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91_HB0999eng
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1 AN ACT relating to education.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Fund Education First Act.
6 Section 5. Educational appropriations. Beginning with
7 fiscal year 2000 and in each fiscal year thereafter, subject
8 to the provisions of Section 10 of this Act, the General
9 Assembly shall appropriate for educational programs an amount
10 that is equal to or exceeds the sum of: (a) the total amount
11 appropriated from general funds for educational programs
12 during the fiscal year immediately preceding the fiscal year
13 for which the appropriation is being made; and (b) 51% of
14 total new general funds available for spending from estimated
15 growth in revenues and funds available because of budgeted
16 program growth and decline in the fiscal year for which the
17 appropriation is being made, excluding annual State
18 contributions to the Teachers' Retirement System of the State
19 of Illinois, the Public School Teachers' Pension and
20 Retirement Fund of Chicago, and the State Universities
21 Retirement System.
22 Section 10. State and federal funding. State funding
23 for educational programs shall continue to be appropriated
24 pursuant to the formula established in Section 5 until the
25 sum of State and federal spending represents one-half of the
26 total revenues available from local, State, and federal
27 sources for elementary and secondary education programs for
28 the current fiscal year, as estimated by the State
29 Superintendent of Education.
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1 Section 15. Allocation. Two-thirds of the new general
2 funds to be appropriated pursuant to clause (b) of Section 5
3 shall be appropriated for elementary and secondary
4 educational programs and one-third shall be appropriated for
5 higher education programs.
6 Section 20. Governor's budget. Beginning with fiscal
7 year 2001 and in each fiscal year thereafter, the Governor
8 shall include in his annual budget an allocation for
9 elementary and secondary education and higher education which
10 conforms to the provisions of this Act.
11 Section 105. The Illinois Income Tax Act is amended by
12 changing Section 201 as follows:
13 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
14 Sec. 201. Tax Imposed.
15 (a) In general. A tax measured by net income is hereby
16 imposed on every individual, corporation, trust and estate
17 for each taxable year ending after July 31, 1969 on the
18 privilege of earning or receiving income in or as a resident
19 of this State. Such tax shall be in addition to all other
20 occupation or privilege taxes imposed by this State or by any
21 municipal corporation or political subdivision thereof.
22 (b) Rates. The tax imposed by subsection (a) of this
23 Section shall be determined as follows:
24 (1) In the case of an individual, trust or estate,
25 for taxable years ending prior to July 1, 1989, an amount
26 equal to 2 1/2% of the taxpayer's net income for the
27 taxable year.
28 (2) In the case of an individual, trust or estate,
29 for taxable years beginning prior to July 1, 1989 and
30 ending after June 30, 1989, an amount equal to the sum of
31 (i) 2 1/2% of the taxpayer's net income for the period
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1 prior to July 1, 1989, as calculated under Section 202.3,
2 and (ii) 3% of the taxpayer's net income for the period
3 after June 30, 1989, as calculated under Section 202.3.
4 (3) In the case of an individual, trust or estate,
5 for taxable years beginning after June 30, 1989, an
6 amount equal to 3% of the taxpayer's net income for the
7 taxable year.
8 (4) (Blank).
9 (5) (Blank).
10 (6) In the case of a corporation, for taxable years
11 ending prior to July 1, 1989, an amount equal to 4% of
12 the taxpayer's net income for the taxable year.
13 (7) In the case of a corporation, for taxable years
14 beginning prior to July 1, 1989 and ending after June 30,
15 1989, an amount equal to the sum of (i) 4% of the
16 taxpayer's net income for the period prior to July 1,
17 1989, as calculated under Section 202.3, and (ii) 4.8% of
18 the taxpayer's net income for the period after June 30,
19 1989, as calculated under Section 202.3.
20 (8) In the case of a corporation, for taxable years
21 beginning after June 30, 1989, an amount equal to 4.8% of
22 the taxpayer's net income for the taxable year.
23 (c) Beginning on July 1, 1979 and thereafter, in
24 addition to such income tax, there is also hereby imposed the
25 Personal Property Tax Replacement Income Tax measured by net
26 income on every corporation (including Subchapter S
27 corporations), partnership and trust, for each taxable year
28 ending after June 30, 1979. Such taxes are imposed on the
29 privilege of earning or receiving income in or as a resident
30 of this State. The Personal Property Tax Replacement Income
31 Tax shall be in addition to the income tax imposed by
32 subsections (a) and (b) of this Section and in addition to
33 all other occupation or privilege taxes imposed by this State
34 or by any municipal corporation or political subdivision
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1 thereof.
2 (d) Additional Personal Property Tax Replacement Income
3 Tax Rates. The personal property tax replacement income tax
4 imposed by this subsection and subsection (c) of this Section
5 in the case of a corporation, other than a Subchapter S
6 corporation, shall be an additional amount equal to 2.85% of
7 such taxpayer's net income for the taxable year, except that
8 beginning on January 1, 1981, and thereafter, the rate of
9 2.85% specified in this subsection shall be reduced to 2.5%,
10 and in the case of a partnership, trust or a Subchapter S
11 corporation shall be an additional amount equal to 1.5% of
12 such taxpayer's net income for the taxable year.
13 (e) Investment credit. A taxpayer shall be allowed a
14 credit against the Personal Property Tax Replacement Income
15 Tax for investment in qualified property.
16 (1) A taxpayer shall be allowed a credit equal to
17 .5% of the basis of qualified property placed in service
18 during the taxable year, provided such property is placed
19 in service on or after July 1, 1984. There shall be
20 allowed an additional credit equal to .5% of the basis of
21 qualified property placed in service during the taxable
22 year, provided such property is placed in service on or
23 after July 1, 1986, and the taxpayer's base employment
24 within Illinois has increased by 1% or more over the
25 preceding year as determined by the taxpayer's employment
26 records filed with the Illinois Department of Employment
27 Security. Taxpayers who are new to Illinois shall be
28 deemed to have met the 1% growth in base employment for
29 the first year in which they file employment records with
30 the Illinois Department of Employment Security. The
31 provisions added to this Section by Public Act 85-1200
32 (and restored by Public Act 87-895) shall be construed as
33 declaratory of existing law and not as a new enactment.
34 If, in any year, the increase in base employment within
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1 Illinois over the preceding year is less than 1%, the
2 additional credit shall be limited to that percentage
3 times a fraction, the numerator of which is .5% and the
4 denominator of which is 1%, but shall not exceed .5%.
5 The investment credit shall not be allowed to the extent
6 that it would reduce a taxpayer's liability in any tax
7 year below zero, nor may any credit for qualified
8 property be allowed for any year other than the year in
9 which the property was placed in service in Illinois. For
10 tax years ending on or after December 31, 1987, and on or
11 before December 31, 1988, the credit shall be allowed for
12 the tax year in which the property is placed in service,
13 or, if the amount of the credit exceeds the tax liability
14 for that year, whether it exceeds the original liability
15 or the liability as later amended, such excess may be
16 carried forward and applied to the tax liability of the 5
17 taxable years following the excess credit years if the
18 taxpayer (i) makes investments which cause the creation
19 of a minimum of 2,000 full-time equivalent jobs in
20 Illinois, (ii) is located in an enterprise zone
21 established pursuant to the Illinois Enterprise Zone Act
22 and (iii) is certified by the Department of Commerce and
23 Community Affairs as complying with the requirements
24 specified in clause (i) and (ii) by July 1, 1986. The
25 Department of Commerce and Community Affairs shall notify
26 the Department of Revenue of all such certifications
27 immediately. For tax years ending after December 31,
28 1988, the credit shall be allowed for the tax year in
29 which the property is placed in service, or, if the
30 amount of the credit exceeds the tax liability for that
31 year, whether it exceeds the original liability or the
32 liability as later amended, such excess may be carried
33 forward and applied to the tax liability of the 5 taxable
34 years following the excess credit years. The credit shall
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1 be applied to the earliest year for which there is a
2 liability. If there is credit from more than one tax year
3 that is available to offset a liability, earlier credit
4 shall be applied first.
5 (2) The term "qualified property" means property
6 which:
7 (A) is tangible, whether new or used,
8 including buildings and structural components of
9 buildings and signs that are real property, but not
10 including land or improvements to real property that
11 are not a structural component of a building such as
12 landscaping, sewer lines, local access roads,
13 fencing, parking lots, and other appurtenances;
14 (B) is depreciable pursuant to Section 167 of
15 the Internal Revenue Code, except that "3-year
16 property" as defined in Section 168(c)(2)(A) of that
17 Code is not eligible for the credit provided by this
18 subsection (e);
19 (C) is acquired by purchase as defined in
20 Section 179(d) of the Internal Revenue Code;
21 (D) is used in Illinois by a taxpayer who is
22 primarily engaged in manufacturing, or in mining
23 coal or fluorite, or in retailing; and
24 (E) has not previously been used in Illinois
25 in such a manner and by such a person as would
26 qualify for the credit provided by this subsection
27 (e) or subsection (f).
28 (3) For purposes of this subsection (e),
29 "manufacturing" means the material staging and production
30 of tangible personal property by procedures commonly
31 regarded as manufacturing, processing, fabrication, or
32 assembling which changes some existing material into new
33 shapes, new qualities, or new combinations. For purposes
34 of this subsection (e) the term "mining" shall have the
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1 same meaning as the term "mining" in Section 613(c) of
2 the Internal Revenue Code. For purposes of this
3 subsection (e), the term "retailing" means the sale of
4 tangible personal property or services rendered in
5 conjunction with the sale of tangible consumer goods or
6 commodities.
7 (4) The basis of qualified property shall be the
8 basis used to compute the depreciation deduction for
9 federal income tax purposes.
10 (5) If the basis of the property for federal income
11 tax depreciation purposes is increased after it has been
12 placed in service in Illinois by the taxpayer, the amount
13 of such increase shall be deemed property placed in
14 service on the date of such increase in basis.
15 (6) The term "placed in service" shall have the
16 same meaning as under Section 46 of the Internal Revenue
17 Code.
18 (7) If during any taxable year, any property ceases
19 to be qualified property in the hands of the taxpayer
20 within 48 months after being placed in service, or the
21 situs of any qualified property is moved outside Illinois
22 within 48 months after being placed in service, the
23 Personal Property Tax Replacement Income Tax for such
24 taxable year shall be increased. Such increase shall be
25 determined by (i) recomputing the investment credit which
26 would have been allowed for the year in which credit for
27 such property was originally allowed by eliminating such
28 property from such computation and, (ii) subtracting such
29 recomputed credit from the amount of credit previously
30 allowed. For the purposes of this paragraph (7), a
31 reduction of the basis of qualified property resulting
32 from a redetermination of the purchase price shall be
33 deemed a disposition of qualified property to the extent
34 of such reduction.
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1 (8) Unless the investment credit is extended by
2 law, the basis of qualified property shall not include
3 costs incurred after December 31, 2003, except for costs
4 incurred pursuant to a binding contract entered into on
5 or before December 31, 2003.
6 (9) Each taxable year, a partnership may elect to
7 pass through to its partners the credits to which the
8 partnership is entitled under this subsection (e) for the
9 taxable year. A partner may use the credit allocated to
10 him or her under this paragraph only against the tax
11 imposed in subsections (c) and (d) of this Section. If
12 the partnership makes that election, those credits shall
13 be allocated among the partners in the partnership in
14 accordance with the rules set forth in Section 704(b) of
15 the Internal Revenue Code, and the rules promulgated
16 under that Section, and the allocated amount of the
17 credits shall be allowed to the partners for that taxable
18 year. The partnership shall make this election on its
19 Personal Property Tax Replacement Income Tax return for
20 that taxable year. The election to pass through the
21 credits shall be irrevocable.
22 (f) Investment credit; Enterprise Zone.
23 (1) A taxpayer shall be allowed a credit against
24 the tax imposed by subsections (a) and (b) of this
25 Section for investment in qualified property which is
26 placed in service in an Enterprise Zone created pursuant
27 to the Illinois Enterprise Zone Act. For partners and for
28 shareholders of Subchapter S corporations, there shall be
29 allowed a credit under this subsection (f) to be
30 determined in accordance with the determination of income
31 and distributive share of income under Sections 702 and
32 704 and Subchapter S of the Internal Revenue Code. The
33 credit shall be .5% of the basis for such property. The
34 credit shall be available only in the taxable year in
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1 which the property is placed in service in the Enterprise
2 Zone and shall not be allowed to the extent that it would
3 reduce a taxpayer's liability for the tax imposed by
4 subsections (a) and (b) of this Section to below zero.
5 For tax years ending on or after December 31, 1985, the
6 credit shall be allowed for the tax year in which the
7 property is placed in service, or, if the amount of the
8 credit exceeds the tax liability for that year, whether
9 it exceeds the original liability or the liability as
10 later amended, such excess may be carried forward and
11 applied to the tax liability of the 5 taxable years
12 following the excess credit year. The credit shall be
13 applied to the earliest year for which there is a
14 liability. If there is credit from more than one tax year
15 that is available to offset a liability, the credit
16 accruing first in time shall be applied first.
17 (2) The term qualified property means property
18 which:
19 (A) is tangible, whether new or used,
20 including buildings and structural components of
21 buildings;
22 (B) is depreciable pursuant to Section 167 of
23 the Internal Revenue Code, except that "3-year
24 property" as defined in Section 168(c)(2)(A) of that
25 Code is not eligible for the credit provided by this
26 subsection (f);
27 (C) is acquired by purchase as defined in
28 Section 179(d) of the Internal Revenue Code;
29 (D) is used in the Enterprise Zone by the
30 taxpayer; and
31 (E) has not been previously used in Illinois
32 in such a manner and by such a person as would
33 qualify for the credit provided by this subsection
34 (f) or subsection (e).
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1 (3) The basis of qualified property shall be the
2 basis used to compute the depreciation deduction for
3 federal income tax purposes.
4 (4) If the basis of the property for federal income
5 tax depreciation purposes is increased after it has been
6 placed in service in the Enterprise Zone by the taxpayer,
7 the amount of such increase shall be deemed property
8 placed in service on the date of such increase in basis.
9 (5) The term "placed in service" shall have the
10 same meaning as under Section 46 of the Internal Revenue
11 Code.
12 (6) If during any taxable year, any property ceases
13 to be qualified property in the hands of the taxpayer
14 within 48 months after being placed in service, or the
15 situs of any qualified property is moved outside the
16 Enterprise Zone within 48 months after being placed in
17 service, the tax imposed under subsections (a) and (b) of
18 this Section for such taxable year shall be increased.
19 Such increase shall be determined by (i) recomputing the
20 investment credit which would have been allowed for the
21 year in which credit for such property was originally
22 allowed by eliminating such property from such
23 computation, and (ii) subtracting such recomputed credit
24 from the amount of credit previously allowed. For the
25 purposes of this paragraph (6), a reduction of the basis
26 of qualified property resulting from a redetermination of
27 the purchase price shall be deemed a disposition of
28 qualified property to the extent of such reduction.
29 (g) Jobs Tax Credit; Enterprise Zone and Foreign
30 Trade Zone or Sub-Zone.
31 (1) A taxpayer conducting a trade or business in an
32 enterprise zone or a High Impact Business designated by
33 the Department of Commerce and Community Affairs
34 conducting a trade or business in a federally designated
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1 Foreign Trade Zone or Sub-Zone shall be allowed a credit
2 against the tax imposed by subsections (a) and (b) of
3 this Section in the amount of $500 per eligible employee
4 hired to work in the zone during the taxable year.
5 (2) To qualify for the credit:
6 (A) the taxpayer must hire 5 or more eligible
7 employees to work in an enterprise zone or federally
8 designated Foreign Trade Zone or Sub-Zone during the
9 taxable year;
10 (B) the taxpayer's total employment within the
11 enterprise zone or federally designated Foreign
12 Trade Zone or Sub-Zone must increase by 5 or more
13 full-time employees beyond the total employed in
14 that zone at the end of the previous tax year for
15 which a jobs tax credit under this Section was
16 taken, or beyond the total employed by the taxpayer
17 as of December 31, 1985, whichever is later; and
18 (C) the eligible employees must be employed
19 180 consecutive days in order to be deemed hired for
20 purposes of this subsection.
21 (3) An "eligible employee" means an employee who
22 is:
23 (A) Certified by the Department of Commerce
24 and Community Affairs as "eligible for services"
25 pursuant to regulations promulgated in accordance
26 with Title II of the Job Training Partnership Act,
27 Training Services for the Disadvantaged or Title III
28 of the Job Training Partnership Act, Employment and
29 Training Assistance for Dislocated Workers Program.
30 (B) Hired after the enterprise zone or
31 federally designated Foreign Trade Zone or Sub-Zone
32 was designated or the trade or business was located
33 in that zone, whichever is later.
34 (C) Employed in the enterprise zone or Foreign
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1 Trade Zone or Sub-Zone. An employee is employed in
2 an enterprise zone or federally designated Foreign
3 Trade Zone or Sub-Zone if his services are rendered
4 there or it is the base of operations for the
5 services performed.
6 (D) A full-time employee working 30 or more
7 hours per week.
8 (4) For tax years ending on or after December 31,
9 1985 and prior to December 31, 1988, the credit shall be
10 allowed for the tax year in which the eligible employees
11 are hired. For tax years ending on or after December 31,
12 1988, the credit shall be allowed for the tax year
13 immediately following the tax year in which the eligible
14 employees are hired. If the amount of the credit exceeds
15 the tax liability for that year, whether it exceeds the
16 original liability or the liability as later amended,
17 such excess may be carried forward and applied to the tax
18 liability of the 5 taxable years following the excess
19 credit year. The credit shall be applied to the earliest
20 year for which there is a liability. If there is credit
21 from more than one tax year that is available to offset a
22 liability, earlier credit shall be applied first.
23 (5) The Department of Revenue shall promulgate such
24 rules and regulations as may be deemed necessary to carry
25 out the purposes of this subsection (g).
26 (6) The credit shall be available for eligible
27 employees hired on or after January 1, 1986.
28 (h) Investment credit; High Impact Business.
29 (1) Subject to subsection (b) of Section 5.5 of the
30 Illinois Enterprise Zone Act, a taxpayer shall be allowed
31 a credit against the tax imposed by subsections (a) and
32 (b) of this Section for investment in qualified property
33 which is placed in service by a Department of Commerce
34 and Community Affairs designated High Impact Business.
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1 The credit shall be .5% of the basis for such property.
2 The credit shall not be available until the minimum
3 investments in qualified property set forth in Section
4 5.5 of the Illinois Enterprise Zone Act have been
5 satisfied and shall not be allowed to the extent that it
6 would reduce a taxpayer's liability for the tax imposed
7 by subsections (a) and (b) of this Section to below zero.
8 The credit applicable to such minimum investments shall
9 be taken in the taxable year in which such minimum
10 investments have been completed. The credit for
11 additional investments beyond the minimum investment by a
12 designated high impact business shall be available only
13 in the taxable year in which the property is placed in
14 service and shall not be allowed to the extent that it
15 would reduce a taxpayer's liability for the tax imposed
16 by subsections (a) and (b) of this Section to below zero.
17 For tax years ending on or after December 31, 1987, the
18 credit shall be allowed for the tax year in which the
19 property is placed in service, or, if the amount of the
20 credit exceeds the tax liability for that year, whether
21 it exceeds the original liability or the liability as
22 later amended, such excess may be carried forward and
23 applied to the tax liability of the 5 taxable years
24 following the excess credit year. The credit shall be
25 applied to the earliest year for which there is a
26 liability. If there is credit from more than one tax
27 year that is available to offset a liability, the credit
28 accruing first in time shall be applied first.
29 Changes made in this subdivision (h)(1) by Public
30 Act 88-670 restore changes made by Public Act 85-1182 and
31 reflect existing law.
32 (2) The term qualified property means property
33 which:
34 (A) is tangible, whether new or used,
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1 including buildings and structural components of
2 buildings;
3 (B) is depreciable pursuant to Section 167 of
4 the Internal Revenue Code, except that "3-year
5 property" as defined in Section 168(c)(2)(A) of that
6 Code is not eligible for the credit provided by this
7 subsection (h);
8 (C) is acquired by purchase as defined in
9 Section 179(d) of the Internal Revenue Code; and
10 (D) is not eligible for the Enterprise Zone
11 Investment Credit provided by subsection (f) of this
12 Section.
13 (3) The basis of qualified property shall be the
14 basis used to compute the depreciation deduction for
15 federal income tax purposes.
16 (4) If the basis of the property for federal income
17 tax depreciation purposes is increased after it has been
18 placed in service in a federally designated Foreign Trade
19 Zone or Sub-Zone located in Illinois by the taxpayer, the
20 amount of such increase shall be deemed property placed
21 in service on the date of such increase in basis.
22 (5) The term "placed in service" shall have the
23 same meaning as under Section 46 of the Internal Revenue
24 Code.
25 (6) If during any taxable year ending on or before
26 December 31, 1996, any property ceases to be qualified
27 property in the hands of the taxpayer within 48 months
28 after being placed in service, or the situs of any
29 qualified property is moved outside Illinois within 48
30 months after being placed in service, the tax imposed
31 under subsections (a) and (b) of this Section for such
32 taxable year shall be increased. Such increase shall be
33 determined by (i) recomputing the investment credit which
34 would have been allowed for the year in which credit for
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1 such property was originally allowed by eliminating such
2 property from such computation, and (ii) subtracting such
3 recomputed credit from the amount of credit previously
4 allowed. For the purposes of this paragraph (6), a
5 reduction of the basis of qualified property resulting
6 from a redetermination of the purchase price shall be
7 deemed a disposition of qualified property to the extent
8 of such reduction.
9 (7) Beginning with tax years ending after December
10 31, 1996, if a taxpayer qualifies for the credit under
11 this subsection (h) and thereby is granted a tax
12 abatement and the taxpayer relocates its entire facility
13 in violation of the explicit terms and length of the
14 contract under Section 18-183 of the Property Tax Code,
15 the tax imposed under subsections (a) and (b) of this
16 Section shall be increased for the taxable year in which
17 the taxpayer relocated its facility by an amount equal to
18 the amount of credit received by the taxpayer under this
19 subsection (h).
20 (i) A credit shall be allowed against the tax imposed by
21 subsections (a) and (b) of this Section for the tax imposed
22 by subsections (c) and (d) of this Section. This credit
23 shall be computed by multiplying the tax imposed by
24 subsections (c) and (d) of this Section by a fraction, the
25 numerator of which is base income allocable to Illinois and
26 the denominator of which is Illinois base income, and further
27 multiplying the product by the tax rate imposed by
28 subsections (a) and (b) of this Section.
29 Any credit earned on or after December 31, 1986 under
30 this subsection which is unused in the year the credit is
31 computed because it exceeds the tax liability imposed by
32 subsections (a) and (b) for that year (whether it exceeds the
33 original liability or the liability as later amended) may be
34 carried forward and applied to the tax liability imposed by
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1 subsections (a) and (b) of the 5 taxable years following the
2 excess credit year. This credit shall be applied first to
3 the earliest year for which there is a liability. If there
4 is a credit under this subsection from more than one tax year
5 that is available to offset a liability the earliest credit
6 arising under this subsection shall be applied first.
7 If, during any taxable year ending on or after December
8 31, 1986, the tax imposed by subsections (c) and (d) of this
9 Section for which a taxpayer has claimed a credit under this
10 subsection (i) is reduced, the amount of credit for such tax
11 shall also be reduced. Such reduction shall be determined by
12 recomputing the credit to take into account the reduced tax
13 imposed by subsection (c) and (d). If any portion of the
14 reduced amount of credit has been carried to a different
15 taxable year, an amended return shall be filed for such
16 taxable year to reduce the amount of credit claimed.
17 (j) Training expense credit. Beginning with tax years
18 ending on or after December 31, 1986, a taxpayer shall be
19 allowed a credit against the tax imposed by subsection (a)
20 and (b) under this Section for all amounts paid or accrued,
21 on behalf of all persons employed by the taxpayer in Illinois
22 or Illinois residents employed outside of Illinois by a
23 taxpayer, for educational or vocational training in
24 semi-technical or technical fields or semi-skilled or skilled
25 fields, which were deducted from gross income in the
26 computation of taxable income. The credit against the tax
27 imposed by subsections (a) and (b) shall be 1.6% of such
28 training expenses. For partners and for shareholders of
29 subchapter S corporations, there shall be allowed a credit
30 under this subsection (j) to be determined in accordance with
31 the determination of income and distributive share of income
32 under Sections 702 and 704 and subchapter S of the Internal
33 Revenue Code.
34 Any credit allowed under this subsection which is unused
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1 in the year the credit is earned may be carried forward to
2 each of the 5 taxable years following the year for which the
3 credit is first computed until it is used. This credit shall
4 be applied first to the earliest year for which there is a
5 liability. If there is a credit under this subsection from
6 more than one tax year that is available to offset a
7 liability the earliest credit arising under this subsection
8 shall be applied first.
9 (k) Research and development credit.
10 Beginning with tax years ending after July 1, 1990, a
11 taxpayer shall be allowed a credit against the tax imposed by
12 subsections (a) and (b) of this Section for increasing
13 research activities in this State. The credit allowed
14 against the tax imposed by subsections (a) and (b) shall be
15 equal to 6 1/2% of the qualifying expenditures for increasing
16 research activities in this State.
17 For purposes of this subsection, "qualifying
18 expenditures" means the qualifying expenditures as defined
19 for the federal credit for increasing research activities
20 which would be allowable under Section 41 of the Internal
21 Revenue Code and which are conducted in this State,
22 "qualifying expenditures for increasing research activities
23 in this State" means the excess of qualifying expenditures
24 for the taxable year in which incurred over qualifying
25 expenditures for the base period, "qualifying expenditures
26 for the base period" means the average of the qualifying
27 expenditures for each year in the base period, and "base
28 period" means the 3 taxable years immediately preceding the
29 taxable year for which the determination is being made.
30 Any credit in excess of the tax liability for the taxable
31 year may be carried forward. A taxpayer may elect to have the
32 unused credit shown on its final completed return carried
33 over as a credit against the tax liability for the following
34 5 taxable years or until it has been fully used, whichever
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1 occurs first.
2 If an unused credit is carried forward to a given year
3 from 2 or more earlier years, that credit arising in the
4 earliest year will be applied first against the tax liability
5 for the given year. If a tax liability for the given year
6 still remains, the credit from the next earliest year will
7 then be applied, and so on, until all credits have been used
8 or no tax liability for the given year remains. Any
9 remaining unused credit or credits then will be carried
10 forward to the next following year in which a tax liability
11 is incurred, except that no credit can be carried forward to
12 a year which is more than 5 years after the year in which the
13 expense for which the credit is given was incurred.
14 Unless extended by law, the credit shall not include
15 costs incurred after December 31, 2004, except for costs
16 incurred pursuant to a binding contract entered into on or
17 before December 31, 2004.
18 (l) Environmental Remediation Tax Credit.
19 (i) For tax years ending after December 31, 1997
20 and on or before December 31, 2001, a taxpayer shall be
21 allowed a credit against the tax imposed by subsections
22 (a) and (b) of this Section for certain amounts paid for
23 unreimbursed eligible remediation costs, as specified in
24 this subsection. For purposes of this Section,
25 "unreimbursed eligible remediation costs" means costs
26 approved by the Illinois Environmental Protection Agency
27 ("Agency") under Section 58.14 of the Environmental
28 Protection Act that were paid in performing environmental
29 remediation at a site for which a No Further Remediation
30 Letter was issued by the Agency and recorded under
31 Section 58.10 of the Environmental Protection Act. The
32 credit must be claimed for the taxable year in which
33 Agency approval of the eligible remediation costs is
34 granted. The credit is not available to any taxpayer if
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1 the taxpayer or any related party caused or contributed
2 to, in any material respect, a release of regulated
3 substances on, in, or under the site that was identified
4 and addressed by the remedial action pursuant to the Site
5 Remediation Program of the Environmental Protection Act.
6 After the Pollution Control Board rules are adopted
7 pursuant to the Illinois Administrative Procedure Act for
8 the administration and enforcement of Section 58.9 of the
9 Environmental Protection Act, determinations as to credit
10 availability for purposes of this Section shall be made
11 consistent with those rules. For purposes of this
12 Section, "taxpayer" includes a person whose tax
13 attributes the taxpayer has succeeded to under Section
14 381 of the Internal Revenue Code and "related party"
15 includes the persons disallowed a deduction for losses by
16 paragraphs (b), (c), and (f)(1) of Section 267 of the
17 Internal Revenue Code by virtue of being a related
18 taxpayer, as well as any of its partners. The credit
19 allowed against the tax imposed by subsections (a) and
20 (b) shall be equal to 25% of the unreimbursed eligible
21 remediation costs in excess of $100,000 per site, except
22 that the $100,000 threshold shall not apply to any site
23 contained in an enterprise zone as determined by the
24 Department of Commerce and Community Affairs. The total
25 credit allowed shall not exceed $40,000 per year with a
26 maximum total of $150,000 per site. For partners and
27 shareholders of subchapter S corporations, there shall be
28 allowed a credit under this subsection to be determined
29 in accordance with the determination of income and
30 distributive share of income under Sections 702 and 704
31 of subchapter S of the Internal Revenue Code.
32 (ii) A credit allowed under this subsection that is
33 unused in the year the credit is earned may be carried
34 forward to each of the 5 taxable years following the year
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1 for which the credit is first earned until it is used.
2 The term "unused credit" does not include any amounts of
3 unreimbursed eligible remediation costs in excess of the
4 maximum credit per site authorized under paragraph (i).
5 This credit shall be applied first to the earliest year
6 for which there is a liability. If there is a credit
7 under this subsection from more than one tax year that is
8 available to offset a liability, the earliest credit
9 arising under this subsection shall be applied first. A
10 credit allowed under this subsection may be sold to a
11 buyer as part of a sale of all or part of the remediation
12 site for which the credit was granted. The purchaser of
13 a remediation site and the tax credit shall succeed to
14 the unused credit and remaining carry-forward period of
15 the seller. To perfect the transfer, the assignor shall
16 record the transfer in the chain of title for the site
17 and provide written notice to the Director of the
18 Illinois Department of Revenue of the assignor's intent
19 to sell the remediation site and the amount of the tax
20 credit to be transferred as a portion of the sale. In no
21 event may a credit be transferred to any taxpayer if the
22 taxpayer or a related party would not be eligible under
23 the provisions of subsection (i).
24 (iii) For purposes of this Section, the term "site"
25 shall have the same meaning as under Section 58.2 of the
26 Environmental Protection Act.
27 (m) Education expense credit.
28 Beginning with tax years ending on or after December 31,
29 2000, a taxpayer who is the custodian of one or more
30 qualifying pupils shall be allowed a credit against the tax
31 imposed by subsections (a) and (b) of this Section for
32 qualified education expenses incurred on behalf of the
33 qualifying pupils. The credit shall be equal to 25% of
34 qualified education expenses, but in no event may the total
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1 credit under this Section claimed by a family that is the
2 custodian of qualifying pupils exceed $500. In no event shall
3 a credit under this subsection reduce the taxpayer's
4 liability under this Act to less than zero. This subsection
5 is exempt from the provisions of Section 250 of this Act.
6 For purposes of this subsection:
7 "Qualifying pupils" means individuals who (i) are
8 residents of the State of Illinois, (ii) are under the age of
9 21 at the close of the school year for which a credit is
10 sought, and (iii) during the school year for which a credit
11 is sought were full-time pupils enrolled in a kindergarten
12 through twelfth grade education program at any school, as
13 defined in this subsection.
14 "Qualified education expense" means the amount incurred
15 by a taxpayer on behalf of a qualifying pupil or pupils in
16 excess of $250 for tuition, book fees, and lab fees at the
17 school or schools in which the pupil or pupils are enrolled
18 during the regular school year.
19 "School" means any public or nonpublic elementary or
20 secondary school in Illinois that is in compliance with Title
21 VI of the Civil Rights Act of 1964 and attendance at which
22 satisfies the requirements of Section 26-1 of the School
23 Code, except that nothing in Section 26-1 shall be construed
24 to require a child to attend any particular public or
25 nonpublic school.
26 "Custodian" means, with respect to a qualifying pupil, an
27 Illinois resident who is the parent, parents, or legal
28 guardian of the qualifying pupil.
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.)
33 Section 999. Effective date. This Act takes effect upon
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1 becoming law.