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91_SB0327
LRB9103540PTpk
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 201.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 201 as follows:
7 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
8 Sec. 201. Tax Imposed.
9 (a) In general. A tax measured by net income is hereby
10 imposed on every individual, corporation, trust and estate
11 for each taxable year ending after July 31, 1969 on the
12 privilege of earning or receiving income in or as a resident
13 of this State. Such tax shall be in addition to all other
14 occupation or privilege taxes imposed by this State or by any
15 municipal corporation or political subdivision thereof.
16 (b) Rates. The tax imposed by subsection (a) of this
17 Section shall be determined as follows:
18 (1) In the case of an individual, trust or estate,
19 for taxable years ending prior to July 1, 1989, an amount
20 equal to 2 1/2% of the taxpayer's net income for the
21 taxable year.
22 (2) In the case of an individual, trust or estate,
23 for taxable years beginning prior to July 1, 1989 and
24 ending after June 30, 1989, an amount equal to the sum of
25 (i) 2 1/2% of the taxpayer's net income for the period
26 prior to July 1, 1989, as calculated under Section 202.3,
27 and (ii) 3% of the taxpayer's net income for the period
28 after June 30, 1989, as calculated under Section 202.3.
29 (3) In the case of an individual, trust or estate,
30 for taxable years beginning after June 30, 1989, an
31 amount equal to 3% of the taxpayer's net income for the
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1 taxable year.
2 (4) (Blank).
3 (5) (Blank).
4 (6) In the case of a corporation, for taxable years
5 ending prior to July 1, 1989, an amount equal to 4% of
6 the taxpayer's net income for the taxable year.
7 (7) In the case of a corporation, for taxable years
8 beginning prior to July 1, 1989 and ending after June 30,
9 1989, an amount equal to the sum of (i) 4% of the
10 taxpayer's net income for the period prior to July 1,
11 1989, as calculated under Section 202.3, and (ii) 4.8% of
12 the taxpayer's net income for the period after June 30,
13 1989, as calculated under Section 202.3.
14 (8) In the case of a corporation, for taxable years
15 beginning after June 30, 1989, an amount equal to 4.8% of
16 the taxpayer's net income for the taxable year.
17 (c) Beginning on July 1, 1979 and thereafter, in
18 addition to such income tax, there is also hereby imposed the
19 Personal Property Tax Replacement Income Tax measured by net
20 income on every corporation (including Subchapter S
21 corporations), partnership and trust, for each taxable year
22 ending after June 30, 1979. Such taxes are imposed on the
23 privilege of earning or receiving income in or as a resident
24 of this State. The Personal Property Tax Replacement Income
25 Tax shall be in addition to the income tax imposed by
26 subsections (a) and (b) of this Section and in addition to
27 all other occupation or privilege taxes imposed by this State
28 or by any municipal corporation or political subdivision
29 thereof.
30 (d) Additional Personal Property Tax Replacement Income
31 Tax Rates. The personal property tax replacement income tax
32 imposed by this subsection and subsection (c) of this Section
33 in the case of a corporation, other than a Subchapter S
34 corporation, shall be an additional amount equal to 2.85% of
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1 such taxpayer's net income for the taxable year, except that
2 beginning on January 1, 1981, and thereafter, the rate of
3 2.85% specified in this subsection shall be reduced to 2.5%,
4 and in the case of a partnership, trust or a Subchapter S
5 corporation shall be an additional amount equal to 1.5% of
6 such taxpayer's net income for the taxable year.
7 (e) Investment credit. A taxpayer shall be allowed a
8 credit against the Personal Property Tax Replacement Income
9 Tax for investment in qualified property.
10 (1) A taxpayer shall be allowed a credit equal to
11 .5% of the basis of qualified property placed in service
12 during the taxable year, provided such property is placed
13 in service on or after July 1, 1984. There shall be
14 allowed an additional credit equal to .5% of the basis of
15 qualified property placed in service during the taxable
16 year, provided such property is placed in service on or
17 after July 1, 1986, and the taxpayer's base employment
18 within Illinois has increased by 1% or more over the
19 preceding year as determined by the taxpayer's employment
20 records filed with the Illinois Department of Employment
21 Security. Taxpayers who are new to Illinois shall be
22 deemed to have met the 1% growth in base employment for
23 the first year in which they file employment records with
24 the Illinois Department of Employment Security. The
25 provisions added to this Section by Public Act 85-1200
26 (and restored by Public Act 87-895) shall be construed as
27 declaratory of existing law and not as a new enactment.
28 If, in any year, the increase in base employment within
29 Illinois over the preceding year is less than 1%, the
30 additional credit shall be limited to that percentage
31 times a fraction, the numerator of which is .5% and the
32 denominator of which is 1%, but shall not exceed .5%.
33 The investment credit shall not be allowed to the extent
34 that it would reduce a taxpayer's liability in any tax
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1 year below zero, nor may any credit for qualified
2 property be allowed for any year other than the year in
3 which the property was placed in service in Illinois. For
4 tax years ending on or after December 31, 1987, and on or
5 before December 31, 1988, the credit shall be allowed for
6 the tax year in which the property is placed in service,
7 or, if the amount of the credit exceeds the tax liability
8 for that year, whether it exceeds the original liability
9 or the liability as later amended, such excess may be
10 carried forward and applied to the tax liability of the 5
11 taxable years following the excess credit years if the
12 taxpayer (i) makes investments which cause the creation
13 of a minimum of 2,000 full-time equivalent jobs in
14 Illinois, (ii) is located in an enterprise zone
15 established pursuant to the Illinois Enterprise Zone Act
16 and (iii) is certified by the Department of Commerce and
17 Community Affairs as complying with the requirements
18 specified in clause (i) and (ii) by July 1, 1986. The
19 Department of Commerce and Community Affairs shall notify
20 the Department of Revenue of all such certifications
21 immediately. For tax years ending after December 31,
22 1988, the credit shall be allowed for the tax year in
23 which the property is placed in service, or, if the
24 amount of the credit exceeds the tax liability for that
25 year, whether it exceeds the original liability or the
26 liability as later amended, such excess may be carried
27 forward and applied to the tax liability of the 5 taxable
28 years following the excess credit years. The credit shall
29 be applied to the earliest year for which there is a
30 liability. If there is credit from more than one tax year
31 that is available to offset a liability, earlier credit
32 shall be applied first.
33 (2) The term "qualified property" means property
34 which:
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1 (A) is tangible, whether new or used,
2 including buildings and structural components of
3 buildings and signs that are real property, but not
4 including land or improvements to real property that
5 are not a structural component of a building such as
6 landscaping, sewer lines, local access roads,
7 fencing, parking lots, and other appurtenances;
8 (B) is depreciable pursuant to Section 167 of
9 the Internal Revenue Code, except that "3-year
10 property" as defined in Section 168(c)(2)(A) of that
11 Code is not eligible for the credit provided by this
12 subsection (e);
13 (C) is acquired by purchase as defined in
14 Section 179(d) of the Internal Revenue Code;
15 (D) is used in Illinois by a taxpayer who is
16 primarily engaged in manufacturing, or in mining
17 coal or fluorite, or in retailing; and
18 (E) has not previously been used in Illinois
19 in such a manner and by such a person as would
20 qualify for the credit provided by this subsection
21 (e) or subsection (f).
22 (3) For purposes of this subsection (e),
23 "manufacturing" means the material staging and production
24 of tangible personal property by procedures commonly
25 regarded as manufacturing, processing, fabrication, or
26 assembling which changes some existing material into new
27 shapes, new qualities, or new combinations. For purposes
28 of this subsection (e) the term "mining" shall have the
29 same meaning as the term "mining" in Section 613(c) of
30 the Internal Revenue Code. For purposes of this
31 subsection (e), the term "retailing" means the sale of
32 tangible personal property or services rendered in
33 conjunction with the sale of tangible consumer goods or
34 commodities.
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1 (4) The basis of qualified property shall be the
2 basis used to compute the depreciation deduction for
3 federal income tax purposes.
4 (5) If the basis of the property for federal income
5 tax depreciation purposes is increased after it has been
6 placed in service in Illinois by the taxpayer, the amount
7 of such increase shall be deemed property placed in
8 service on the date of such increase in basis.
9 (6) The term "placed in service" shall have the
10 same meaning as under Section 46 of the Internal Revenue
11 Code.
12 (7) 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 Illinois
16 within 48 months after being placed in service, the
17 Personal Property Tax Replacement Income Tax for such
18 taxable year shall be increased. Such increase shall be
19 determined by (i) recomputing the investment credit which
20 would have been allowed for the year in which credit for
21 such property was originally allowed by eliminating such
22 property from such computation and, (ii) subtracting such
23 recomputed credit from the amount of credit previously
24 allowed. For the purposes of this paragraph (7), a
25 reduction of the basis of qualified property resulting
26 from a redetermination of the purchase price shall be
27 deemed a disposition of qualified property to the extent
28 of such reduction.
29 (8) Unless the investment credit is extended by
30 law, the basis of qualified property shall not include
31 costs incurred after December 31, 2003, except for costs
32 incurred pursuant to a binding contract entered into on
33 or before December 31, 2003.
34 (9) Each taxable year, a partnership may elect to
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1 pass through to its partners the credits to which the
2 partnership is entitled under this subsection (e) for the
3 taxable year. A partner may use the credit allocated to
4 him or her under this paragraph only against the tax
5 imposed in subsections (c) and (d) of this Section. If
6 the partnership makes that election, those credits shall
7 be allocated among the partners in the partnership in
8 accordance with the rules set forth in Section 704(b) of
9 the Internal Revenue Code, and the rules promulgated
10 under that Section, and the allocated amount of the
11 credits shall be allowed to the partners for that taxable
12 year. The partnership shall make this election on its
13 Personal Property Tax Replacement Income Tax return for
14 that taxable year. The election to pass through the
15 credits shall be irrevocable.
16 (f) Investment credit; Enterprise Zone.
17 (1) A taxpayer shall be allowed a credit against
18 the tax imposed by subsections (a) and (b) of this
19 Section for investment in qualified property which is
20 placed in service in an Enterprise Zone created pursuant
21 to the Illinois Enterprise Zone Act. For partners and for
22 shareholders of Subchapter S corporations, there shall be
23 allowed a credit under this subsection (f) to be
24 determined in accordance with the determination of income
25 and distributive share of income under Sections 702 and
26 704 and Subchapter S of the Internal Revenue Code. The
27 credit shall be .5% of the basis for such property. The
28 credit shall be available only in the taxable year in
29 which the property is placed in service in the Enterprise
30 Zone and shall not be allowed to the extent that it would
31 reduce a taxpayer's liability for the tax imposed by
32 subsections (a) and (b) of this Section to below zero.
33 For tax years ending on or after December 31, 1985, the
34 credit shall be allowed for the tax year in which the
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1 property is placed in service, or, if the amount of the
2 credit exceeds the tax liability for that year, whether
3 it exceeds the original liability or the liability as
4 later amended, such excess may be carried forward and
5 applied to the tax liability of the 5 taxable years
6 following the excess credit year. The credit shall be
7 applied to the earliest year for which there is a
8 liability. If there is credit from more than one tax year
9 that is available to offset a liability, the credit
10 accruing first in time shall be applied first.
11 (2) The term qualified property means property
12 which:
13 (A) is tangible, whether new or used,
14 including buildings and structural components of
15 buildings;
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 (f);
21 (C) is acquired by purchase as defined in
22 Section 179(d) of the Internal Revenue Code;
23 (D) is used in the Enterprise Zone by the
24 taxpayer; and
25 (E) has not been previously used in Illinois
26 in such a manner and by such a person as would
27 qualify for the credit provided by this subsection
28 (f) or subsection (e).
29 (3) The basis of qualified property shall be the
30 basis used to compute the depreciation deduction for
31 federal income tax purposes.
32 (4) If the basis of the property for federal income
33 tax depreciation purposes is increased after it has been
34 placed in service in the Enterprise Zone by the taxpayer,
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1 the amount of such increase shall be deemed property
2 placed in service on the date of such increase in basis.
3 (5) The term "placed in service" shall have the
4 same meaning as under Section 46 of the Internal Revenue
5 Code.
6 (6) If during any taxable year, any property ceases
7 to be qualified property in the hands of the taxpayer
8 within 48 months after being placed in service, or the
9 situs of any qualified property is moved outside the
10 Enterprise Zone within 48 months after being placed in
11 service, the tax imposed under subsections (a) and (b) of
12 this Section for such taxable year shall be increased.
13 Such increase shall be determined by (i) recomputing the
14 investment credit which would have been allowed for the
15 year in which credit for such property was originally
16 allowed by eliminating such property from such
17 computation, and (ii) subtracting such recomputed credit
18 from the amount of credit previously allowed. For the
19 purposes of this paragraph (6), a reduction of the basis
20 of qualified property resulting from a redetermination of
21 the purchase price shall be deemed a disposition of
22 qualified property to the extent of such reduction.
23 (g) Jobs Tax Credit; Enterprise Zone and Foreign
24 Trade Zone or Sub-Zone.
25 (1) A taxpayer conducting a trade or business in an
26 enterprise zone or a High Impact Business designated by
27 the Department of Commerce and Community Affairs
28 conducting a trade or business in a federally designated
29 Foreign Trade Zone or Sub-Zone shall be allowed a credit
30 against the tax imposed by subsections (a) and (b) of
31 this Section in the amount of $500 per eligible employee
32 hired to work in the zone during the taxable year.
33 (2) To qualify for the credit:
34 (A) the taxpayer must hire 5 or more eligible
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1 employees to work in an enterprise zone or federally
2 designated Foreign Trade Zone or Sub-Zone during the
3 taxable year;
4 (B) the taxpayer's total employment within the
5 enterprise zone or federally designated Foreign
6 Trade Zone or Sub-Zone must increase by 5 or more
7 full-time employees beyond the total employed in
8 that zone at the end of the previous tax year for
9 which a jobs tax credit under this Section was
10 taken, or beyond the total employed by the taxpayer
11 as of December 31, 1985, whichever is later; and
12 (C) the eligible employees must be employed
13 180 consecutive days in order to be deemed hired for
14 purposes of this subsection.
15 (3) An "eligible employee" means an employee who
16 is:
17 (A) Certified by the Department of Commerce
18 and Community Affairs as "eligible for services"
19 pursuant to regulations promulgated in accordance
20 with Title II of the Job Training Partnership Act,
21 Training Services for the Disadvantaged or Title III
22 of the Job Training Partnership Act, Employment and
23 Training Assistance for Dislocated Workers Program.
24 (B) Hired after the enterprise zone or
25 federally designated Foreign Trade Zone or Sub-Zone
26 was designated or the trade or business was located
27 in that zone, whichever is later.
28 (C) Employed in the enterprise zone or Foreign
29 Trade Zone or Sub-Zone. An employee is employed in
30 an enterprise zone or federally designated Foreign
31 Trade Zone or Sub-Zone if his services are rendered
32 there or it is the base of operations for the
33 services performed.
34 (D) A full-time employee working 30 or more
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1 hours per week.
2 (4) For tax years ending on or after December 31,
3 1985 and prior to December 31, 1988, the credit shall be
4 allowed for the tax year in which the eligible employees
5 are hired. For tax years ending on or after December 31,
6 1988, the credit shall be allowed for the tax year
7 immediately following the tax year in which the eligible
8 employees are hired. If the amount of the credit exceeds
9 the tax liability for that year, whether it exceeds the
10 original liability or the liability as later amended,
11 such excess may be carried forward and applied to the tax
12 liability of the 5 taxable years following the excess
13 credit year. The credit shall be applied to the earliest
14 year for which there is a liability. If there is credit
15 from more than one tax year that is available to offset a
16 liability, earlier credit shall be applied first.
17 (5) The Department of Revenue shall promulgate such
18 rules and regulations as may be deemed necessary to carry
19 out the purposes of this subsection (g).
20 (6) The credit shall be available for eligible
21 employees hired on or after January 1, 1986.
22 (h) Investment credit; High Impact Business.
23 (1) Subject to subsection (b) of Section 5.5 of the
24 Illinois Enterprise Zone Act, a taxpayer shall be allowed
25 a credit against the tax imposed by subsections (a) and
26 (b) of this Section for investment in qualified property
27 which is placed in service by a Department of Commerce
28 and Community Affairs designated High Impact Business.
29 The credit shall be .5% of the basis for such property.
30 The credit shall not be available until the minimum
31 investments in qualified property set forth in Section
32 5.5 of the Illinois Enterprise Zone Act have been
33 satisfied and shall not be allowed to the extent that it
34 would reduce a taxpayer's liability for the tax imposed
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1 by subsections (a) and (b) of this Section to below zero.
2 The credit applicable to such minimum investments shall
3 be taken in the taxable year in which such minimum
4 investments have been completed. The credit for
5 additional investments beyond the minimum investment by a
6 designated high impact business shall be available only
7 in the taxable year in which the property is placed in
8 service and shall not be allowed to the extent that it
9 would reduce a taxpayer's liability for the tax imposed
10 by subsections (a) and (b) of this Section to below zero.
11 For tax years ending on or after December 31, 1987, the
12 credit shall be allowed for the tax year in which the
13 property is placed in service, or, if the amount of the
14 credit exceeds the tax liability for that year, whether
15 it exceeds the original liability or the liability as
16 later amended, such excess may be carried forward and
17 applied to the tax liability of the 5 taxable years
18 following the excess credit year. The credit shall be
19 applied to the earliest year for which there is a
20 liability. If there is credit from more than one tax
21 year that is available to offset a liability, the credit
22 accruing first in time shall be applied first.
23 Changes made in this subdivision (h)(1) by Public
24 Act 88-670 restore changes made by Public Act 85-1182 and
25 reflect existing law.
26 (2) The term qualified property means property
27 which:
28 (A) is tangible, whether new or used,
29 including buildings and structural components of
30 buildings;
31 (B) is depreciable pursuant to Section 167 of
32 the Internal Revenue Code, except that "3-year
33 property" as defined in Section 168(c)(2)(A) of that
34 Code is not eligible for the credit provided by this
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1 subsection (h);
2 (C) is acquired by purchase as defined in
3 Section 179(d) of the Internal Revenue Code; and
4 (D) is not eligible for the Enterprise Zone
5 Investment Credit provided by subsection (f) of this
6 Section.
7 (3) The basis of qualified property shall be the
8 basis used to compute the depreciation deduction for
9 federal income tax purposes.
10 (4) If the basis of the property for federal income
11 tax depreciation purposes is increased after it has been
12 placed in service in a federally designated Foreign Trade
13 Zone or Sub-Zone located in Illinois by the taxpayer, the
14 amount of such increase shall be deemed property placed
15 in service on the date of such increase in basis.
16 (5) The term "placed in service" shall have the
17 same meaning as under Section 46 of the Internal Revenue
18 Code.
19 (6) If during any taxable year ending on or before
20 December 31, 1996, any property ceases to be qualified
21 property in the hands of the taxpayer within 48 months
22 after being placed in service, or the situs of any
23 qualified property is moved outside Illinois within 48
24 months after being placed in service, the tax imposed
25 under subsections (a) and (b) of this Section 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 (6), a
33 reduction of the basis of qualified property resulting
34 from a redetermination of the purchase price shall be
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1 deemed a disposition of qualified property to the extent
2 of such reduction.
3 (7) Beginning with tax years ending after December
4 31, 1996, if a taxpayer qualifies for the credit under
5 this subsection (h) and thereby is granted a tax
6 abatement and the taxpayer relocates its entire facility
7 in violation of the explicit terms and length of the
8 contract under Section 18-183 of the Property Tax Code,
9 the tax imposed under subsections (a) and (b) of this
10 Section shall be increased for the taxable year in which
11 the taxpayer relocated its facility by an amount equal to
12 the amount of credit received by the taxpayer under this
13 subsection (h).
14 (i) A credit shall be allowed against the tax imposed by
15 subsections (a) and (b) of this Section for the tax imposed
16 by subsections (c) and (d) of this Section. This credit
17 shall be computed by multiplying the tax imposed by
18 subsections (c) and (d) of this Section by a fraction, the
19 numerator of which is base income allocable to Illinois and
20 the denominator of which is Illinois base income, and further
21 multiplying the product by the tax rate imposed by
22 subsections (a) and (b) of this Section.
23 Any credit earned on or after December 31, 1986 under
24 this subsection which is unused in the year the credit is
25 computed because it exceeds the tax liability imposed by
26 subsections (a) and (b) for that year (whether it exceeds the
27 original liability or the liability as later amended) may be
28 carried forward and applied to the tax liability imposed by
29 subsections (a) and (b) of the 5 taxable years following the
30 excess credit year. This credit shall be applied first to
31 the earliest year for which there is a liability. If there
32 is a credit under this subsection from more than one tax year
33 that is available to offset a liability the earliest credit
34 arising under this subsection shall be applied first.
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1 If, during any taxable year ending on or after December
2 31, 1986, the tax imposed by subsections (c) and (d) of this
3 Section for which a taxpayer has claimed a credit under this
4 subsection (i) is reduced, the amount of credit for such tax
5 shall also be reduced. Such reduction shall be determined by
6 recomputing the credit to take into account the reduced tax
7 imposed by subsection (c) and (d). If any portion of the
8 reduced amount of credit has been carried to a different
9 taxable year, an amended return shall be filed for such
10 taxable year to reduce the amount of credit claimed.
11 (j) Training expense credit. Beginning with tax years
12 ending on or after December 31, 1986, a taxpayer shall be
13 allowed a credit against the tax imposed by subsection (a)
14 and (b) under this Section for all amounts paid or accrued,
15 on behalf of all persons employed by the taxpayer in Illinois
16 or Illinois residents employed outside of Illinois by a
17 taxpayer, for educational or vocational training in
18 semi-technical or technical fields or semi-skilled or skilled
19 fields, which were deducted from gross income in the
20 computation of taxable income. The credit against the tax
21 imposed by subsections (a) and (b) shall be 1.6% of such
22 training expenses. For partners and for shareholders of
23 subchapter S corporations, there shall be allowed a credit
24 under this subsection (j) to be determined in accordance with
25 the determination of income and distributive share of income
26 under Sections 702 and 704 and subchapter S of the Internal
27 Revenue Code.
28 Any credit allowed under this subsection which is unused
29 in the year the credit is earned may be carried forward to
30 each of the 5 taxable years following the year for which the
31 credit is first computed until it is used. This credit shall
32 be applied first to the earliest year for which there is a
33 liability. If there is a credit under this subsection from
34 more than one tax year that is available to offset a
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1 liability the earliest credit arising under this subsection
2 shall be applied first.
3 (k) Research and development credit.
4 Beginning with tax years ending after July 1, 1990, a
5 taxpayer shall be allowed a credit against the tax imposed by
6 subsections (a) and (b) of this Section for increasing
7 research activities in this State. The credit allowed
8 against the tax imposed by subsections (a) and (b) shall be
9 equal to 6 1/2% of the qualifying expenditures for increasing
10 research activities in this State.
11 For purposes of this subsection, "qualifying
12 expenditures" means the qualifying expenditures as defined
13 for the federal credit for increasing research activities
14 which would be allowable under Section 41 of the Internal
15 Revenue Code and which are conducted in this State,
16 "qualifying expenditures for increasing research activities
17 in this State" means the excess of qualifying expenditures
18 for the taxable year in which incurred over qualifying
19 expenditures for the base period, "qualifying expenditures
20 for the base period" means the average of the qualifying
21 expenditures for each year in the base period, and "base
22 period" means the 3 taxable years immediately preceding the
23 taxable year for which the determination is being made.
24 Any credit in excess of the tax liability for the taxable
25 year may be carried forward. A taxpayer may elect to have the
26 unused credit shown on its final completed return carried
27 over as a credit against the tax liability for the following
28 5 taxable years or until it has been fully used, whichever
29 occurs first.
30 If an unused credit is carried forward to a given year
31 from 2 or more earlier years, that credit arising in the
32 earliest year will be applied first against the tax liability
33 for the given year. If a tax liability for the given year
34 still remains, the credit from the next earliest year will
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1 then be applied, and so on, until all credits have been used
2 or no tax liability for the given year remains. Any
3 remaining unused credit or credits then will be carried
4 forward to the next following year in which a tax liability
5 is incurred, except that no credit can be carried forward to
6 a year which is more than 5 years after the year in which the
7 expense for which the credit is given was incurred.
8 Unless extended by law, the credit shall not include
9 costs incurred after December 31, 2004, except for costs
10 incurred pursuant to a binding contract entered into on or
11 before December 31, 2004.
12 (l) Environmental Remediation Tax Credit.
13 (i) For tax years ending after December 31, 1997
14 and on or before December 31, 2001, a taxpayer shall be
15 allowed a credit against the tax imposed by subsections
16 (a) and (b) of this Section for certain amounts paid for
17 unreimbursed eligible remediation costs, as specified in
18 this subsection. For purposes of this Section,
19 "unreimbursed eligible remediation costs" means costs
20 approved by the Illinois Environmental Protection Agency
21 ("Agency") under Section 58.14 of the Environmental
22 Protection Act that were paid in performing environmental
23 remediation at a site for which a No Further Remediation
24 Letter was issued by the Agency and recorded under
25 Section 58.10 of the Environmental Protection Act. The
26 credit must be claimed for the taxable year in which
27 Agency approval of the eligible remediation costs is
28 granted. The credit is not available to any taxpayer if
29 the taxpayer or any related party caused or contributed
30 to, in any material respect, a release of regulated
31 substances on, in, or under the site that was identified
32 and addressed by the remedial action pursuant to the Site
33 Remediation Program of the Environmental Protection Act.
34 After the Pollution Control Board rules are adopted
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1 pursuant to the Illinois Administrative Procedure Act for
2 the administration and enforcement of Section 58.9 of the
3 Environmental Protection Act, determinations as to credit
4 availability for purposes of this Section shall be made
5 consistent with those rules. For purposes of this
6 Section, "taxpayer" includes a person whose tax
7 attributes the taxpayer has succeeded to under Section
8 381 of the Internal Revenue Code and "related party"
9 includes the persons disallowed a deduction for losses by
10 paragraphs (b), (c), and (f)(1) of Section 267 of the
11 Internal Revenue Code by virtue of being a related
12 taxpayer, as well as any of its partners. The credit
13 allowed against the tax imposed by subsections (a) and
14 (b) shall be equal to 25% of the unreimbursed eligible
15 remediation costs in excess of $100,000 per site, except
16 that the $100,000 threshold shall not apply to any site
17 contained in an enterprise zone as determined by the
18 Department of Commerce and Community Affairs. The total
19 credit allowed shall not exceed $40,000 per year with a
20 maximum total of $150,000 per site. For partners and
21 shareholders of subchapter S corporations, there shall be
22 allowed a credit under this subsection to be determined
23 in accordance with the determination of income and
24 distributive share of income under Sections 702 and 704
25 of subchapter S of the Internal Revenue Code.
26 (ii) A credit allowed under this subsection that is
27 unused in the year the credit is earned may be carried
28 forward to each of the 5 taxable years following the year
29 for which the credit is first earned until it is used.
30 The term "unused credit" does not include any amounts of
31 unreimbursed eligible remediation costs in excess of the
32 maximum credit per site authorized under paragraph (i).
33 This credit shall be applied first to the earliest year
34 for which there is a liability. If there is a credit
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1 under this subsection from more than one tax year that is
2 available to offset a liability, the earliest credit
3 arising under this subsection shall be applied first. A
4 credit allowed under this subsection may be sold to a
5 buyer as part of a sale of all or part of the remediation
6 site for which the credit was granted. The purchaser of
7 a remediation site and the tax credit shall succeed to
8 the unused credit and remaining carry-forward period of
9 the seller. To perfect the transfer, the assignor shall
10 record the transfer in the chain of title for the site
11 and provide written notice to the Director of the
12 Illinois Department of Revenue of the assignor's intent
13 to sell the remediation site and the amount of the tax
14 credit to be transferred as a portion of the sale. In no
15 event may a credit be transferred to any taxpayer if the
16 taxpayer or a related party would not be eligible under
17 the provisions of subsection (i).
18 (iii) For purposes of this Section, the term "site"
19 shall have the same meaning as under Section 58.2 of the
20 Environmental Protection Act.
21 (m) Education expense credit.
22 Beginning with tax years ending after December 31, 1999,
23 a taxpayer who is the custodian of one or more qualifying
24 pupils shall be allowed a credit against the tax imposed by
25 subsections (a) and (b) of this Section for qualified
26 education expenses incurred on behalf of the qualifying
27 pupils. The credit shall be equal to 25% of qualified
28 education expenses, but in no event may the total credit
29 under this Section claimed by a family that is the custodian
30 of qualifying pupils exceed $500. Any credit in excess of the
31 tax liability for the taxable year shall be refunded to the
32 taxpayer. This subsection is exempt from the provisions of
33 Section 250 of this Act.
34 For purposes of this subsection;
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1 "Qualifying pupils" means individuals who (i) are
2 residents of the State of Illinois, (ii) are under the age of
3 21 at the close of the school year for which a credit is
4 sought, and (iii) during the school year for which a credit
5 is sought were full-time pupils enrolled in a kindergarten
6 through twelfth grade education program at any school, as
7 defined in this subsection.
8 "Qualified education expense" means the amount incurred
9 on behalf of a qualifying pupil in excess of $250 for
10 tuition, book fees, and lab fees at the school in which the
11 pupil is enrolled during the regular school year.
12 "School" means any public or nonpublic elementary or
13 secondary school in Illinois that is in compliance with Title
14 VI of the Civil Rights Act of 1964 and attendance at which
15 satisfies the requirements of Section 26-1 of the School
16 Code, except that nothing shall be construed to require a
17 child to attend any particular public or nonpublic school to
18 qualify for the credit under this Section.
19 "Custodian" means, with respect to qualifying pupils, an
20 Illinois resident who is a parent, the parents, a legal
21 guardian, or the legal guardians of the qualifying pupils.
22 (Source: P.A. 89-235, eff. 8-4-95; 89-519, eff. 7-18-96;
23 89-591, eff. 8-1-96; 90-123, eff. 7-21-97; 90-458, eff.
24 8-17-97; 90-605, eff. 6-30-98; 90-655, eff. 7-30-98; 90-717,
25 eff. 8-7-98; 90-792, eff. 1-1-99; revised 9-16-98.)