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91_SB1439
LRB9111819SMdv
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 assumed are 50% or more of its total insurance
15 premiums as determined under paragraph (2) of subsection (b)
16 of Section 304, except that for purposes of this
17 determination reinsurance premiums do not include assumed
18 premiums from inter-affiliate pooling arrangements),
19 beginning with taxable years ending on or after December 31,
20 1999 and ending with taxable years ending on or before
21 December 31, 2000, the sum of the rates of tax imposed by
22 subsections (b) and (d) shall be reduced (but not increased)
23 to the rate at which the total amount of tax imposed under
24 this Act, net of all credits allowed under this Act, shall
25 equal (i) the total amount of tax that would be imposed on
26 the foreign insurer's net income allocable to Illinois for
27 the taxable year by such foreign insurer's state or country
28 of domicile if that net income were subject to all income
29 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 (e) Investment credit. A taxpayer shall be allowed a
32 credit against the Personal Property Tax Replacement Income
33 Tax for investment in qualified property.
34 (1) A taxpayer shall be allowed a credit equal to
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1 .5% of the basis of qualified property placed in service
2 during the taxable year, provided such property is placed
3 in service on or after July 1, 1984. There shall be
4 allowed an additional credit equal to .5% of the basis of
5 qualified property placed in service during the taxable
6 year, provided such property is placed in service on or
7 after July 1, 1986, and the taxpayer's base employment
8 within Illinois has increased by 1% or more over the
9 preceding year as determined by the taxpayer's employment
10 records filed with the Illinois Department of Employment
11 Security. Taxpayers who are new to Illinois shall be
12 deemed to have met the 1% growth in base employment for
13 the first year in which they file employment records with
14 the Illinois Department of Employment Security. The
15 provisions added to this Section by Public Act 85-1200
16 (and restored by Public Act 87-895) shall be construed as
17 declaratory of existing law and not as a new enactment.
18 If, in any year, the increase in base employment within
19 Illinois over the preceding year is less than 1%, the
20 additional credit shall be limited to that percentage
21 times a fraction, the numerator of which is .5% and the
22 denominator of which is 1%, but shall not exceed .5%.
23 The investment credit shall not be allowed to the extent
24 that it would reduce a taxpayer's liability in any tax
25 year below zero, nor may any credit for qualified
26 property be allowed for any year other than the year in
27 which the property was placed in service in Illinois. For
28 tax years ending on or after December 31, 1987, and on or
29 before December 31, 1988, the credit shall be allowed for
30 the tax year in which the property is placed in service,
31 or, if the amount of the credit exceeds the tax liability
32 for that year, whether it exceeds the original liability
33 or the liability as later amended, such excess may be
34 carried forward and applied to the tax liability of the 5
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1 taxable years following the excess credit years if the
2 taxpayer (i) makes investments which cause the creation
3 of a minimum of 2,000 full-time equivalent jobs in
4 Illinois, (ii) is located in an enterprise zone
5 established pursuant to the Illinois Enterprise Zone Act
6 and (iii) is certified by the Department of Commerce and
7 Community Affairs as complying with the requirements
8 specified in clause (i) and (ii) by July 1, 1986. The
9 Department of Commerce and Community Affairs shall notify
10 the Department of Revenue of all such certifications
11 immediately. For tax years ending after December 31,
12 1988, the credit shall be allowed for the tax year in
13 which the property is placed in service, or, if the
14 amount of the credit exceeds the tax liability for that
15 year, whether it exceeds the original liability or the
16 liability as later amended, such excess may be carried
17 forward and applied to the tax liability of the 5 taxable
18 years following the excess credit years. The credit shall
19 be applied to the earliest year for which there is a
20 liability. If there is credit from more than one tax year
21 that is available to offset a liability, earlier credit
22 shall be applied first.
23 (2) The term "qualified property" means property
24 which:
25 (A) is tangible, whether new or used,
26 including buildings and structural components of
27 buildings and signs that are real property, but not
28 including land or improvements to real property that
29 are not a structural component of a building such as
30 landscaping, sewer lines, local access roads,
31 fencing, parking lots, and other appurtenances;
32 (B) is depreciable pursuant to Section 167 of
33 the Internal Revenue Code, except that "3-year
34 property" as defined in Section 168(c)(2)(A) of that
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1 Code is not eligible for the credit provided by this
2 subsection (e);
3 (C) is acquired by purchase as defined in
4 Section 179(d) of the Internal Revenue Code;
5 (D) is used in Illinois by a taxpayer who is
6 primarily engaged in manufacturing, or in mining
7 coal or fluorite, or in retailing; and
8 (E) has not previously been used in Illinois
9 in such a manner and by such a person as would
10 qualify for the credit provided by this subsection
11 (e) or subsection (f).
12 (3) For purposes of this subsection (e),
13 "manufacturing" means the material staging and production
14 of tangible personal property by procedures commonly
15 regarded as manufacturing, processing, fabrication, or
16 assembling which changes some existing material into new
17 shapes, new qualities, or new combinations. For purposes
18 of this subsection (e) the term "mining" shall have the
19 same meaning as the term "mining" in Section 613(c) of
20 the Internal Revenue Code. For purposes of this
21 subsection (e), the term "retailing" means the sale of
22 tangible personal property or services rendered in
23 conjunction with the sale of tangible consumer goods or
24 commodities.
25 (4) The basis of qualified property shall be the
26 basis used to compute the depreciation deduction for
27 federal income tax purposes.
28 (5) If the basis of the property for federal income
29 tax depreciation purposes is increased after it has been
30 placed in service in Illinois by the taxpayer, the amount
31 of such increase shall be deemed property placed in
32 service on the date of such increase in basis.
33 (6) The term "placed in service" shall have the
34 same meaning as under Section 46 of the Internal Revenue
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1 Code.
2 (7) If during any taxable year, any property ceases
3 to be qualified property in the hands of the taxpayer
4 within 48 months after being placed in service, or the
5 situs of any qualified property is moved outside Illinois
6 within 48 months after being placed in service, the
7 Personal Property Tax Replacement Income Tax for such
8 taxable year shall be increased. Such increase shall be
9 determined by (i) recomputing the investment credit which
10 would have been allowed for the year in which credit for
11 such property was originally allowed by eliminating such
12 property from such computation and, (ii) subtracting such
13 recomputed credit from the amount of credit previously
14 allowed. For the purposes of this paragraph (7), a
15 reduction of the basis of qualified property resulting
16 from a redetermination of the purchase price shall be
17 deemed a disposition of qualified property to the extent
18 of such reduction.
19 (8) Unless the investment credit is extended by
20 law, the basis of qualified property shall not include
21 costs incurred after December 31, 2003, except for costs
22 incurred pursuant to a binding contract entered into on
23 or before December 31, 2003.
24 (9) Each taxable year, a partnership may elect to
25 pass through to its partners the credits to which the
26 partnership is entitled under this subsection (e) for the
27 taxable year. A partner may use the credit allocated to
28 him or her under this paragraph only against the tax
29 imposed in subsections (c) and (d) of this Section. If
30 the partnership makes that election, those credits shall
31 be allocated among the partners in the partnership in
32 accordance with the rules set forth in Section 704(b) of
33 the Internal Revenue Code, and the rules promulgated
34 under that Section, and the allocated amount of the
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1 credits shall be allowed to the partners for that taxable
2 year. The partnership shall make this election on its
3 Personal Property Tax Replacement Income Tax return for
4 that taxable year. The election to pass through the
5 credits shall be irrevocable.
6 (f) Investment credit; Enterprise Zone.
7 (1) A taxpayer shall be allowed a credit against
8 the tax imposed by subsections (a) and (b) of this
9 Section for investment in qualified property which is
10 placed in service in an Enterprise Zone created pursuant
11 to the Illinois Enterprise Zone Act. For partners,
12 shareholders of Subchapter S corporations, and owners of
13 limited liability companies, if the liability company is
14 treated as a partnership for purposes of federal and
15 State income taxation, there shall be allowed a credit
16 under this subsection (f) to be determined in accordance
17 with the determination of income and distributive share
18 of income under Sections 702 and 704 and Subchapter S of
19 the Internal Revenue Code. The credit shall be .5% of the
20 basis for such property. The credit shall be available
21 only in the taxable year in which the property is placed
22 in service in the Enterprise Zone and shall not be
23 allowed to the extent that it would reduce a taxpayer's
24 liability for the tax imposed by subsections (a) and (b)
25 of this Section to below zero. For tax years ending on or
26 after December 31, 1985, the credit shall be allowed for
27 the tax year in which the property is placed in service,
28 or, if the amount of the credit exceeds the tax liability
29 for that year, whether it exceeds the original liability
30 or the liability as later amended, such excess may be
31 carried forward and applied to the tax liability of the 5
32 taxable years following the excess credit year. The
33 credit shall be applied to the earliest year for which
34 there is a liability. If there is credit from more than
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1 one tax year that is available to offset a liability, the
2 credit accruing first in time shall be applied first.
3 (2) The term qualified property means property
4 which:
5 (A) is tangible, whether new or used,
6 including buildings and structural components of
7 buildings;
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 (f);
13 (C) is acquired by purchase as defined in
14 Section 179(d) of the Internal Revenue Code;
15 (D) is used in the Enterprise Zone by the
16 taxpayer; and
17 (E) has not been previously used in Illinois
18 in such a manner and by such a person as would
19 qualify for the credit provided by this subsection
20 (f) or subsection (e).
21 (3) The basis of qualified property shall be the
22 basis used to compute the depreciation deduction for
23 federal income tax purposes.
24 (4) If the basis of the property for federal income
25 tax depreciation purposes is increased after it has been
26 placed in service in the Enterprise Zone by the taxpayer,
27 the amount of such increase shall be deemed property
28 placed in service on the date of such increase in basis.
29 (5) The term "placed in service" shall have the
30 same meaning as under Section 46 of the Internal Revenue
31 Code.
32 (6) If during any taxable year, any property ceases
33 to be qualified property in the hands of the taxpayer
34 within 48 months after being placed in service, or the
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1 situs of any qualified property is moved outside the
2 Enterprise Zone within 48 months after being placed in
3 service, the tax imposed under subsections (a) and (b) of
4 this Section for such taxable year shall be increased.
5 Such increase shall be determined by (i) recomputing the
6 investment credit which would have been allowed for the
7 year in which credit for such property was originally
8 allowed by eliminating such property from such
9 computation, and (ii) subtracting such recomputed credit
10 from the amount of credit previously allowed. For the
11 purposes of this paragraph (6), a reduction of the basis
12 of qualified property resulting from a redetermination of
13 the purchase price shall be deemed a disposition of
14 qualified property to the extent of such reduction.
15 (g) Jobs Tax Credit; Enterprise Zone and Foreign Trade
16 Zone or Sub-Zone.
17 (1) A taxpayer conducting a trade or business in an
18 enterprise zone or a High Impact Business designated by
19 the Department of Commerce and Community Affairs
20 conducting a trade or business in a federally designated
21 Foreign Trade Zone or Sub-Zone shall be allowed a credit
22 against the tax imposed by subsections (a) and (b) of
23 this Section in the amount of $500 per eligible employee
24 hired to work in the zone during the taxable year.
25 (2) To qualify for the credit:
26 (A) the taxpayer must hire 5 or more eligible
27 employees to work in an enterprise zone or federally
28 designated Foreign Trade Zone or Sub-Zone during the
29 taxable year;
30 (B) the taxpayer's total employment within the
31 enterprise zone or federally designated Foreign
32 Trade Zone or Sub-Zone must increase by 5 or more
33 full-time employees beyond the total employed in
34 that zone at the end of the previous tax year for
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1 which a jobs tax credit under this Section was
2 taken, or beyond the total employed by the taxpayer
3 as of December 31, 1985, whichever is later; and
4 (C) the eligible employees must be employed
5 180 consecutive days in order to be deemed hired for
6 purposes of this subsection.
7 (3) An "eligible employee" means an employee who
8 is:
9 (A) Certified by the Department of Commerce
10 and Community Affairs as "eligible for services"
11 pursuant to regulations promulgated in accordance
12 with Title II of the Job Training Partnership Act,
13 Training Services for the Disadvantaged or Title III
14 of the Job Training Partnership Act, Employment and
15 Training Assistance for Dislocated Workers Program.
16 (B) Hired after the enterprise zone or
17 federally designated Foreign Trade Zone or Sub-Zone
18 was designated or the trade or business was located
19 in that zone, whichever is later.
20 (C) Employed in the enterprise zone or Foreign
21 Trade Zone or Sub-Zone. An employee is employed in
22 an enterprise zone or federally designated Foreign
23 Trade Zone or Sub-Zone if his services are rendered
24 there or it is the base of operations for the
25 services performed.
26 (D) A full-time employee working 30 or more
27 hours per week.
28 (4) For tax years ending on or after December 31,
29 1985 and prior to December 31, 1988, the credit shall be
30 allowed for the tax year in which the eligible employees
31 are hired. For tax years ending on or after December 31,
32 1988, the credit shall be allowed for the tax year
33 immediately following the tax year in which the eligible
34 employees are hired. If the amount of the credit exceeds
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1 the tax liability for that year, whether it exceeds the
2 original liability or the liability as later amended,
3 such excess may be carried forward and applied to the tax
4 liability of the 5 taxable years following the excess
5 credit year. The credit shall be applied to the earliest
6 year for which there is a liability. If there is credit
7 from more than one tax year that is available to offset a
8 liability, earlier credit shall be applied first.
9 (5) The Department of Revenue shall promulgate such
10 rules and regulations as may be deemed necessary to carry
11 out the purposes of this subsection (g).
12 (6) The credit shall be available for eligible
13 employees hired on or after January 1, 1986.
14 (h) Investment credit; High Impact Business.
15 (1) Subject to subsection (b) of Section 5.5 of the
16 Illinois Enterprise Zone Act, a taxpayer shall be allowed
17 a credit against the tax imposed by subsections (a) and
18 (b) of this Section for investment in qualified property
19 which is placed in service by a Department of Commerce
20 and Community Affairs designated High Impact Business.
21 The credit shall be .5% of the basis for such property.
22 The credit shall not be available until the minimum
23 investments in qualified property set forth in Section
24 5.5 of the Illinois Enterprise Zone Act have been
25 satisfied and shall not be allowed to the extent that it
26 would reduce a taxpayer's liability for the tax imposed
27 by subsections (a) and (b) of this Section to below zero.
28 The credit applicable to such minimum investments shall
29 be taken in the taxable year in which such minimum
30 investments have been completed. The credit for
31 additional investments beyond the minimum investment by a
32 designated high impact business shall be available only
33 in the taxable year in which the property is placed in
34 service and shall not be allowed to the extent that it
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1 would reduce a taxpayer's liability for the tax imposed
2 by subsections (a) and (b) of this Section to below zero.
3 For tax years ending on or after December 31, 1987, the
4 credit shall be allowed for the tax year in which the
5 property is placed in service, or, if the amount of the
6 credit exceeds the tax liability for that year, whether
7 it exceeds the original liability or the liability as
8 later amended, such excess may be carried forward and
9 applied to the tax liability of the 5 taxable years
10 following the excess credit year. The credit shall be
11 applied to the earliest year for which there is a
12 liability. If there is credit from more than one tax
13 year that is available to offset a liability, the credit
14 accruing first in time shall be applied first.
15 Changes made in this subdivision (h)(1) by Public
16 Act 88-670 restore changes made by Public Act 85-1182 and
17 reflect existing law.
18 (2) The term qualified property means property
19 which:
20 (A) is tangible, whether new or used,
21 including buildings and structural components of
22 buildings;
23 (B) is depreciable pursuant to Section 167 of
24 the Internal Revenue Code, except that "3-year
25 property" as defined in Section 168(c)(2)(A) of that
26 Code is not eligible for the credit provided by this
27 subsection (h);
28 (C) is acquired by purchase as defined in
29 Section 179(d) of the Internal Revenue Code; and
30 (D) is not eligible for the Enterprise Zone
31 Investment Credit provided by subsection (f) of this
32 Section.
33 (3) The basis of qualified property shall be the
34 basis used to compute the depreciation deduction for
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1 federal income tax purposes.
2 (4) If the basis of the property for federal income
3 tax depreciation purposes is increased after it has been
4 placed in service in a federally designated Foreign Trade
5 Zone or Sub-Zone located in Illinois by the taxpayer, the
6 amount of such increase shall be deemed property placed
7 in service on the date of such increase in basis.
8 (5) The term "placed in service" shall have the
9 same meaning as under Section 46 of the Internal Revenue
10 Code.
11 (6) If during any taxable year ending on or before
12 December 31, 1996, any property ceases to be qualified
13 property in the hands of the taxpayer within 48 months
14 after being placed in service, or the situs of any
15 qualified property is moved outside Illinois within 48
16 months after being placed in service, the tax imposed
17 under subsections (a) and (b) of this Section 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 (6), 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 (7) Beginning with tax years ending after December
30 31, 1996, if a taxpayer qualifies for the credit under
31 this subsection (h) and thereby is granted a tax
32 abatement and the taxpayer relocates its entire facility
33 in violation of the explicit terms and length of the
34 contract under Section 18-183 of the Property Tax Code,
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1 the tax imposed under subsections (a) and (b) of this
2 Section shall be increased for the taxable year in which
3 the taxpayer relocated its facility by an amount equal to
4 the amount of credit received by the taxpayer under this
5 subsection (h).
6 (i) A credit shall be allowed against the tax imposed by
7 subsections (a) and (b) of this Section for the tax imposed
8 by subsections (c) and (d) of this Section. This credit
9 shall be computed by multiplying the tax imposed by
10 subsections (c) and (d) of this Section by a fraction, the
11 numerator of which is base income allocable to Illinois and
12 the denominator of which is Illinois base income, and further
13 multiplying the product by the tax rate imposed by
14 subsections (a) and (b) of this Section.
15 Any credit earned on or after December 31, 1986 under
16 this subsection which is unused in the year the credit is
17 computed because it exceeds the tax liability imposed by
18 subsections (a) and (b) for that year (whether it exceeds the
19 original liability or the liability as later amended) may be
20 carried forward and applied to the tax liability imposed by
21 subsections (a) and (b) of the 5 taxable years following the
22 excess credit year. This credit shall be applied first to
23 the earliest year for which there is a liability. If there
24 is a credit under this subsection from more than one tax year
25 that is available to offset a liability the earliest credit
26 arising under this subsection shall be applied first.
27 If, during any taxable year ending on or after December
28 31, 1986, the tax imposed by subsections (c) and (d) of this
29 Section for which a taxpayer has claimed a credit under this
30 subsection (i) is reduced, the amount of credit for such tax
31 shall also be reduced. Such reduction shall be determined by
32 recomputing the credit to take into account the reduced tax
33 imposed by subsection (c) and (d). If any portion of the
34 reduced amount of credit has been carried to a different
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1 taxable year, an amended return shall be filed for such
2 taxable year to reduce the amount of credit claimed.
3 (j) Training expense credit. Beginning with tax years
4 ending on or after December 31, 1986, a taxpayer shall be
5 allowed a credit against the tax imposed by subsection (a)
6 and (b) under this Section for all amounts paid or accrued,
7 on behalf of all persons employed by the taxpayer in Illinois
8 or Illinois residents employed outside of Illinois by a
9 taxpayer, for educational or vocational training in
10 semi-technical or technical fields or semi-skilled or skilled
11 fields, which were deducted from gross income in the
12 computation of taxable income. The credit against the tax
13 imposed by subsections (a) and (b) shall be 1.6% of such
14 training expenses. For partners, shareholders of subchapter
15 S corporations, and owners of limited liability companies, if
16 the liability company is treated as a partnership for
17 purposes of federal and State income taxation, there shall be
18 allowed a credit under this subsection (j) to be determined
19 in accordance with the determination of income and
20 distributive share of income under Sections 702 and 704 and
21 subchapter S of the Internal Revenue Code.
22 Any credit allowed under this subsection which is unused
23 in the year the credit is earned may be carried forward to
24 each of the 5 taxable years following the year for which the
25 credit is first computed until it is used. This credit shall
26 be applied first to the earliest year for which there is a
27 liability. If there is a credit under this subsection from
28 more than one tax year that is available to offset a
29 liability the earliest credit arising under this subsection
30 shall be applied first.
31 (k) Research and development credit.
32 Beginning with tax years ending after July 1, 1990, a
33 taxpayer shall be allowed a credit against the tax imposed by
34 subsections (a) and (b) of this Section for increasing
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1 research activities in this State. The credit allowed
2 against the tax imposed by subsections (a) and (b) shall be
3 equal to 6 1/2% of the qualifying expenditures for increasing
4 research activities in this State. For partners, shareholders
5 of subchapter S corporations, and owners of limited liability
6 companies, if the liability company is treated as a
7 partnership for purposes of federal and State income
8 taxation, there shall be allowed a credit under this
9 subsection to be determined in accordance with the
10 determination of income and distributive share of income
11 under Sections 702 and 704 and subchapter S of the Internal
12 Revenue Code.
13 For purposes of this subsection, "qualifying
14 expenditures" means the qualified research expenses,
15 qualifying expenditures as defined in for the federal credit
16 for increasing research activities which would be allowable
17 under Section 41(b) 41 of the Internal Revenue Code on the
18 effective date of this amendatory Act of the 91st General
19 Assembly, if the research activities and which are conducted
20 by an entity that has its primary office in this State. For
21 purposes of this subsection, "qualifying expenditures"
22 include intellectual property development and protection
23 expenditures in the United States and foreign countries
24 incurred for the purpose of protecting the results of
25 research activities., "qualifying expenditures for increasing
26 research activities in this State" means the excess of
27 qualifying expenditures for the taxable year in which
28 incurred over qualifying expenditures for the base period,
29 "qualifying expenditures for the base period" means the
30 average of the qualifying expenditures for each year in the
31 base period, and "base period" means the 3 taxable years
32 immediately preceding the taxable year for which the
33 determination is being made.
34 Any credit in excess of the tax liability for the taxable
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1 year may be carried forward. A taxpayer may elect to have the
2 unused credit shown on its final completed return carried
3 over as a credit against the tax liability for the following
4 5 taxable years or until it has been fully used, whichever
5 occurs first.
6 If an unused credit is carried forward to a given year
7 from 2 or more earlier years, that credit arising in the
8 earliest year will be applied first against the tax liability
9 for the given year. If a tax liability for the given year
10 still remains, the credit from the next earliest year will
11 then be applied, and so on, until all credits have been used
12 or no tax liability for the given year remains. Any
13 remaining unused credit or credits then will be carried
14 forward to the next following year in which a tax liability
15 is incurred, except that no credit can be carried forward to
16 a year which is more than 5 years after the year in which the
17 expense for which the credit is given was incurred.
18 Unless extended by law, the credit shall not include
19 costs incurred after December 31, 2014 2004, except for costs
20 incurred pursuant to a binding contract entered into on or
21 before December 31, 2014 2004.
22 No inference shall be drawn from this amendatory Act of
23 the 91st General Assembly in construing this Section for
24 taxable years beginning before January 1, 1999.
25 (l) Environmental Remediation Tax Credit.
26 (i) For tax years ending after December 31, 1997
27 and on or before December 31, 2001, a taxpayer shall be
28 allowed a credit against the tax imposed by subsections
29 (a) and (b) of this Section for certain amounts paid for
30 unreimbursed eligible remediation costs, as specified in
31 this subsection. For purposes of this Section,
32 "unreimbursed eligible remediation costs" means costs
33 approved by the Illinois Environmental Protection Agency
34 ("Agency") under Section 58.14 of the Environmental
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1 Protection Act that were paid in performing environmental
2 remediation at a site for which a No Further Remediation
3 Letter was issued by the Agency and recorded under
4 Section 58.10 of the Environmental Protection Act. The
5 credit must be claimed for the taxable year in which
6 Agency approval of the eligible remediation costs is
7 granted. The credit is not available to any taxpayer if
8 the taxpayer or any related party caused or contributed
9 to, in any material respect, a release of regulated
10 substances on, in, or under the site that was identified
11 and addressed by the remedial action pursuant to the Site
12 Remediation Program of the Environmental Protection Act.
13 After the Pollution Control Board rules are adopted
14 pursuant to the Illinois Administrative Procedure Act for
15 the administration and enforcement of Section 58.9 of the
16 Environmental Protection Act, determinations as to credit
17 availability for purposes of this Section shall be made
18 consistent with those rules. For purposes of this
19 Section, "taxpayer" includes a person whose tax
20 attributes the taxpayer has succeeded to under Section
21 381 of the Internal Revenue Code and "related party"
22 includes the persons disallowed a deduction for losses by
23 paragraphs (b), (c), and (f)(1) of Section 267 of the
24 Internal Revenue Code by virtue of being a related
25 taxpayer, as well as any of its partners. The credit
26 allowed against the tax imposed by subsections (a) and
27 (b) shall be equal to 25% of the unreimbursed eligible
28 remediation costs in excess of $100,000 per site, except
29 that the $100,000 threshold shall not apply to any site
30 contained in an enterprise zone as determined by the
31 Department of Commerce and Community Affairs. The total
32 credit allowed shall not exceed $40,000 per year with a
33 maximum total of $150,000 per site. For partners and
34 shareholders of subchapter S corporations, there shall be
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1 allowed a credit under this subsection to be determined
2 in accordance with the determination of income and
3 distributive share of income under Sections 702 and 704
4 of subchapter S of the Internal Revenue Code.
5 (ii) A credit allowed under this subsection that is
6 unused in the year the credit is earned may be carried
7 forward to each of the 5 taxable years following the year
8 for which the credit is first earned until it is used.
9 The term "unused credit" does not include any amounts of
10 unreimbursed eligible remediation costs in excess of the
11 maximum credit per site authorized under paragraph (i).
12 This credit shall be applied first to the earliest year
13 for which there is a liability. If there is a credit
14 under this subsection from more than one tax year that is
15 available to offset a liability, the earliest credit
16 arising under this subsection shall be applied first. A
17 credit allowed under this subsection may be sold to a
18 buyer as part of a sale of all or part of the remediation
19 site for which the credit was granted. The purchaser of
20 a remediation site and the tax credit shall succeed to
21 the unused credit and remaining carry-forward period of
22 the seller. To perfect the transfer, the assignor shall
23 record the transfer in the chain of title for the site
24 and provide written notice to the Director of the
25 Illinois Department of Revenue of the assignor's intent
26 to sell the remediation site and the amount of the tax
27 credit to be transferred as a portion of the sale. In no
28 event may a credit be transferred to any taxpayer if the
29 taxpayer or a related party would not be eligible under
30 the provisions of subsection (i).
31 (iii) For purposes of this Section, the term "site"
32 shall have the same meaning as under Section 58.2 of the
33 Environmental Protection Act.
34 (m) Education expense credit.
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1 Beginning with tax years ending after December 31, 1999,
2 a taxpayer who is the custodian of one or more qualifying
3 pupils shall be allowed a credit against the tax imposed by
4 subsections (a) and (b) of this Section for qualified
5 education expenses incurred on behalf of the qualifying
6 pupils. The credit shall be equal to 25% of qualified
7 education expenses, but in no event may the total credit
8 under this Section claimed by a family that is the custodian
9 of qualifying pupils exceed $500. In no event shall a credit
10 under this subsection reduce the taxpayer's liability under
11 this Act to less than zero. This subsection is exempt from
12 the provisions of Section 250 of this Act.
13 For purposes of this subsection;
14 "Qualifying pupils" means individuals who (i) are
15 residents of the State of Illinois, (ii) are under the age of
16 21 at the close of the school year for which a credit is
17 sought, and (iii) during the school year for which a credit
18 is sought were full-time pupils enrolled in a kindergarten
19 through twelfth grade education program at any school, as
20 defined in this subsection.
21 "Qualified education expense" means the amount incurred
22 on behalf of a qualifying pupil in excess of $250 for
23 tuition, book fees, and lab fees at the school in which the
24 pupil is enrolled during the regular school year.
25 "School" means any public or nonpublic elementary or
26 secondary school in Illinois that is in compliance with Title
27 VI of the Civil Rights Act of 1964 and attendance at which
28 satisfies the requirements of Section 26-1 of the School
29 Code, except that nothing shall be construed to require a
30 child to attend any particular public or nonpublic school to
31 qualify for the credit under this Section.
32 "Custodian" means, with respect to qualifying pupils, an
33 Illinois resident who is a parent, the parents, a legal
34 guardian, or the legal guardians of the qualifying pupils.
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1 (Source: P.A. 90-123, eff. 7-21-97; 90-458, eff. 8-17-97;
2 90-605, eff. 6-30-98; 90-655, eff. 7-30-98; 90-717, eff.
3 8-7-98; 90-792, eff. 1-1-99; 91-9, eff. 1-1-00; 91-357, eff.
4 7-29-99; 91-643, eff. 8-20-99; 91-644, eff. 8-20-99; revised
5 8-27-99.)
6 Section 99. Effective date. This Act takes effect on
7 January 1, 2001.