b) otherwise due under
    this Act as the amount of the taxpayer's base income
    subject to tax both by such other state or states and by
    this State bears to his total base income subject to tax by
    this State for the taxable year. For purposes of this
    subsection, no compensation received by a resident which
    qualifies as compensation paid in this State as determined
    under Section 304(a)(2)(B) shall be considered income
    subject to tax by another state or states. The credit
    provided by this paragraph shall not be allowed if any
    creditable tax was deducted in determining base income for
    the taxable year. Any person claiming such credit shall
    attach a statement in support thereof and shall notify the
    Director of any refund or reductions in the amount of tax
    claimed as a credit hereunder all in such manner and at
    such time as the Department shall by regulations prescribe.
        (4) Accumulation and capital gain distributions. If
    the net income of a taxpayer includes amounts included in
    his base income by reason of Section 668 or 669 of the
    Internal Revenue Code (relating to accumulation and
    capital gain distributions by a trust, respectively), the
    tax imposed on such taxpayer by this Act shall be credited
    with his pro rata portion of the taxes imposed by this Act
    on such trust for preceding taxable years which would not
    have been payable for such preceding years if the trust had
    in fact made distributions to its beneficiaries at the
    times and in the amounts specified in Sections 666 and 669
    of the Internal Revenue Code. The credit provided by this
    paragraph shall not reduce the tax otherwise due from the
    taxpayer to an amount less than that which would be due if
    the amounts included by reason of Sections 668 and 669 of
    the Internal Revenue Code were excluded from his base
    income.
    (c) Cross reference. For application against tax due of
overpayments of tax for a prior year, see Section 909.
(Source: P.A. 92-826, eff. 8-21-02.)

Effective Date: 1/1/2006