[ Search ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
[ Introduced ] | [ Engrossed ] | [ House Amendment 001 ] |
[ Senate Amendment 001 ] | [ Conference Committee Report 001 ] |
91_SB0338enr SB338 Enrolled LRB9102972JSpr 1 AN ACT concerning insurance taxes. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The State Finance Act is amended by adding 5 Section 5.490 as follows: 6 (30 ILCS 105/5.490 new) 7 Sec. 5.490. The Insurance Premium Tax Refund Fund. 8 Section 7. The Illinois Income Tax Act is amended by 9 changing Section 201 as follows: 10 (35 ILCS 5/201) (from Ch. 120, par. 2-201) 11 Sec. 201. Tax Imposed. 12 (a) In general. A tax measured by net income is hereby 13 imposed on every individual, corporation, trust and estate 14 for each taxable year ending after July 31, 1969 on the 15 privilege of earning or receiving income in or as a resident 16 of this State. Such tax shall be in addition to all other 17 occupation or privilege taxes imposed by this State or by any 18 municipal corporation or political subdivision thereof. 19 (b) Rates. The tax imposed by subsection (a) of this 20 Section shall be determined as follows, except as adjusted by 21 subsection (d-1): 22 (1) In the case of an individual, trust or estate, 23 for taxable years ending prior to July 1, 1989, an amount 24 equal to 2 1/2% of the taxpayer's net income for the 25 taxable year. 26 (2) In the case of an individual, trust or estate, 27 for taxable years beginning prior to July 1, 1989 and 28 ending after June 30, 1989, an amount equal to the sum of 29 (i) 2 1/2% of the taxpayer's net income for the period SB338 Enrolled -2- LRB9102972JSpr 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 SB338 Enrolled -3- LRB9102972JSpr 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 and except as adjusted by subsection (d-1), shall 7 be an additional amount equal to 2.85% of such taxpayer's net 8 income for the taxable year, except that beginning on January 9 1, 1981, and thereafter, the rate of 2.85% specified in this 10 subsection shall be reduced to 2.5%, and in the case of a 11 partnership, trust or a Subchapter S corporation shall be an 12 additional amount equal to 1.5% of such taxpayer's net income 13 for the taxable year. 14 (d-1) Rate reduction for certain foreign insurers. In 15 the case of a foreign insurer, as defined by Section 35A-5 of 16 the Illinois Insurance Code, whose state or country of 17 domicile imposes on insurers domiciled in Illinois a 18 retaliatory tax (excluding any insurer whose reinsurance 19 premiums assumed are 50% or more of its total insurance 20 premiums as determined under paragraph (2) of subsection (b) 21 of Section 304, except that for purposes of this 22 determination reinsurance premiums do not include assumed 23 premiums from inter-affiliate pooling arrangements), 24 beginning with taxable years ending on or after December 31, 25 1999 and ending with taxable years ending on or before 26 December 31, 2000, the sum of the rates of tax imposed by 27 subsections (b) and (d) shall be reduced (but not increased) 28 to the rate at which the total amount of tax imposed under 29 this Act, net of all credits allowed under this Act, shall 30 equal (i) the total amount of tax that would be imposed on 31 the foreign insurer's net income allocable to Illinois for 32 the taxable year by such foreign insurer's state or country 33 of domicile if that net income were subject to all income 34 taxes and taxes measured by net income imposed by such SB338 Enrolled -4- LRB9102972JSpr 1 foreign insurer's state or country of domicile, net of all 2 credits allowed or (ii) a rate of zero if no such tax is 3 imposed on such income by the foreign insurer's state of 4 domicile. 5 (1) For the purposes of subsection (d-1), in no 6 event shall the sum of the rates of tax imposed by 7 subsections (b) and (d) be reduced below the rate at 8 which the sum of: 9 (A) the total amount of tax imposed on such 10 foreign insurer under this Act for a taxable year, 11 net of all credits allowed under this Act, plus 12 (B) the privilege tax imposed by Section 409 13 of the Illinois Insurance Code, the fire insurance 14 company tax imposed by Section 12 of the Fire 15 Investigation Act, and the fire department taxes 16 imposed under Section 11-10-1 of the Illinois 17 Municipal Code, 18 equals 1.25% of the net taxable premiums written for the 19 taxable year, as described by subsection (1) of Section 20 409 of the Illinois Insurance Code. This paragraph will 21 in no event increase the rates imposed under subsections 22 (b) and (d). 23 (2) Any reduction in the rates of tax imposed by 24 this subsection shall be applied first against the rates 25 imposed by subsection (b) and only after the tax imposed 26 by subsection (a) net of all credits allowed under this 27 Section other than the credit allowed under subsection 28 (i) has been reduced to zero, against the rates imposed 29 by subsection (d). 30 (3) The provisions of this subsection (d-1) are 31 effective only through December 31, 2000 and cease to be 32 effective on January 1, 2001; but this does not affect 33 any claim or obligation based upon the use or application 34 of this subsection for tax years ending on December 31, SB338 Enrolled -5- LRB9102972JSpr 1 2000 or earlier. 2 (e) Investment credit. A taxpayer shall be allowed a 3 credit against the Personal Property Tax Replacement Income 4 Tax for investment in qualified property. 5 (1) A taxpayer shall be allowed a credit equal to 6 .5% of the basis of qualified property placed in service 7 during the taxable year, provided such property is placed 8 in service on or after July 1, 1984. There shall be 9 allowed an additional credit equal to .5% of the basis of 10 qualified property placed in service during the taxable 11 year, provided such property is placed in service on or 12 after July 1, 1986, and the taxpayer's base employment 13 within Illinois has increased by 1% or more over the 14 preceding year as determined by the taxpayer's employment 15 records filed with the Illinois Department of Employment 16 Security. Taxpayers who are new to Illinois shall be 17 deemed to have met the 1% growth in base employment for 18 the first year in which they file employment records with 19 the Illinois Department of Employment Security. The 20 provisions added to this Section by Public Act 85-1200 21 (and restored by Public Act 87-895) shall be construed as 22 declaratory of existing law and not as a new enactment. 23 If, in any year, the increase in base employment within 24 Illinois over the preceding year is less than 1%, the 25 additional credit shall be limited to that percentage 26 times a fraction, the numerator of which is .5% and the 27 denominator of which is 1%, but shall not exceed .5%. 28 The investment credit shall not be allowed to the extent 29 that it would reduce a taxpayer's liability in any tax 30 year below zero, nor may any credit for qualified 31 property be allowed for any year other than the year in 32 which the property was placed in service in Illinois. For 33 tax years ending on or after December 31, 1987, and on or 34 before December 31, 1988, the credit shall be allowed for SB338 Enrolled -6- LRB9102972JSpr 1 the tax year in which the property is placed in service, 2 or, if the amount of the credit exceeds the tax liability 3 for that year, whether it exceeds the original liability 4 or the liability as later amended, such excess may be 5 carried forward and applied to the tax liability of the 5 6 taxable years following the excess credit years if the 7 taxpayer (i) makes investments which cause the creation 8 of a minimum of 2,000 full-time equivalent jobs in 9 Illinois, (ii) is located in an enterprise zone 10 established pursuant to the Illinois Enterprise Zone Act 11 and (iii) is certified by the Department of Commerce and 12 Community Affairs as complying with the requirements 13 specified in clause (i) and (ii) by July 1, 1986. The 14 Department of Commerce and Community Affairs shall notify 15 the Department of Revenue of all such certifications 16 immediately. For tax years ending after December 31, 17 1988, the credit shall be allowed for the tax year in 18 which the property is placed in service, or, if the 19 amount of the credit exceeds the tax liability for that 20 year, whether it exceeds the original liability or the 21 liability as later amended, such excess may be carried 22 forward and applied to the tax liability of the 5 taxable 23 years following the excess credit years. The credit shall 24 be applied to the earliest year for which there is a 25 liability. If there is credit from more than one tax year 26 that is available to offset a liability, earlier credit 27 shall be applied first. 28 (2) The term "qualified property" means property 29 which: 30 (A) is tangible, whether new or used, 31 including buildings and structural components of 32 buildings and signs that are real property, but not 33 including land or improvements to real property that 34 are not a structural component of a building such as SB338 Enrolled -7- LRB9102972JSpr 1 landscaping, sewer lines, local access roads, 2 fencing, parking lots, and other appurtenances; 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 (e); 8 (C) is acquired by purchase as defined in 9 Section 179(d) of the Internal Revenue Code; 10 (D) is used in Illinois by a taxpayer who is 11 primarily engaged in manufacturing, or in mining 12 coal or fluorite, or in retailing; and 13 (E) has not previously been used in Illinois 14 in such a manner and by such a person as would 15 qualify for the credit provided by this subsection 16 (e) or subsection (f). 17 (3) For purposes of this subsection (e), 18 "manufacturing" means the material staging and production 19 of tangible personal property by procedures commonly 20 regarded as manufacturing, processing, fabrication, or 21 assembling which changes some existing material into new 22 shapes, new qualities, or new combinations. For purposes 23 of this subsection (e) the term "mining" shall have the 24 same meaning as the term "mining" in Section 613(c) of 25 the Internal Revenue Code. For purposes of this 26 subsection (e), the term "retailing" means the sale of 27 tangible personal property or services rendered in 28 conjunction with the sale of tangible consumer goods or 29 commodities. 30 (4) The basis of qualified property shall be the 31 basis used to compute the depreciation deduction for 32 federal income tax purposes. 33 (5) If the basis of the property for federal income 34 tax depreciation purposes is increased after it has been SB338 Enrolled -8- LRB9102972JSpr 1 placed in service in Illinois by the taxpayer, the amount 2 of such increase shall be deemed property placed in 3 service on the date of such increase in basis. 4 (6) The term "placed in service" shall have the 5 same meaning as under Section 46 of the Internal Revenue 6 Code. 7 (7) If during any taxable year, any property ceases 8 to be qualified property in the hands of the taxpayer 9 within 48 months after being placed in service, or the 10 situs of any qualified property is moved outside Illinois 11 within 48 months after being placed in service, the 12 Personal Property Tax Replacement Income Tax for such 13 taxable year shall be increased. Such increase shall be 14 determined by (i) recomputing the investment credit which 15 would have been allowed for the year in which credit for 16 such property was originally allowed by eliminating such 17 property from such computation and, (ii) subtracting such 18 recomputed credit from the amount of credit previously 19 allowed. For the purposes of this paragraph (7), a 20 reduction of the basis of qualified property resulting 21 from a redetermination of the purchase price shall be 22 deemed a disposition of qualified property to the extent 23 of such reduction. 24 (8) Unless the investment credit is extended by 25 law, the basis of qualified property shall not include 26 costs incurred after December 31, 2003, except for costs 27 incurred pursuant to a binding contract entered into on 28 or before December 31, 2003. 29 (9) Each taxable year, a partnership may elect to 30 pass through to its partners the credits to which the 31 partnership is entitled under this subsection (e) for the 32 taxable year. A partner may use the credit allocated to 33 him or her under this paragraph only against the tax 34 imposed in subsections (c) and (d) of this Section. If SB338 Enrolled -9- LRB9102972JSpr 1 the partnership makes that election, those credits shall 2 be allocated among the partners in the partnership in 3 accordance with the rules set forth in Section 704(b) of 4 the Internal Revenue Code, and the rules promulgated 5 under that Section, and the allocated amount of the 6 credits shall be allowed to the partners for that taxable 7 year. The partnership shall make this election on its 8 Personal Property Tax Replacement Income Tax return for 9 that taxable year. The election to pass through the 10 credits shall be irrevocable. 11 (f) Investment credit; Enterprise Zone. 12 (1) A taxpayer shall be allowed a credit against 13 the tax imposed by subsections (a) and (b) of this 14 Section for investment in qualified property which is 15 placed in service in an Enterprise Zone created pursuant 16 to the Illinois Enterprise Zone Act. For partners and for 17 shareholders of Subchapter S corporations, there shall be 18 allowed a credit under this subsection (f) to be 19 determined in accordance with the determination of income 20 and distributive share of income under Sections 702 and 21 704 and Subchapter S of the Internal Revenue Code. The 22 credit shall be .5% of the basis for such property. The 23 credit shall be available only in the taxable year in 24 which the property is placed in service in the Enterprise 25 Zone and shall not be allowed to the extent that it would 26 reduce a taxpayer's liability for the tax imposed by 27 subsections (a) and (b) of this Section to below zero. 28 For tax years ending on or after December 31, 1985, the 29 credit shall be allowed for the tax year in which the 30 property is placed in service, or, if the amount of the 31 credit exceeds the tax liability for that year, whether 32 it exceeds the original liability or the liability as 33 later amended, such excess may be carried forward and 34 applied to the tax liability of the 5 taxable years SB338 Enrolled -10- LRB9102972JSpr 1 following the excess credit year. The credit shall be 2 applied to the earliest year for which there is a 3 liability. If there is credit from more than one tax year 4 that is available to offset a liability, the credit 5 accruing first in time shall be applied first. 6 (2) The term qualified property means property 7 which: 8 (A) is tangible, whether new or used, 9 including buildings and structural components of 10 buildings; 11 (B) is depreciable pursuant to Section 167 of 12 the Internal Revenue Code, except that "3-year 13 property" as defined in Section 168(c)(2)(A) of that 14 Code is not eligible for the credit provided by this 15 subsection (f); 16 (C) is acquired by purchase as defined in 17 Section 179(d) of the Internal Revenue Code; 18 (D) is used in the Enterprise Zone by the 19 taxpayer; and 20 (E) has not been previously used in Illinois 21 in such a manner and by such a person as would 22 qualify for the credit provided by this subsection 23 (f) or subsection (e). 24 (3) The basis of qualified property shall be the 25 basis used to compute the depreciation deduction for 26 federal income tax purposes. 27 (4) If the basis of the property for federal income 28 tax depreciation purposes is increased after it has been 29 placed in service in the Enterprise Zone by the taxpayer, 30 the amount of such increase shall be deemed property 31 placed in service on the date of such increase in basis. 32 (5) The term "placed in service" shall have the 33 same meaning as under Section 46 of the Internal Revenue 34 Code. SB338 Enrolled -11- LRB9102972JSpr 1 (6) If during any taxable year, any property ceases 2 to be qualified property in the hands of the taxpayer 3 within 48 months after being placed in service, or the 4 situs of any qualified property is moved outside the 5 Enterprise Zone within 48 months after being placed in 6 service, the tax imposed under subsections (a) and (b) of 7 this Section for such taxable year shall be increased. 8 Such increase shall be determined by (i) recomputing the 9 investment credit which would have been allowed for the 10 year in which credit for such property was originally 11 allowed by eliminating such property from such 12 computation, and (ii) subtracting such recomputed credit 13 from the amount of credit previously allowed. For the 14 purposes of this paragraph (6), a reduction of the basis 15 of qualified property resulting from a redetermination of 16 the purchase price shall be deemed a disposition of 17 qualified property to the extent of such reduction. 18 (g) Jobs Tax Credit; Enterprise Zone and Foreign 19 Trade Zone or Sub-Zone. 20 (1) A taxpayer conducting a trade or business in an 21 enterprise zone or a High Impact Business designated by 22 the Department of Commerce and Community Affairs 23 conducting a trade or business in a federally designated 24 Foreign Trade Zone or Sub-Zone shall be allowed a credit 25 against the tax imposed by subsections (a) and (b) of 26 this Section in the amount of $500 per eligible employee 27 hired to work in the zone during the taxable year. 28 (2) To qualify for the credit: 29 (A) the taxpayer must hire 5 or more eligible 30 employees to work in an enterprise zone or federally 31 designated Foreign Trade Zone or Sub-Zone during the 32 taxable year; 33 (B) the taxpayer's total employment within the 34 enterprise zone or federally designated Foreign SB338 Enrolled -12- LRB9102972JSpr 1 Trade Zone or Sub-Zone must increase by 5 or more 2 full-time employees beyond the total employed in 3 that zone at the end of the previous tax year for 4 which a jobs tax credit under this Section was 5 taken, or beyond the total employed by the taxpayer 6 as of December 31, 1985, whichever is later; and 7 (C) the eligible employees must be employed 8 180 consecutive days in order to be deemed hired for 9 purposes of this subsection. 10 (3) An "eligible employee" means an employee who 11 is: 12 (A) Certified by the Department of Commerce 13 and Community Affairs as "eligible for services" 14 pursuant to regulations promulgated in accordance 15 with Title II of the Job Training Partnership Act, 16 Training Services for the Disadvantaged or Title III 17 of the Job Training Partnership Act, Employment and 18 Training Assistance for Dislocated Workers Program. 19 (B) Hired after the enterprise zone or 20 federally designated Foreign Trade Zone or Sub-Zone 21 was designated or the trade or business was located 22 in that zone, whichever is later. 23 (C) Employed in the enterprise zone or Foreign 24 Trade Zone or Sub-Zone. An employee is employed in 25 an enterprise zone or federally designated Foreign 26 Trade Zone or Sub-Zone if his services are rendered 27 there or it is the base of operations for the 28 services performed. 29 (D) A full-time employee working 30 or more 30 hours per week. 31 (4) For tax years ending on or after December 31, 32 1985 and prior to December 31, 1988, the credit shall be 33 allowed for the tax year in which the eligible employees 34 are hired. For tax years ending on or after December 31, SB338 Enrolled -13- LRB9102972JSpr 1 1988, the credit shall be allowed for the tax year 2 immediately following the tax year in which the eligible 3 employees are hired. If the amount of the credit exceeds 4 the tax liability for that year, whether it exceeds the 5 original liability or the liability as later amended, 6 such excess may be carried forward and applied to the tax 7 liability of the 5 taxable years following the excess 8 credit year. The credit shall be applied to the earliest 9 year for which there is a liability. If there is credit 10 from more than one tax year that is available to offset a 11 liability, earlier credit shall be applied first. 12 (5) The Department of Revenue shall promulgate such 13 rules and regulations as may be deemed necessary to carry 14 out the purposes of this subsection (g). 15 (6) The credit shall be available for eligible 16 employees hired on or after January 1, 1986. 17 (h) Investment credit; High Impact Business. 18 (1) Subject to subsection (b) of Section 5.5 of the 19 Illinois Enterprise Zone Act, a taxpayer shall be allowed 20 a credit against the tax imposed by subsections (a) and 21 (b) of this Section for investment in qualified property 22 which is placed in service by a Department of Commerce 23 and Community Affairs designated High Impact Business. 24 The credit shall be .5% of the basis for such property. 25 The credit shall not be available until the minimum 26 investments in qualified property set forth in Section 27 5.5 of the Illinois Enterprise Zone Act have been 28 satisfied and shall not be allowed to the extent that it 29 would reduce a taxpayer's liability for the tax imposed 30 by subsections (a) and (b) of this Section to below zero. 31 The credit applicable to such minimum investments shall 32 be taken in the taxable year in which such minimum 33 investments have been completed. The credit for 34 additional investments beyond the minimum investment by a SB338 Enrolled -14- LRB9102972JSpr 1 designated high impact business shall be available only 2 in the taxable year in which the property is placed in 3 service and shall not be allowed to the extent that it 4 would reduce a taxpayer's liability for the tax imposed 5 by subsections (a) and (b) of this Section to below zero. 6 For tax years ending on or after December 31, 1987, the 7 credit shall be allowed for the tax year in which the 8 property is placed in service, or, if the amount of the 9 credit exceeds the tax liability for that year, whether 10 it exceeds the original liability or the liability as 11 later amended, such excess may be carried forward and 12 applied to the tax liability of the 5 taxable years 13 following the excess credit year. The credit shall be 14 applied to the earliest year for which there is a 15 liability. If there is credit from more than one tax 16 year that is available to offset a liability, the credit 17 accruing first in time shall be applied first. 18 Changes made in this subdivision (h)(1) by Public 19 Act 88-670 restore changes made by Public Act 85-1182 and 20 reflect existing law. 21 (2) The term qualified property means property 22 which: 23 (A) is tangible, whether new or used, 24 including buildings and structural components of 25 buildings; 26 (B) is depreciable pursuant to Section 167 of 27 the Internal Revenue Code, except that "3-year 28 property" as defined in Section 168(c)(2)(A) of that 29 Code is not eligible for the credit provided by this 30 subsection (h); 31 (C) is acquired by purchase as defined in 32 Section 179(d) of the Internal Revenue Code; and 33 (D) is not eligible for the Enterprise Zone 34 Investment Credit provided by subsection (f) of this SB338 Enrolled -15- LRB9102972JSpr 1 Section. 2 (3) The basis of qualified property shall be the 3 basis used to compute the depreciation deduction for 4 federal income tax purposes. 5 (4) If the basis of the property for federal income 6 tax depreciation purposes is increased after it has been 7 placed in service in a federally designated Foreign Trade 8 Zone or Sub-Zone located in Illinois by the taxpayer, the 9 amount of such increase shall be deemed property placed 10 in service on the date of such increase in basis. 11 (5) The term "placed in service" shall have the 12 same meaning as under Section 46 of the Internal Revenue 13 Code. 14 (6) If during any taxable year ending on or before 15 December 31, 1996, any property ceases to be qualified 16 property in the hands of the taxpayer within 48 months 17 after being placed in service, or the situs of any 18 qualified property is moved outside Illinois within 48 19 months after being placed in service, the tax imposed 20 under subsections (a) and (b) of this Section for such 21 taxable year shall be increased. Such increase shall be 22 determined by (i) recomputing the investment credit which 23 would have been allowed for the year in which credit for 24 such property was originally allowed by eliminating such 25 property from such computation, and (ii) subtracting such 26 recomputed credit from the amount of credit previously 27 allowed. For the purposes of this paragraph (6), a 28 reduction of the basis of qualified property resulting 29 from a redetermination of the purchase price shall be 30 deemed a disposition of qualified property to the extent 31 of such reduction. 32 (7) Beginning with tax years ending after December 33 31, 1996, if a taxpayer qualifies for the credit under 34 this subsection (h) and thereby is granted a tax SB338 Enrolled -16- LRB9102972JSpr 1 abatement and the taxpayer relocates its entire facility 2 in violation of the explicit terms and length of the 3 contract under Section 18-183 of the Property Tax Code, 4 the tax imposed under subsections (a) and (b) of this 5 Section shall be increased for the taxable year in which 6 the taxpayer relocated its facility by an amount equal to 7 the amount of credit received by the taxpayer under this 8 subsection (h). 9 (i) A credit shall be allowed against the tax imposed by 10 subsections (a) and (b) of this Section for the tax imposed 11 by subsections (c) and (d) of this Section. This credit 12 shall be computed by multiplying the tax imposed by 13 subsections (c) and (d) of this Section by a fraction, the 14 numerator of which is base income allocable to Illinois and 15 the denominator of which is Illinois base income, and further 16 multiplying the product by the tax rate imposed by 17 subsections (a) and (b) of this Section. 18 Any credit earned on or after December 31, 1986 under 19 this subsection which is unused in the year the credit is 20 computed because it exceeds the tax liability imposed by 21 subsections (a) and (b) for that year (whether it exceeds the 22 original liability or the liability as later amended) may be 23 carried forward and applied to the tax liability imposed by 24 subsections (a) and (b) of the 5 taxable years following the 25 excess credit year. This credit shall be applied first to 26 the earliest year for which there is a liability. If there 27 is a credit under this subsection from more than one tax year 28 that is available to offset a liability the earliest credit 29 arising under this subsection shall be applied first. 30 If, during any taxable year ending on or after December 31 31, 1986, the tax imposed by subsections (c) and (d) of this 32 Section for which a taxpayer has claimed a credit under this 33 subsection (i) is reduced, the amount of credit for such tax 34 shall also be reduced. Such reduction shall be determined by SB338 Enrolled -17- LRB9102972JSpr 1 recomputing the credit to take into account the reduced tax 2 imposed by subsection (c) and (d). If any portion of the 3 reduced amount of credit has been carried to a different 4 taxable year, an amended return shall be filed for such 5 taxable year to reduce the amount of credit claimed. 6 (j) Training expense credit. Beginning with tax years 7 ending on or after December 31, 1986, a taxpayer shall be 8 allowed a credit against the tax imposed by subsection (a) 9 and (b) under this Section for all amounts paid or accrued, 10 on behalf of all persons employed by the taxpayer in Illinois 11 or Illinois residents employed outside of Illinois by a 12 taxpayer, for educational or vocational training in 13 semi-technical or technical fields or semi-skilled or skilled 14 fields, which were deducted from gross income in the 15 computation of taxable income. The credit against the tax 16 imposed by subsections (a) and (b) shall be 1.6% of such 17 training expenses. For partners and for shareholders of 18 subchapter S corporations, there shall be allowed a credit 19 under this subsection (j) to be determined in accordance with 20 the determination of income and distributive share of income 21 under Sections 702 and 704 and subchapter S of the Internal 22 Revenue Code. 23 Any credit allowed under this subsection which is unused 24 in the year the credit is earned may be carried forward to 25 each of the 5 taxable years following the year for which the 26 credit is first computed until it is used. This credit shall 27 be applied first to the earliest year for which there is a 28 liability. If there is a credit under this subsection from 29 more than one tax year that is available to offset a 30 liability the earliest credit arising under this subsection 31 shall be applied first. 32 (k) Research and development credit. 33 Beginning with tax years ending after July 1, 1990, a 34 taxpayer shall be allowed a credit against the tax imposed by SB338 Enrolled -18- LRB9102972JSpr 1 subsections (a) and (b) of this Section for increasing 2 research activities in this State. The credit allowed 3 against the tax imposed by subsections (a) and (b) shall be 4 equal to 6 1/2% of the qualifying expenditures for increasing 5 research activities in this State. 6 For purposes of this subsection, "qualifying 7 expenditures" means the qualifying expenditures as defined 8 for the federal credit for increasing research activities 9 which would be allowable under Section 41 of the Internal 10 Revenue Code and which are conducted in this State, 11 "qualifying expenditures for increasing research activities 12 in this State" means the excess of qualifying expenditures 13 for the taxable year in which incurred over qualifying 14 expenditures for the base period, "qualifying expenditures 15 for the base period" means the average of the qualifying 16 expenditures for each year in the base period, and "base 17 period" means the 3 taxable years immediately preceding the 18 taxable year for which the determination is being made. 19 Any credit in excess of the tax liability for the taxable 20 year may be carried forward. A taxpayer may elect to have the 21 unused credit shown on its final completed return carried 22 over as a credit against the tax liability for the following 23 5 taxable years or until it has been fully used, whichever 24 occurs first. 25 If an unused credit is carried forward to a given year 26 from 2 or more earlier years, that credit arising in the 27 earliest year will be applied first against the tax liability 28 for the given year. If a tax liability for the given year 29 still remains, the credit from the next earliest year will 30 then be applied, and so on, until all credits have been used 31 or no tax liability for the given year remains. Any 32 remaining unused credit or credits then will be carried 33 forward to the next following year in which a tax liability 34 is incurred, except that no credit can be carried forward to SB338 Enrolled -19- LRB9102972JSpr 1 a year which is more than 5 years after the year in which the 2 expense for which the credit is given was incurred. 3 Unless extended by law, the credit shall not include 4 costs incurred after December 31, 2004, except for costs 5 incurred pursuant to a binding contract entered into on or 6 before December 31, 2004. 7 (l) Environmental Remediation Tax Credit. 8 (i) For tax years ending after December 31, 1997 9 and on or before December 31, 2001, a taxpayer shall be 10 allowed a credit against the tax imposed by subsections 11 (a) and (b) of this Section for certain amounts paid for 12 unreimbursed eligible remediation costs, as specified in 13 this subsection. For purposes of this Section, 14 "unreimbursed eligible remediation costs" means costs 15 approved by the Illinois Environmental Protection Agency 16 ("Agency") under Section 58.14 of the Environmental 17 Protection Act that were paid in performing environmental 18 remediation at a site for which a No Further Remediation 19 Letter was issued by the Agency and recorded under 20 Section 58.10 of the Environmental Protection Act. The 21 credit must be claimed for the taxable year in which 22 Agency approval of the eligible remediation costs is 23 granted. The credit is not available to any taxpayer if 24 the taxpayer or any related party caused or contributed 25 to, in any material respect, a release of regulated 26 substances on, in, or under the site that was identified 27 and addressed by the remedial action pursuant to the Site 28 Remediation Program of the Environmental Protection Act. 29 After the Pollution Control Board rules are adopted 30 pursuant to the Illinois Administrative Procedure Act for 31 the administration and enforcement of Section 58.9 of the 32 Environmental Protection Act, determinations as to credit 33 availability for purposes of this Section shall be made 34 consistent with those rules. For purposes of this SB338 Enrolled -20- LRB9102972JSpr 1 Section, "taxpayer" includes a person whose tax 2 attributes the taxpayer has succeeded to under Section 3 381 of the Internal Revenue Code and "related party" 4 includes the persons disallowed a deduction for losses by 5 paragraphs (b), (c), and (f)(1) of Section 267 of the 6 Internal Revenue Code by virtue of being a related 7 taxpayer, as well as any of its partners. The credit 8 allowed against the tax imposed by subsections (a) and 9 (b) shall be equal to 25% of the unreimbursed eligible 10 remediation costs in excess of $100,000 per site, except 11 that the $100,000 threshold shall not apply to any site 12 contained in an enterprise zone as determined by the 13 Department of Commerce and Community Affairs. The total 14 credit allowed shall not exceed $40,000 per year with a 15 maximum total of $150,000 per site. For partners and 16 shareholders of subchapter S corporations, there shall be 17 allowed a credit under this subsection to be determined 18 in accordance with the determination of income and 19 distributive share of income under Sections 702 and 704 20 of subchapter S of the Internal Revenue Code. 21 (ii) A credit allowed under this subsection that is 22 unused in the year the credit is earned may be carried 23 forward to each of the 5 taxable years following the year 24 for which the credit is first earned until it is used. 25 The term "unused credit" does not include any amounts of 26 unreimbursed eligible remediation costs in excess of the 27 maximum credit per site authorized under paragraph (i). 28 This credit shall be applied first to the earliest year 29 for which there is a liability. If there is a credit 30 under this subsection from more than one tax year that is 31 available to offset a liability, the earliest credit 32 arising under this subsection shall be applied first. A 33 credit allowed under this subsection may be sold to a 34 buyer as part of a sale of all or part of the remediation SB338 Enrolled -21- LRB9102972JSpr 1 site for which the credit was granted. The purchaser of 2 a remediation site and the tax credit shall succeed to 3 the unused credit and remaining carry-forward period of 4 the seller. To perfect the transfer, the assignor shall 5 record the transfer in the chain of title for the site 6 and provide written notice to the Director of the 7 Illinois Department of Revenue of the assignor's intent 8 to sell the remediation site and the amount of the tax 9 credit to be transferred as a portion of the sale. In no 10 event may a credit be transferred to any taxpayer if the 11 taxpayer or a related party would not be eligible under 12 the provisions of subsection (i). 13 (iii) For purposes of this Section, the term "site" 14 shall have the same meaning as under Section 58.2 of the 15 Environmental Protection Act. 16 (Source: P.A. 89-235, eff. 8-4-95; 89-519, eff. 7-18-96; 17 89-591, eff. 8-1-96; 90-123, eff. 7-21-97; 90-458, eff. 18 8-17-97; 90-605, eff. 6-30-98; 90-655, eff. 7-30-98; 90-717, 19 eff. 8-7-98; 90-792, eff. 1-1-99; revised 9-16-98.) 20 Section 10. The Illinois Insurance Code is amended by 21 changing Section 412 as follows: 22 (215 ILCS 5/412) (from Ch. 73, par. 1024) 23 Sec. 412. Refunds; penalties; collection. 24 (1) (a) Whenever it appears to the satisfaction of the 25 Director that because of some mistake of fact, error in 26 calculation, or erroneous interpretation of a statute of this 27 or any other state, any authorized company has paid to him, 28 pursuant to any provision of law, taxes, fees, or other 29 charges in excess of the amount legally chargeable against 30 it, during the 6 year period immediately preceding the 31 discovery of such overpayment, he shall have power to refund 32 to such company the amount of the excess or excesses by SB338 Enrolled -22- LRB9102972JSpr 1 applying the amount or amounts thereof toward the payment of 2 taxes, fees, or other charges already due, or which may 3 thereafter become due from that company until such excess or 4 excesses have been fully refunded, or upon a written request 5 from the authorized company, the Director shall provideat6his discretion, to makea cash refund within 120 days after 7 receipt of the written request if all necessary information 8 has been filed with the Department in order for it to perform 9 an audit of the annual return for the year in which the 10 overpayment occurred or within 120 days after the date the 11 Department receives all the necessary information to perform 12 such audit. The Director shall not provide a cash refund if 13 there are insufficient funds in the Insurance Premium Tax 14 Refund Fund to provide a cash refund, if the amount of the 15 overpayment is less than $100, or if the amount of the 16 overpayment can be fully offset against the taxpayer's 17 estimated liability for the year following the year of the 18 cash refund request. Any cash refund shall be paid from the 19 Insurance Premium Tax Refund Fund, a special fund hereby 20 created in the State treasury. 21 (b) Beginning January 1, 2000 and thereafter, the 22 Department shall deposit a percentage of the amounts 23 collected under Sections 409, 444, and 444.1 of this Code 24 into the Insurance Premium Tax Refund Fund. The percentage 25 deposited into the Insurance Premium Tax Refund Fund shall be 26 the annual percentage. The annual percentage shall be 27 calculated as a fraction, the numerator of which shall be the 28 amount of cash refunds approved by the Director for payment 29 and paid during the preceding calendar year as a result of 30 overpayment of tax liability under Sections 409, 444, and 31 444.1 of this Code and the denominator of which shall be the 32 amounts collected pursuant to Sections 409, 444, and 444.1 of 33 this Code during the preceding calendar year. However, if 34 there were no cash refunds paid in a preceding calendar year, SB338 Enrolled -23- LRB9102972JSpr 1 the Department shall deposit 5% of the amount collected in 2 that preceding calendar year pursuant to Sections 409, 444, 3 and 444.1 of this Code into the Insurance Premium Tax Refund 4 Fund instead of an amount calculated by using the annual 5 percentage. 6 (c) Beginning July 1, 1999, moneys in the Insurance 7 Premium Tax Refund Fund shall be expended exclusively for the 8 purpose of paying cash refunds resulting from overpayment of 9 tax liability under Sections 409, 444, and 444.1 of this Code 10 as determined by the Director pursuant to subsection 1(a) of 11 this Section. Cash refunds made in accordance with this 12 Section may be made from the Insurance Premium Tax Refund 13 Fund only to the extent that amounts have been deposited and 14 retained in the Insurance Premium Tax Refund Fund. 15 (d) This Section shall constitute an irrevocable and 16 continuing appropriation from the Insurance Premium Tax 17 Refund Fund for the purpose of paying cash refunds pursuant 18 to the provisions of this Section. 19 (2) When any insurance company or any surplus line 20 producer fails to file any tax return required under Sections 21 408.1, 409, 444, 444.1 and 445 of this Code or Section 12 of 22 the Fire Investigation Act on the date prescribed, including 23 any extensions, there shall be added as a penalty $200 or 5% 24 of the amount of such tax, whichever is greater, for each 25 month or part of a month of failure to file, the entire 26 penalty not to exceed $1,000 or 25% of the tax due, whichever 27 is greater. 28 (3) (a) When any insurance company or any surplus line 29 producer fails to pay the full amount due under the 30 provisions of this Section, Sections 408.1, 409, 444, 444.1 31 or 445 of this Code, or Section 12 of the Fire Investigation 32 Act, there shall be added to the amount due as a penalty an 33 amount equal to 5% of the deficiency. 34 (b) If such failure to pay is determined by the Director SB338 Enrolled -24- LRB9102972JSpr 1 to be wilful, after a hearing under Sections 402 and 403, 2 there shall be added to the tax as a penalty an amount equal 3 to the greater of 25% of the deficiency or 5% of the amount 4 due and unpaid for each month or part of a month that the 5 deficiency remains unpaid commencing with the date that the 6 amount becomes due. Such amount shall be in lieu of any 7 determined under paragraph (a). 8 (4) Any insurance company or any surplus line producer 9 which fails to pay the full amount due under this Section or 10 Sections 408.1, 409, 444, 444.1 or 445 of this Code, or 11 Section 12 of the Fire Investigation Act is liable, in 12 addition to the tax and any penalties, for interest on such 13 deficiency at the rate of 12% per annum, or at such higher 14 adjusted rates as are or may be established under subsection 15 (b) of Section 6621 of the Internal Revenue Code, from the 16 date that payment of any such tax was due, determined without 17 regard to any extensions, to the date of payment of such 18 amount. 19 (5) The Director, through the Attorney General, may 20 institute an action in the name of the People of the State of 21 Illinois, in any court of competent jurisdiction, for the 22 recovery of the amount of such taxes, fees, and penalties 23 due, and prosecute the same to final judgment, and take such 24 steps as are necessary to collect the same. 25 (6) In the event that the certificate of authority of a 26 foreign or alien company is revoked for any cause or the 27 company withdraws from this State prior to the renewal date 28 of the certificate of authority as provided in Section 114, 29 the company may recover the amount of any such tax paid in 30 advance. Except as provided in this subsection, no revocation 31 or withdrawal excuses payment of or constitutes grounds for 32 the recovery of any taxes or penalties imposed by this Code. 33 (7) When an insurance company or domestic affiliated 34 group fails to pay the full amount of any fee of $100 or more SB338 Enrolled -25- LRB9102972JSpr 1 due under Section 408 of this Code, there shall be added to 2 the amount due as a penalty the greater of $50 or an amount 3 equal to 5% of the deficiency for each month or part of a 4 month that the deficiency remains unpaid. 5 (Source: P.A. 87-108.) 6 Section 99. Effective date. This Act takes effect upon 7 becoming law.