HB2546 94TH GENERAL ASSEMBLY

LRB094 09485 BDD 39736 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB2546

Introduced 2/18/2005, by Rep. Mary E. Flowers

SYNOPSIS AS INTRODUCED:

35 ILCS 5/205	from Ch. 120, par. 2-205
35 ILCS 5/205.5 new

Amends the Illinois Income Tax Act. Provides that the base income of a hospital that is exempt from the federal income tax by reason of Section 501(a) of the Internal Revenue Code is the aggregate of: (i) its unrelated business taxable income, without certain deductions; and (ii) an amount equal to the payments for goods and services made to the hospital by patients and not reimbursed by public or private insurance less the amount that the State Medicaid program would have paid for those same goods and services. Provides that the standard exemption shall not be allowed in determining the net income of a not-for-profit hospital. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

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 Section 205 and by adding Section 205.5 as follows:

(35 ILCS 5/205) (from Ch. 120, par. 2-205)

Sec. 205. Exempt organizations.

(a) Charitable, etc. organizations. The base income of an organization which is exempt from the federal income tax by reason of Section 501(a) of the Internal Revenue Code shall not be determined under section 203 of this Act, but, except as provided in Section 205.5, shall be its unrelated business taxable income as determined under section 512 of the Internal Revenue Code, without any deduction for the tax imposed by this Act. The standard exemption provided by section 204 of this Act shall not be allowed in determining the net income of an organization to which this subsection applies.

(b) Partnerships. A partnership as such shall not be subject to the tax imposed by subsection 201 (a) and (b) of this Act, but shall be subject to the replacement tax imposed by subsection 201 (c) and (d) of this Act and shall compute its base income as described in subsection (d) of Section 203 of this Act. For taxable years ending on or after December 31, 2004, an investment partnership, as defined in Section 1501(a)(11.5) of this Act, shall not be subject to the tax imposed by subsections (c) and (d) of Section 201 of this Act. A partnership shall file such returns and other information at such time and in such manner as may be required under Article 5 of this Act. The partners in a partnership shall be liable for the replacement tax imposed by subsection 201 (c) and (d) of this Act on such partnership, to the extent such tax is not paid by the partnership, as provided under the laws of Illinois governing the liability of partners for the obligations of a partnership. Persons carrying on business as partners shall be liable for the tax imposed by subsection 201 (a) and (b) of this Act only in their separate or individual capacities.

(c) Subchapter S corporations. A Subchapter S corporation shall not be subject to the tax imposed by subsection 201 (a) and (b) of this Act but shall be subject to the replacement tax imposed by subsection 201 (c) and (d) of this Act and shall file such returns and other information at such time and in such manner as may be required under Article 5 of this Act.

(d) Combat zone death. An individual relieved from the federal income tax for any taxable year by reason of section 692 of the Internal Revenue Code shall not be subject to the tax imposed by this Act for such taxable year.

(e) Certain trusts. A common trust fund described in Section 584 of the Internal Revenue Code, and any other trust to the extent that the grantor is treated as the owner thereof under sections 671 through 678 of the Internal Revenue Code shall not be subject to the tax imposed by this Act.

(f) Certain business activities. A person not otherwise subject to the tax imposed by this Act shall not become subject to the tax imposed by this Act by reason of:

(1) that person's ownership of tangible personal property located at the premises of a printer in this State with which the person has contracted for printing, or

(2) activities of the person's employees or agents located solely at the premises of a printer and related to quality control, distribution, or printing services performed by a printer in the State with which the person has contracted for printing.

(g) A nonprofit risk organization that holds a certificate of authority under Article VIID of the Illinois Insurance Code is exempt from the tax imposed under this Act with respect to its activities or operations in furtherance of the powers conferred upon it under that Article VIID of the Illinois Insurance Code.

(Source: P.A. 93-840, eff. 7-30-04; 93-918, eff. 1-1-05; revised 10-25-04.)

(35 ILCS 5/205.5 new)

Sec. 205.5. Base income for not-for-profit hospitals. The base income of a hospital that is exempt from the federal income tax by reason of Section 501(a) of the Internal Revenue Code is the aggregate of:

(1) its unrelated business taxable income as determined under section 512 of the Internal Revenue Code, without any deduction for the tax imposed by this Act; and

(2) an amount equal to the payments for goods and services made to the hospital by patients and not reimbursed by public or private insurance less the amount that the State Medicaid program would have paid for those same goods and services.

The standard exemption provided by section 204 of this Act is not allowed in determining the net income of an organization to which this Section applies.

Section 99. Effective date. This Act takes effect upon becoming law.