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91_SB1326
LRB9110268SMdv
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, except as adjusted by
18 subsection (d-1):
19 (1) In the case of an individual, trust or estate,
20 for taxable years ending prior to July 1, 1989, an amount
21 equal to 2 1/2% of the taxpayer's net income for the
22 taxable year.
23 (2) In the case of an individual, trust or estate,
24 for taxable years beginning prior to July 1, 1989 and
25 ending after June 30, 1989, an amount equal to the sum of
26 (i) 2 1/2% of the taxpayer's net income for the period
27 prior to July 1, 1989, as calculated under Section 202.3,
28 and (ii) 3% of the taxpayer's net income for the period
29 after June 30, 1989, as calculated under Section 202.3.
30 (3) In the case of an individual, trust or estate,
31 for taxable years beginning after June 30, 1989, an
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1 amount equal to 3% of the taxpayer's net income for the
2 taxable year.
3 (4) (Blank).
4 (5) (Blank).
5 (6) In the case of a corporation, for taxable years
6 ending prior to July 1, 1989, an amount equal to 4% of
7 the taxpayer's net income for the taxable year.
8 (7) In the case of a corporation, for taxable years
9 beginning prior to July 1, 1989 and ending after June 30,
10 1989, an amount equal to the sum of (i) 4% of the
11 taxpayer's net income for the period prior to July 1,
12 1989, as calculated under Section 202.3, and (ii) 4.8% of
13 the taxpayer's net income for the period after June 30,
14 1989, as calculated under Section 202.3.
15 (8) In the case of a corporation, for taxable years
16 beginning after June 30, 1989, an amount equal to 4.8% of
17 the taxpayer's net income for the taxable year.
18 (c) Beginning on July 1, 1979 and thereafter, in
19 addition to such income tax, there is also hereby imposed the
20 Personal Property Tax Replacement Income Tax measured by net
21 income on every corporation (including Subchapter S
22 corporations), partnership and trust, for each taxable year
23 ending after June 30, 1979. Such taxes are imposed on the
24 privilege of earning or receiving income in or as a resident
25 of this State. The Personal Property Tax Replacement Income
26 Tax shall be in addition to the income tax imposed by
27 subsections (a) and (b) of this Section and in addition to
28 all other occupation or privilege taxes imposed by this State
29 or by any municipal corporation or political subdivision
30 thereof.
31 (d) Additional Personal Property Tax Replacement Income
32 Tax Rates. The personal property tax replacement income tax
33 imposed by this subsection and subsection (c) of this Section
34 in the case of a corporation, other than a Subchapter S
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1 corporation and except as adjusted by subsection (d-1), shall
2 be an additional amount equal to 2.85% of such taxpayer's net
3 income for the taxable year, except that beginning on January
4 1, 1981, and thereafter, the rate of 2.85% specified in this
5 subsection shall be reduced to 2.5%, and in the case of a
6 partnership, trust or a Subchapter S corporation shall be an
7 additional amount equal to 1.5% of such taxpayer's net income
8 for the taxable year.
9 (d-1) Rate reduction for certain foreign insurers. In
10 the case of a foreign insurer, as defined by Section 35A-5 of
11 the Illinois Insurance Code, whose state or country of
12 domicile imposes on insurers domiciled in Illinois a
13 retaliatory tax (excluding any insurer whose reinsurance
14 premiums from reinsurance assumed are 50% or more of its
15 total insurance premiums as determined under paragraph (2) of
16 subsection (b) of Section 304, except that for purposes of
17 this determination reinsurance premiums from reinsurance do
18 not include assumed premiums from inter-affiliate reinsurance
19 pooling arrangements), beginning with taxable years ending on
20 or after December 31, 1999 and ending with taxable years
21 ending on or before December 31, 2000, the sum of the rates
22 of tax imposed by subsections (b) and (d) shall be reduced
23 (but not increased) to the rate at which the total amount of
24 tax imposed under this Act, net of all credits allowed under
25 this Act, shall equal (i) the total amount of tax that would
26 be imposed on the foreign insurer's net income allocable to
27 Illinois for the taxable year by such foreign insurer's state
28 or country of domicile if that net income were subject to all
29 income taxes and taxes measured by net income imposed by such
30 foreign insurer's state or country of domicile, net of all
31 credits allowed or (ii) a rate of zero if no such tax is
32 imposed on such income by the foreign insurer's state of
33 domicile.
34 (1) For the purposes of subsection (d-1), in no
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1 event shall the sum of the rates of tax imposed by
2 subsections (b) and (d) be reduced below the rate at
3 which the sum of:
4 (A) the total amount of tax imposed on such
5 foreign insurer under this Act for a taxable year,
6 net of all credits allowed under this Act, plus
7 (B) the privilege tax imposed by Section 409
8 of the Illinois Insurance Code, the fire insurance
9 company tax imposed by Section 12 of the Fire
10 Investigation Act, and the fire department taxes
11 imposed under Section 11-10-1 of the Illinois
12 Municipal Code,
13 equals 1.25% of the net taxable premiums written for the
14 taxable year, as described by subsection (1) of Section
15 409 of the Illinois Insurance Code. This paragraph will
16 in no event increase the rates imposed under subsections
17 (b) and (d).
18 (2) Any reduction in the rates of tax imposed by
19 this subsection shall be applied first against the rates
20 imposed by subsection (b) and only after the tax imposed
21 by subsection (a) net of all credits allowed under this
22 Section other than the credit allowed under subsection
23 (i) has been reduced to zero, against the rates imposed
24 by subsection (d).
25 (3) The provisions of this subsection (d-1) are
26 effective only through December 31, 2000 and cease to be
27 effective on January 1, 2001; but this does not affect
28 any claim or obligation based upon the use or application
29 of this subsection for tax years ending on December 31,
30 2000 or earlier.
31 This subsection (d-1) is exempt from the provisions of
32 Section 250.
33 (e) Investment credit. A taxpayer shall be allowed a
34 credit against the Personal Property Tax Replacement Income
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1 Tax for investment in qualified property.
2 (1) A taxpayer shall be allowed a credit equal to
3 .5% of the basis of qualified property placed in service
4 during the taxable year, provided such property is placed
5 in service on or after July 1, 1984. There shall be
6 allowed an additional credit equal to .5% of the basis of
7 qualified property placed in service during the taxable
8 year, provided such property is placed in service on or
9 after July 1, 1986, and the taxpayer's base employment
10 within Illinois has increased by 1% or more over the
11 preceding year as determined by the taxpayer's employment
12 records filed with the Illinois Department of Employment
13 Security. Taxpayers who are new to Illinois shall be
14 deemed to have met the 1% growth in base employment for
15 the first year in which they file employment records with
16 the Illinois Department of Employment Security. The
17 provisions added to this Section by Public Act 85-1200
18 (and restored by Public Act 87-895) shall be construed as
19 declaratory of existing law and not as a new enactment.
20 If, in any year, the increase in base employment within
21 Illinois over the preceding year is less than 1%, the
22 additional credit shall be limited to that percentage
23 times a fraction, the numerator of which is .5% and the
24 denominator of which is 1%, but shall not exceed .5%.
25 The investment credit shall not be allowed to the extent
26 that it would reduce a taxpayer's liability in any tax
27 year below zero, nor may any credit for qualified
28 property be allowed for any year other than the year in
29 which the property was placed in service in Illinois. For
30 tax years ending on or after December 31, 1987, and on or
31 before December 31, 1988, the credit shall be allowed for
32 the tax year in which the property is placed in service,
33 or, if the amount of the credit exceeds the tax liability
34 for that year, whether it exceeds the original liability
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1 or the liability as later amended, such excess may be
2 carried forward and applied to the tax liability of the 5
3 taxable years following the excess credit years if the
4 taxpayer (i) makes investments which cause the creation
5 of a minimum of 2,000 full-time equivalent jobs in
6 Illinois, (ii) is located in an enterprise zone
7 established pursuant to the Illinois Enterprise Zone Act
8 and (iii) is certified by the Department of Commerce and
9 Community Affairs as complying with the requirements
10 specified in clause (i) and (ii) by July 1, 1986. The
11 Department of Commerce and Community Affairs shall notify
12 the Department of Revenue of all such certifications
13 immediately. For tax years ending after December 31,
14 1988, the credit shall be allowed for the tax year in
15 which the property is placed in service, or, if the
16 amount of the credit exceeds the tax liability for that
17 year, whether it exceeds the original liability or the
18 liability as later amended, such excess may be carried
19 forward and applied to the tax liability of the 5 taxable
20 years following the excess credit years. The credit shall
21 be applied to the earliest year for which there is a
22 liability. If there is credit from more than one tax year
23 that is available to offset a liability, earlier credit
24 shall be applied first.
25 (2) The term "qualified property" means property
26 which:
27 (A) is tangible, whether new or used,
28 including buildings and structural components of
29 buildings and signs that are real property, but not
30 including land or improvements to real property that
31 are not a structural component of a building such as
32 landscaping, sewer lines, local access roads,
33 fencing, parking lots, and other appurtenances;
34 (B) is depreciable pursuant to Section 167 of
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1 the Internal Revenue Code, except that "3-year
2 property" as defined in Section 168(c)(2)(A) of that
3 Code is not eligible for the credit provided by this
4 subsection (e);
5 (C) is acquired by purchase as defined in
6 Section 179(d) of the Internal Revenue Code;
7 (D) is used in Illinois by a taxpayer who is
8 primarily engaged in manufacturing, or in mining
9 coal or fluorite, or in retailing; and
10 (E) has not previously been used in Illinois
11 in such a manner and by such a person as would
12 qualify for the credit provided by this subsection
13 (e) or subsection (f).
14 (3) For purposes of this subsection (e),
15 "manufacturing" means the material staging and production
16 of tangible personal property by procedures commonly
17 regarded as manufacturing, processing, fabrication, or
18 assembling which changes some existing material into new
19 shapes, new qualities, or new combinations. For purposes
20 of this subsection (e) the term "mining" shall have the
21 same meaning as the term "mining" in Section 613(c) of
22 the Internal Revenue Code. For purposes of this
23 subsection (e), the term "retailing" means the sale of
24 tangible personal property or services rendered in
25 conjunction with the sale of tangible consumer goods or
26 commodities.
27 (4) The basis of qualified property shall be the
28 basis used to compute the depreciation deduction for
29 federal income tax purposes.
30 (5) If the basis of the property for federal income
31 tax depreciation purposes is increased after it has been
32 placed in service in Illinois by the taxpayer, the amount
33 of such increase shall be deemed property placed in
34 service on the date of such increase in basis.
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1 (6) The term "placed in service" shall have the
2 same meaning as under Section 46 of the Internal Revenue
3 Code.
4 (7) If during any taxable year, any property ceases
5 to be qualified property in the hands of the taxpayer
6 within 48 months after being placed in service, or the
7 situs of any qualified property is moved outside Illinois
8 within 48 months after being placed in service, the
9 Personal Property Tax Replacement Income Tax for such
10 taxable year shall be increased. Such increase shall be
11 determined by (i) recomputing the investment credit which
12 would have been allowed for the year in which credit for
13 such property was originally allowed by eliminating such
14 property from such computation and, (ii) subtracting such
15 recomputed credit from the amount of credit previously
16 allowed. For the purposes of this paragraph (7), a
17 reduction of the basis of qualified property resulting
18 from a redetermination of the purchase price shall be
19 deemed a disposition of qualified property to the extent
20 of such reduction.
21 (8) Unless the investment credit is extended by
22 law, the basis of qualified property shall not include
23 costs incurred after December 31, 2003, except for costs
24 incurred pursuant to a binding contract entered into on
25 or before December 31, 2003.
26 (9) Each taxable year, a partnership may elect to
27 pass through to its partners the credits to which the
28 partnership is entitled under this subsection (e) for the
29 taxable year. A partner may use the credit allocated to
30 him or her under this paragraph only against the tax
31 imposed in subsections (c) and (d) of this Section. If
32 the partnership makes that election, those credits shall
33 be allocated among the partners in the partnership in
34 accordance with the rules set forth in Section 704(b) of
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1 the Internal Revenue Code, and the rules promulgated
2 under that Section, and the allocated amount of the
3 credits shall be allowed to the partners for that taxable
4 year. The partnership shall make this election on its
5 Personal Property Tax Replacement Income Tax return for
6 that taxable year. The election to pass through the
7 credits shall be irrevocable.
8 (f) Investment credit; Enterprise Zone.
9 (1) A taxpayer shall be allowed a credit against
10 the tax imposed by subsections (a) and (b) of this
11 Section for investment in qualified property which is
12 placed in service in an Enterprise Zone created pursuant
13 to the Illinois Enterprise Zone Act. For partners,
14 shareholders of Subchapter S corporations, and owners of
15 limited liability companies, if the liability company is
16 treated as a partnership for purposes of federal and
17 State income taxation, there shall be allowed a credit
18 under this subsection (f) to be determined in accordance
19 with the determination of income and distributive share
20 of income under Sections 702 and 704 and Subchapter S of
21 the Internal Revenue Code. The credit shall be .5% of the
22 basis for such property. The credit shall be available
23 only in the taxable year in which the property is placed
24 in service in the Enterprise Zone and shall not be
25 allowed to the extent that it would reduce a taxpayer's
26 liability for the tax imposed by subsections (a) and (b)
27 of this Section to below zero. For tax years ending on or
28 after December 31, 1985, the credit shall be allowed for
29 the tax year in which the property is placed in service,
30 or, if the amount of the credit exceeds the tax liability
31 for that year, whether it exceeds the original liability
32 or the liability as later amended, such excess may be
33 carried forward and applied to the tax liability of the 5
34 taxable years following the excess credit year. The
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1 credit shall be applied to the earliest year for which
2 there is a liability. If there is credit from more than
3 one tax year that is available to offset a liability, the
4 credit accruing first in time 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;
10 (B) is depreciable pursuant to Section 167 of
11 the Internal Revenue Code, except that "3-year
12 property" as defined in Section 168(c)(2)(A) of that
13 Code is not eligible for the credit provided by this
14 subsection (f);
15 (C) is acquired by purchase as defined in
16 Section 179(d) of the Internal Revenue Code;
17 (D) is used in the Enterprise Zone by the
18 taxpayer; and
19 (E) has not been previously used in Illinois
20 in such a manner and by such a person as would
21 qualify for the credit provided by this subsection
22 (f) or subsection (e).
23 (3) The basis of qualified property shall be the
24 basis used to compute the depreciation deduction for
25 federal income tax purposes.
26 (4) If the basis of the property for federal income
27 tax depreciation purposes is increased after it has been
28 placed in service in the Enterprise Zone by the taxpayer,
29 the amount of such increase shall be deemed property
30 placed in service on the date of such increase in basis.
31 (5) The term "placed in service" shall have the
32 same meaning as under Section 46 of the Internal Revenue
33 Code.
34 (6) If during any taxable year, any property ceases
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1 to be qualified property in the hands of the taxpayer
2 within 48 months after being placed in service, or the
3 situs of any qualified property is moved outside the
4 Enterprise Zone within 48 months after being placed in
5 service, the tax imposed under subsections (a) and (b) of
6 this Section for such taxable year shall be increased.
7 Such increase shall be determined by (i) recomputing the
8 investment credit which would have been allowed for the
9 year in which credit for such property was originally
10 allowed by eliminating such property from such
11 computation, and (ii) subtracting such recomputed credit
12 from the amount of credit previously allowed. For the
13 purposes of this paragraph (6), a reduction of the basis
14 of qualified property resulting from a redetermination of
15 the purchase price shall be deemed a disposition of
16 qualified property to the extent of such reduction.
17 (g) Jobs Tax Credit; Enterprise Zone and Foreign Trade
18 Zone or Sub-Zone.
19 (1) A taxpayer conducting a trade or business in an
20 enterprise zone or a High Impact Business designated by
21 the Department of Commerce and Community Affairs
22 conducting a trade or business in a federally designated
23 Foreign Trade Zone or Sub-Zone shall be allowed a credit
24 against the tax imposed by subsections (a) and (b) of
25 this Section in the amount of $500 per eligible employee
26 hired to work in the zone during the taxable year.
27 (2) To qualify for the credit:
28 (A) the taxpayer must hire 5 or more eligible
29 employees to work in an enterprise zone or federally
30 designated Foreign Trade Zone or Sub-Zone during the
31 taxable year;
32 (B) the taxpayer's total employment within the
33 enterprise zone or federally designated Foreign
34 Trade Zone or Sub-Zone must increase by 5 or more
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1 full-time employees beyond the total employed in
2 that zone at the end of the previous tax year for
3 which a jobs tax credit under this Section was
4 taken, or beyond the total employed by the taxpayer
5 as of December 31, 1985, whichever is later; and
6 (C) the eligible employees must be employed
7 180 consecutive days in order to be deemed hired for
8 purposes of this subsection.
9 (3) An "eligible employee" means an employee who
10 is:
11 (A) Certified by the Department of Commerce
12 and Community Affairs as "eligible for services"
13 pursuant to regulations promulgated in accordance
14 with Title II of the Job Training Partnership Act,
15 Training Services for the Disadvantaged or Title III
16 of the Job Training Partnership Act, Employment and
17 Training Assistance for Dislocated Workers Program.
18 (B) Hired after the enterprise zone or
19 federally designated Foreign Trade Zone or Sub-Zone
20 was designated or the trade or business was located
21 in that zone, whichever is later.
22 (C) Employed in the enterprise zone or Foreign
23 Trade Zone or Sub-Zone. An employee is employed in
24 an enterprise zone or federally designated Foreign
25 Trade Zone or Sub-Zone if his services are rendered
26 there or it is the base of operations for the
27 services performed.
28 (D) A full-time employee working 30 or more
29 hours per week.
30 (4) For tax years ending on or after December 31,
31 1985 and prior to December 31, 1988, the credit shall be
32 allowed for the tax year in which the eligible employees
33 are hired. For tax years ending on or after December 31,
34 1988, the credit shall be allowed for the tax year
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1 immediately following the tax year in which the eligible
2 employees are hired. If the amount of the credit exceeds
3 the tax liability for that year, whether it exceeds the
4 original liability or the liability as later amended,
5 such excess may be carried forward and applied to the tax
6 liability of the 5 taxable years following the excess
7 credit year. The credit shall be applied to the earliest
8 year for which there is a liability. If there is credit
9 from more than one tax year that is available to offset a
10 liability, earlier credit shall be applied first.
11 (5) The Department of Revenue shall promulgate such
12 rules and regulations as may be deemed necessary to carry
13 out the purposes of this subsection (g).
14 (6) The credit shall be available for eligible
15 employees hired on or after January 1, 1986.
16 (h) Investment credit; High Impact Business.
17 (1) Subject to subsection (b) of Section 5.5 of the
18 Illinois Enterprise Zone Act, a taxpayer shall be allowed
19 a credit against the tax imposed by subsections (a) and
20 (b) of this Section for investment in qualified property
21 which is placed in service by a Department of Commerce
22 and Community Affairs designated High Impact Business.
23 The credit shall be .5% of the basis for such property.
24 The credit shall not be available until the minimum
25 investments in qualified property set forth in Section
26 5.5 of the Illinois Enterprise Zone Act have been
27 satisfied and shall not be allowed to the extent that it
28 would reduce a taxpayer's liability for the tax imposed
29 by subsections (a) and (b) of this Section to below zero.
30 The credit applicable to such minimum investments shall
31 be taken in the taxable year in which such minimum
32 investments have been completed. The credit for
33 additional investments beyond the minimum investment by a
34 designated high impact business shall be available only
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1 in the taxable year in which the property is placed in
2 service and shall not be allowed to the extent that it
3 would reduce a taxpayer's liability for the tax imposed
4 by subsections (a) and (b) of this Section to below zero.
5 For tax years ending on or after December 31, 1987, 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
15 year that is available to offset a liability, the credit
16 accruing first in time shall be applied first.
17 Changes made in this subdivision (h)(1) by Public
18 Act 88-670 restore changes made by Public Act 85-1182 and
19 reflect existing law.
20 (2) The term qualified property means property
21 which:
22 (A) is tangible, whether new or used,
23 including buildings and structural components of
24 buildings;
25 (B) is depreciable pursuant to Section 167 of
26 the Internal Revenue Code, except that "3-year
27 property" as defined in Section 168(c)(2)(A) of that
28 Code is not eligible for the credit provided by this
29 subsection (h);
30 (C) is acquired by purchase as defined in
31 Section 179(d) of the Internal Revenue Code; and
32 (D) is not eligible for the Enterprise Zone
33 Investment Credit provided by subsection (f) of this
34 Section.
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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 a federally designated Foreign Trade
7 Zone or Sub-Zone located in Illinois by the taxpayer, the
8 amount of such increase shall be deemed property placed
9 in service on the date of such increase in basis.
10 (5) The term "placed in service" shall have the
11 same meaning as under Section 46 of the Internal Revenue
12 Code.
13 (6) If during any taxable year ending on or before
14 December 31, 1996, any property ceases to be qualified
15 property in the hands of the taxpayer within 48 months
16 after being placed in service, or the situs of any
17 qualified property is moved outside Illinois within 48
18 months after being placed in service, the tax imposed
19 under subsections (a) and (b) of this Section for such
20 taxable year shall be increased. Such increase shall be
21 determined by (i) recomputing the investment credit which
22 would have been allowed for the year in which credit for
23 such property was originally allowed by eliminating such
24 property from such computation, and (ii) subtracting such
25 recomputed credit from the amount of credit previously
26 allowed. For the purposes of this paragraph (6), a
27 reduction of the basis of qualified property resulting
28 from a redetermination of the purchase price shall be
29 deemed a disposition of qualified property to the extent
30 of such reduction.
31 (7) Beginning with tax years ending after December
32 31, 1996, if a taxpayer qualifies for the credit under
33 this subsection (h) and thereby is granted a tax
34 abatement and the taxpayer relocates its entire facility
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1 in violation of the explicit terms and length of the
2 contract under Section 18-183 of the Property Tax Code,
3 the tax imposed under subsections (a) and (b) of this
4 Section shall be increased for the taxable year in which
5 the taxpayer relocated its facility by an amount equal to
6 the amount of credit received by the taxpayer under this
7 subsection (h).
8 (i) A credit shall be allowed against the tax imposed by
9 subsections (a) and (b) of this Section for the tax imposed
10 by subsections (c) and (d) of this Section. This credit
11 shall be computed by multiplying the tax imposed by
12 subsections (c) and (d) of this Section by a fraction, the
13 numerator of which is base income allocable to Illinois and
14 the denominator of which is Illinois base income, and further
15 multiplying the product by the tax rate imposed by
16 subsections (a) and (b) of this Section.
17 Any credit earned on or after December 31, 1986 under
18 this subsection which is unused in the year the credit is
19 computed because it exceeds the tax liability imposed by
20 subsections (a) and (b) for that year (whether it exceeds the
21 original liability or the liability as later amended) may be
22 carried forward and applied to the tax liability imposed by
23 subsections (a) and (b) of the 5 taxable years following the
24 excess credit year. This credit shall be applied first to
25 the earliest year for which there is a liability. If there
26 is a credit under this subsection from more than one tax year
27 that is available to offset a liability the earliest credit
28 arising under this subsection shall be applied first.
29 If, during any taxable year ending on or after December
30 31, 1986, the tax imposed by subsections (c) and (d) of this
31 Section for which a taxpayer has claimed a credit under this
32 subsection (i) is reduced, the amount of credit for such tax
33 shall also be reduced. Such reduction shall be determined by
34 recomputing the credit to take into account the reduced tax
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1 imposed by subsection (c) and (d). If any portion of the
2 reduced amount of credit has been carried to a different
3 taxable year, an amended return shall be filed for such
4 taxable year to reduce the amount of credit claimed.
5 (j) Training expense credit. Beginning with tax years
6 ending on or after December 31, 1986, a taxpayer shall be
7 allowed a credit against the tax imposed by subsection (a)
8 and (b) under this Section for all amounts paid or accrued,
9 on behalf of all persons employed by the taxpayer in Illinois
10 or Illinois residents employed outside of Illinois by a
11 taxpayer, for educational or vocational training in
12 semi-technical or technical fields or semi-skilled or skilled
13 fields, which were deducted from gross income in the
14 computation of taxable income. The credit against the tax
15 imposed by subsections (a) and (b) shall be 1.6% of such
16 training expenses. For partners, shareholders of subchapter
17 S corporations, and owners of limited liability companies, if
18 the liability company is treated as a partnership for
19 purposes of federal and State income taxation, there shall be
20 allowed a credit under this subsection (j) to be determined
21 in accordance with the determination of income and
22 distributive share of income under Sections 702 and 704 and
23 subchapter S of the Internal Revenue Code.
24 Any credit allowed under this subsection which is unused
25 in the year the credit is earned may be carried forward to
26 each of the 5 taxable years following the year for which the
27 credit is first computed until it is used. This credit shall
28 be applied first to the earliest year for which there is a
29 liability. If there is a credit under this subsection from
30 more than one tax year that is available to offset a
31 liability the earliest credit arising under this subsection
32 shall be applied first.
33 (k) Research and development credit.
34 Beginning with tax years ending after July 1, 1990, a
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1 taxpayer shall be allowed a credit against the tax imposed by
2 subsections (a) and (b) of this Section for increasing
3 research activities in this State. The credit allowed
4 against the tax imposed by subsections (a) and (b) shall be
5 equal to 6 1/2% of the qualifying expenditures for increasing
6 research activities in this State. For partners, shareholders
7 of subchapter S corporations, and owners of limited liability
8 companies, if the liability company is treated as a
9 partnership for purposes of federal and State income
10 taxation, there shall be allowed a credit under this
11 subsection to be determined in accordance with the
12 determination of income and distributive share of income
13 under Sections 702 and 704 and subchapter S of the Internal
14 Revenue Code.
15 For purposes of this subsection, "qualifying
16 expenditures" means the qualifying expenditures as defined
17 for the federal credit for increasing research activities
18 which would be allowable under Section 41 of the Internal
19 Revenue Code and which are conducted in this State,
20 "qualifying expenditures for increasing research activities
21 in this State" means the excess of qualifying expenditures
22 for the taxable year in which incurred over qualifying
23 expenditures for the base period, "qualifying expenditures
24 for the base period" means the average of the qualifying
25 expenditures for each year in the base period, and "base
26 period" means the 3 taxable years immediately preceding the
27 taxable year for which the determination is being made.
28 Any credit in excess of the tax liability for the taxable
29 year may be carried forward. A taxpayer may elect to have the
30 unused credit shown on its final completed return carried
31 over as a credit against the tax liability for the following
32 5 taxable years or until it has been fully used, whichever
33 occurs first.
34 If an unused credit is carried forward to a given year
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1 from 2 or more earlier years, that credit arising in the
2 earliest year will be applied first against the tax liability
3 for the given year. If a tax liability for the given year
4 still remains, the credit from the next earliest year will
5 then be applied, and so on, until all credits have been used
6 or no tax liability for the given year remains. Any
7 remaining unused credit or credits then will be carried
8 forward to the next following year in which a tax liability
9 is incurred, except that no credit can be carried forward to
10 a year which is more than 5 years after the year in which the
11 expense for which the credit is given was incurred.
12 Unless extended by law, the credit shall not include
13 costs incurred after December 31, 2004, except for costs
14 incurred pursuant to a binding contract entered into on or
15 before December 31, 2004.
16 No inference shall be drawn from this amendatory Act of
17 the 91st General Assembly in construing this Section for
18 taxable years beginning before January 1, 1999.
19 (l) Environmental Remediation Tax Credit.
20 (i) For tax years ending after December 31, 1997
21 and on or before December 31, 2001, a taxpayer shall be
22 allowed a credit against the tax imposed by subsections
23 (a) and (b) of this Section for certain amounts paid for
24 unreimbursed eligible remediation costs, as specified in
25 this subsection. For purposes of this Section,
26 "unreimbursed eligible remediation costs" means costs
27 approved by the Illinois Environmental Protection Agency
28 ("Agency") under Section 58.14 of the Environmental
29 Protection Act that were paid in performing environmental
30 remediation at a site for which a No Further Remediation
31 Letter was issued by the Agency and recorded under
32 Section 58.10 of the Environmental Protection Act. The
33 credit must be claimed for the taxable year in which
34 Agency approval of the eligible remediation costs is
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1 granted. The credit is not available to any taxpayer if
2 the taxpayer or any related party caused or contributed
3 to, in any material respect, a release of regulated
4 substances on, in, or under the site that was identified
5 and addressed by the remedial action pursuant to the Site
6 Remediation Program of the Environmental Protection Act.
7 After the Pollution Control Board rules are adopted
8 pursuant to the Illinois Administrative Procedure Act for
9 the administration and enforcement of Section 58.9 of the
10 Environmental Protection Act, determinations as to credit
11 availability for purposes of this Section shall be made
12 consistent with those rules. For purposes of this
13 Section, "taxpayer" includes a person whose tax
14 attributes the taxpayer has succeeded to under Section
15 381 of the Internal Revenue Code and "related party"
16 includes the persons disallowed a deduction for losses by
17 paragraphs (b), (c), and (f)(1) of Section 267 of the
18 Internal Revenue Code by virtue of being a related
19 taxpayer, as well as any of its partners. The credit
20 allowed against the tax imposed by subsections (a) and
21 (b) shall be equal to 25% of the unreimbursed eligible
22 remediation costs in excess of $100,000 per site, except
23 that the $100,000 threshold shall not apply to any site
24 contained in an enterprise zone as determined by the
25 Department of Commerce and Community Affairs. The total
26 credit allowed shall not exceed $40,000 per year with a
27 maximum total of $150,000 per site. For partners and
28 shareholders of subchapter S corporations, there shall be
29 allowed a credit under this subsection to be determined
30 in accordance with the determination of income and
31 distributive share of income under Sections 702 and 704
32 of subchapter S of the Internal Revenue Code.
33 (ii) A credit allowed under this subsection that is
34 unused in the year the credit is earned may be carried
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1 forward to each of the 5 taxable years following the year
2 for which the credit is first earned until it is used.
3 The term "unused credit" does not include any amounts of
4 unreimbursed eligible remediation costs in excess of the
5 maximum credit per site authorized under paragraph (i).
6 This credit shall be applied first to the earliest year
7 for which there is a liability. If there is a credit
8 under this subsection from more than one tax year that is
9 available to offset a liability, the earliest credit
10 arising under this subsection shall be applied first. A
11 credit allowed under this subsection may be sold to a
12 buyer as part of a sale of all or part of the remediation
13 site for which the credit was granted. The purchaser of
14 a remediation site and the tax credit shall succeed to
15 the unused credit and remaining carry-forward period of
16 the seller. To perfect the transfer, the assignor shall
17 record the transfer in the chain of title for the site
18 and provide written notice to the Director of the
19 Illinois Department of Revenue of the assignor's intent
20 to sell the remediation site and the amount of the tax
21 credit to be transferred as a portion of the sale. In no
22 event may a credit be transferred to any taxpayer if the
23 taxpayer or a related party would not be eligible under
24 the provisions of subsection (i).
25 (iii) For purposes of this Section, the term "site"
26 shall have the same meaning as under Section 58.2 of the
27 Environmental Protection Act.
28 (m) Education expense credit.
29 Beginning with tax years ending after December 31, 1999,
30 a taxpayer who is the custodian of one or more qualifying
31 pupils shall be allowed a credit against the tax imposed by
32 subsections (a) and (b) of this Section for qualified
33 education expenses incurred on behalf of the qualifying
34 pupils. The credit shall be equal to 25% of qualified
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1 education expenses, but in no event may the total credit
2 under this Section claimed by a family that is the custodian
3 of qualifying pupils exceed $500. In no event shall a credit
4 under this subsection reduce the taxpayer's liability under
5 this Act to less than zero. This subsection is exempt from
6 the provisions of Section 250 of this Act.
7 For purposes of this subsection;
8 "Qualifying pupils" means individuals who (i) are
9 residents of the State of Illinois, (ii) are under the age of
10 21 at the close of the school year for which a credit is
11 sought, and (iii) during the school year for which a credit
12 is sought were full-time pupils enrolled in a kindergarten
13 through twelfth grade education program at any school, as
14 defined in this subsection.
15 "Qualified education expense" means the amount incurred
16 on behalf of a qualifying pupil in excess of $250 for
17 tuition, book fees, and lab fees at the school in which the
18 pupil is enrolled 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 shall be construed to require a
24 child to attend any particular public or nonpublic school to
25 qualify for the credit under this Section.
26 "Custodian" means, with respect to qualifying pupils, an
27 Illinois resident who is a parent, the parents, a legal
28 guardian, or the legal guardians of the qualifying pupils.
29 (Source: P.A. 90-123, eff. 7-21-97; 90-458, eff. 8-17-97;
30 90-605, eff. 6-30-98; 90-655, eff. 7-30-98; 90-717, eff.
31 8-7-98; 90-792, eff. 1-1-99; 91-9, eff. 1-1-00; 91-357, eff.
32 7-29-99; 91-643, eff. 8-20-99; 91-644, eff. 8-20-99; revised
33 8-27-99.)
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1 Section 99. Effective date. This Act takes effect upon
2 becoming law.