Bill Text: IL HB3003 | 2023-2024 | 103rd General Assembly | Introduced
Bill Title: Amends the Illinois Income Tax Act. Increases the research and development credit by providing that the increase in research and development activities shall be based on an increase over 50% of the average of the qualifying expenditures for each year in the base period (instead of 100% of the average of the qualifying expenditures for each year in the base period). Provides that the research and development credit applies on a permanent basis. Effective immediately.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced) 2023-11-21 - Added Co-Sponsor Rep. Tom Weber [HB3003 Detail]
Download: Illinois-2023-HB3003-Introduced.html
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1 | AN ACT concerning revenue.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Income Tax Act is amended by | |||||||||||||||||||
5 | changing Section 201 as follows:
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6 | (35 ILCS 5/201)
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7 | Sec. 201. Tax imposed. | |||||||||||||||||||
8 | (a) In general. A tax measured by net income is hereby | |||||||||||||||||||
9 | imposed on every
individual, corporation, trust and estate for | |||||||||||||||||||
10 | each taxable year ending
after July 31, 1969 on the privilege | |||||||||||||||||||
11 | of earning or receiving income in or
as a resident of this | |||||||||||||||||||
12 | State. Such tax shall be in addition to all other
occupation or | |||||||||||||||||||
13 | privilege taxes imposed by this State or by any municipal
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14 | corporation or political subdivision thereof. | |||||||||||||||||||
15 | (b) Rates. The tax imposed by subsection (a) of this | |||||||||||||||||||
16 | Section shall be
determined as follows, except as adjusted by | |||||||||||||||||||
17 | subsection (d-1): | |||||||||||||||||||
18 | (1) In the case of an individual, trust or estate, for | |||||||||||||||||||
19 | taxable years
ending prior to July 1, 1989, an amount | |||||||||||||||||||
20 | equal to 2 1/2% of the taxpayer's
net income for the | |||||||||||||||||||
21 | taxable year. | |||||||||||||||||||
22 | (2) In the case of an individual, trust or estate, for | |||||||||||||||||||
23 | taxable years
beginning prior to July 1, 1989 and ending |
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1 | after June 30, 1989, an amount
equal to the sum of (i) 2 | ||||||
2 | 1/2% of the taxpayer's net income for the period
prior to | ||||||
3 | July 1, 1989, as calculated under Section 202.3, and (ii) | ||||||
4 | 3% of the
taxpayer's net income for the period after June | ||||||
5 | 30, 1989, as calculated
under Section 202.3. | ||||||
6 | (3) In the case of an individual, trust or estate, for | ||||||
7 | taxable years
beginning after June 30, 1989, and ending | ||||||
8 | prior to January 1, 2011, an amount equal to 3% of the | ||||||
9 | taxpayer's net
income for the taxable year. | ||||||
10 | (4) In the case of an individual, trust, or estate, | ||||||
11 | for taxable years beginning prior to January 1, 2011, and | ||||||
12 | ending after December 31, 2010, an amount equal to the sum | ||||||
13 | of (i) 3% of the taxpayer's net income for the period prior | ||||||
14 | to January 1, 2011, as calculated under Section 202.5, and | ||||||
15 | (ii) 5% of the taxpayer's net income for the period after | ||||||
16 | December 31, 2010, as calculated under Section 202.5. | ||||||
17 | (5) In the case of an individual, trust, or estate, | ||||||
18 | for taxable years beginning on or after January 1, 2011, | ||||||
19 | and ending prior to January 1, 2015, an amount equal to 5% | ||||||
20 | of the taxpayer's net income for the taxable year. | ||||||
21 | (5.1) In the case of an individual, trust, or estate, | ||||||
22 | for taxable years beginning prior to January 1, 2015, and | ||||||
23 | ending after December 31, 2014, an amount equal to the sum | ||||||
24 | of (i) 5% of the taxpayer's net income for the period prior | ||||||
25 | to January 1, 2015, as calculated under Section 202.5, and | ||||||
26 | (ii) 3.75% of the taxpayer's net income for the period |
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1 | after December 31, 2014, as calculated under Section | ||||||
2 | 202.5. | ||||||
3 | (5.2) In the case of an individual, trust, or estate, | ||||||
4 | for taxable years beginning on or after January 1, 2015, | ||||||
5 | and ending prior to July 1, 2017, an amount equal to 3.75% | ||||||
6 | of the taxpayer's net income for the taxable year. | ||||||
7 | (5.3) In the case of an individual, trust, or estate, | ||||||
8 | for taxable years beginning prior to July 1, 2017, and | ||||||
9 | ending after June 30, 2017, an amount equal to the sum of | ||||||
10 | (i) 3.75% of the taxpayer's net income for the period | ||||||
11 | prior to July 1, 2017, as calculated under Section 202.5, | ||||||
12 | and (ii) 4.95% of the taxpayer's net income for the period | ||||||
13 | after June 30, 2017, as calculated under Section 202.5. | ||||||
14 | (5.4) In the case of an individual, trust, or estate, | ||||||
15 | for taxable years beginning on or after July 1, 2017, an | ||||||
16 | amount equal to 4.95% of the taxpayer's net income for the | ||||||
17 | taxable year. | ||||||
18 | (6) In the case of a corporation, for taxable years
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19 | ending prior to July 1, 1989, an amount equal to 4% of the
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20 | taxpayer's net income for the taxable year. | ||||||
21 | (7) In the case of a corporation, for taxable years | ||||||
22 | beginning prior to
July 1, 1989 and ending after June 30, | ||||||
23 | 1989, an amount equal to the sum of
(i) 4% of the | ||||||
24 | taxpayer's net income for the period prior to July 1, | ||||||
25 | 1989,
as calculated under Section 202.3, and (ii) 4.8% of | ||||||
26 | the taxpayer's net
income for the period after June 30, |
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1 | 1989, as calculated under Section
202.3. | ||||||
2 | (8) In the case of a corporation, for taxable years | ||||||
3 | beginning after
June 30, 1989, and ending prior to January | ||||||
4 | 1, 2011, an amount equal to 4.8% of the taxpayer's net | ||||||
5 | income for the
taxable year. | ||||||
6 | (9) In the case of a corporation, for taxable years | ||||||
7 | beginning prior to January 1, 2011, and ending after | ||||||
8 | December 31, 2010, an amount equal to the sum of (i) 4.8% | ||||||
9 | of the taxpayer's net income for the period prior to | ||||||
10 | January 1, 2011, as calculated under Section 202.5, and | ||||||
11 | (ii) 7% of the taxpayer's net income for the period after | ||||||
12 | December 31, 2010, as calculated under Section 202.5. | ||||||
13 | (10) In the case of a corporation, for taxable years | ||||||
14 | beginning on or after January 1, 2011, and ending prior to | ||||||
15 | January 1, 2015, an amount equal to 7% of the taxpayer's | ||||||
16 | net income for the taxable year. | ||||||
17 | (11) In the case of a corporation, for taxable years | ||||||
18 | beginning prior to January 1, 2015, and ending after | ||||||
19 | December 31, 2014, an amount equal to the sum of (i) 7% of | ||||||
20 | the taxpayer's net income for the period prior to January | ||||||
21 | 1, 2015, as calculated under Section 202.5, and (ii) 5.25% | ||||||
22 | of the taxpayer's net income for the period after December | ||||||
23 | 31, 2014, as calculated under Section 202.5. | ||||||
24 | (12) In the case of a corporation, for taxable years | ||||||
25 | beginning on or after January 1, 2015, and ending prior to | ||||||
26 | July 1, 2017, an amount equal to 5.25% of the taxpayer's |
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1 | net income for the taxable year. | ||||||
2 | (13) In the case of a corporation, for taxable years | ||||||
3 | beginning prior to July 1, 2017, and ending after June 30, | ||||||
4 | 2017, an amount equal to the sum of (i) 5.25% of the | ||||||
5 | taxpayer's net income for the period prior to July 1, | ||||||
6 | 2017, as calculated under Section 202.5, and (ii) 7% of | ||||||
7 | the taxpayer's net income for the period after June 30, | ||||||
8 | 2017, as calculated under Section 202.5. | ||||||
9 | (14) In the case of a corporation, for taxable years | ||||||
10 | beginning on or after July 1, 2017, an amount equal to 7% | ||||||
11 | of the taxpayer's net income for the taxable year. | ||||||
12 | The rates under this subsection (b) are subject to the | ||||||
13 | provisions of Section 201.5. | ||||||
14 | (b-5) Surcharge; sale or exchange of assets, properties, | ||||||
15 | and intangibles of organization gaming licensees. For each of | ||||||
16 | taxable years 2019 through 2027, a surcharge is imposed on all | ||||||
17 | taxpayers on income arising from the sale or exchange of | ||||||
18 | capital assets, depreciable business property, real property | ||||||
19 | used in the trade or business, and Section 197 intangibles (i) | ||||||
20 | of an organization licensee under the Illinois Horse Racing | ||||||
21 | Act of 1975 and (ii) of an organization gaming licensee under | ||||||
22 | the Illinois Gambling Act. The amount of the surcharge is | ||||||
23 | equal to the amount of federal income tax liability for the | ||||||
24 | taxable year attributable to those sales and exchanges. The | ||||||
25 | surcharge imposed shall not apply if: | ||||||
26 | (1) the organization gaming license, organization |
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1 | license, or racetrack property is transferred as a result | ||||||
2 | of any of the following: | ||||||
3 | (A) bankruptcy, a receivership, or a debt | ||||||
4 | adjustment initiated by or against the initial | ||||||
5 | licensee or the substantial owners of the initial | ||||||
6 | licensee; | ||||||
7 | (B) cancellation, revocation, or termination of | ||||||
8 | any such license by the Illinois Gaming Board or the | ||||||
9 | Illinois Racing Board; | ||||||
10 | (C) a determination by the Illinois Gaming Board | ||||||
11 | that transfer of the license is in the best interests | ||||||
12 | of Illinois gaming; | ||||||
13 | (D) the death of an owner of the equity interest in | ||||||
14 | a licensee; | ||||||
15 | (E) the acquisition of a controlling interest in | ||||||
16 | the stock or substantially all of the assets of a | ||||||
17 | publicly traded company; | ||||||
18 | (F) a transfer by a parent company to a wholly | ||||||
19 | owned subsidiary; or | ||||||
20 | (G) the transfer or sale to or by one person to | ||||||
21 | another person where both persons were initial owners | ||||||
22 | of the license when the license was issued; or | ||||||
23 | (2) the controlling interest in the organization | ||||||
24 | gaming license, organization license, or racetrack | ||||||
25 | property is transferred in a transaction to lineal | ||||||
26 | descendants in which no gain or loss is recognized or as a |
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1 | result of a transaction in accordance with Section 351 of | ||||||
2 | the Internal Revenue Code in which no gain or loss is | ||||||
3 | recognized; or | ||||||
4 | (3) live horse racing was not conducted in 2010 at a | ||||||
5 | racetrack located within 3 miles of the Mississippi River | ||||||
6 | under a license issued pursuant to the Illinois Horse | ||||||
7 | Racing Act of 1975. | ||||||
8 | The transfer of an organization gaming license, | ||||||
9 | organization license, or racetrack property by a person other | ||||||
10 | than the initial licensee to receive the organization gaming | ||||||
11 | license is not subject to a surcharge. The Department shall | ||||||
12 | adopt rules necessary to implement and administer this | ||||||
13 | subsection. | ||||||
14 | (c) Personal Property Tax Replacement Income Tax.
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15 | Beginning on July 1, 1979 and thereafter, in addition to such | ||||||
16 | income
tax, there is also hereby imposed the Personal Property | ||||||
17 | Tax Replacement
Income Tax measured by net income on every | ||||||
18 | corporation (including Subchapter
S corporations), partnership | ||||||
19 | and trust, for each taxable year ending after
June 30, 1979. | ||||||
20 | Such taxes are imposed on the privilege of earning or
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21 | receiving income in or as a resident of this State. The | ||||||
22 | Personal Property
Tax Replacement Income Tax shall be in | ||||||
23 | addition to the income tax imposed
by subsections (a) and (b) | ||||||
24 | of this Section and in addition to all other
occupation or | ||||||
25 | privilege taxes imposed by this State or by any municipal
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26 | corporation or political subdivision thereof. |
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1 | (d) Additional Personal Property Tax Replacement Income | ||||||
2 | Tax Rates.
The personal property tax replacement income tax | ||||||
3 | imposed by this subsection
and subsection (c) of this Section | ||||||
4 | in the case of a corporation, other
than a Subchapter S | ||||||
5 | corporation and except as adjusted by subsection (d-1),
shall | ||||||
6 | be an additional amount equal to
2.85% of such taxpayer's net | ||||||
7 | income for the taxable year, except that
beginning on January | ||||||
8 | 1, 1981, and thereafter, the rate of 2.85% specified
in this | ||||||
9 | subsection shall be reduced to 2.5%, and in the case of a
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10 | partnership, trust or a Subchapter S corporation shall be an | ||||||
11 | additional
amount equal to 1.5% of such taxpayer's net income | ||||||
12 | for the taxable year. | ||||||
13 | (d-1) Rate reduction for certain foreign insurers. In the | ||||||
14 | case of a
foreign insurer, as defined by Section 35A-5 of the | ||||||
15 | Illinois Insurance Code,
whose state or country of domicile | ||||||
16 | imposes on insurers domiciled in Illinois
a retaliatory tax | ||||||
17 | (excluding any insurer
whose premiums from reinsurance assumed | ||||||
18 | are 50% or more of its total insurance
premiums as determined | ||||||
19 | under paragraph (2) of subsection (b) of Section 304,
except | ||||||
20 | that for purposes of this determination premiums from | ||||||
21 | reinsurance do
not include premiums from inter-affiliate | ||||||
22 | reinsurance arrangements),
beginning with taxable years ending | ||||||
23 | on or after December 31, 1999,
the sum of
the rates of tax | ||||||
24 | imposed by subsections (b) and (d) shall be reduced (but not
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25 | increased) to the rate at which the total amount of tax imposed | ||||||
26 | under this Act,
net of all credits allowed under this Act, |
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1 | shall equal (i) the total amount of
tax that would be imposed | ||||||
2 | on the foreign insurer's net income allocable to
Illinois for | ||||||
3 | the taxable year by such foreign insurer's state or country of
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4 | domicile if that net income were subject to all income taxes | ||||||
5 | and taxes
measured by net income imposed by such foreign | ||||||
6 | insurer's state or country of
domicile, net of all credits | ||||||
7 | allowed or (ii) a rate of zero if no such tax is
imposed on | ||||||
8 | such income by the foreign insurer's state of domicile.
For | ||||||
9 | the purposes of this subsection (d-1), an inter-affiliate | ||||||
10 | includes a
mutual insurer under common management. | ||||||
11 | (1) For the purposes of subsection (d-1), in no event | ||||||
12 | shall the sum of the
rates of tax imposed by subsections | ||||||
13 | (b) and (d) be reduced below the rate at
which the sum of: | ||||||
14 | (A) the total amount of tax imposed on such | ||||||
15 | foreign insurer under
this Act for a taxable year, net | ||||||
16 | of all credits allowed under this Act, plus | ||||||
17 | (B) the privilege tax imposed by Section 409 of | ||||||
18 | the Illinois Insurance
Code, the fire insurance | ||||||
19 | company tax imposed by Section 12 of the Fire
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20 | Investigation Act, and the fire department taxes | ||||||
21 | imposed under Section 11-10-1
of the Illinois | ||||||
22 | Municipal Code, | ||||||
23 | equals 1.25% for taxable years ending prior to December | ||||||
24 | 31, 2003, or
1.75% for taxable years ending on or after | ||||||
25 | December 31, 2003, of the net
taxable premiums written for | ||||||
26 | the taxable year,
as described by subsection (1) of |
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1 | Section 409 of the Illinois Insurance Code.
This paragraph | ||||||
2 | will in no event increase the rates imposed under | ||||||
3 | subsections
(b) and (d). | ||||||
4 | (2) Any reduction in the rates of tax imposed by this | ||||||
5 | subsection shall be
applied first against the rates | ||||||
6 | imposed by subsection (b) and only after the
tax imposed | ||||||
7 | by subsection (a) net of all credits allowed under this | ||||||
8 | Section
other than the credit allowed under subsection (i) | ||||||
9 | has been reduced to zero,
against the rates imposed by | ||||||
10 | subsection (d). | ||||||
11 | This subsection (d-1) is exempt from the provisions of | ||||||
12 | Section 250. | ||||||
13 | (e) Investment credit. A taxpayer shall be allowed a | ||||||
14 | credit
against the Personal Property Tax Replacement Income | ||||||
15 | Tax for
investment in qualified property. | ||||||
16 | (1) A taxpayer shall be allowed a credit equal to .5% | ||||||
17 | of
the basis of qualified property placed in service | ||||||
18 | during the taxable year,
provided such property is placed | ||||||
19 | in service on or after
July 1, 1984. There shall be allowed | ||||||
20 | an additional credit equal
to .5% of the basis of | ||||||
21 | qualified property placed in service during the
taxable | ||||||
22 | year, provided such property is placed in service on or
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23 | after July 1, 1986, and the taxpayer's base employment
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24 | within Illinois has increased by 1% or more over the | ||||||
25 | preceding year as
determined by the taxpayer's employment | ||||||
26 | records filed with the
Illinois Department of Employment |
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| |||||||
1 | Security. Taxpayers who are new to
Illinois shall be | ||||||
2 | deemed to have met the 1% growth in base employment for
the | ||||||
3 | first year in which they file employment records with the | ||||||
4 | Illinois
Department of Employment Security. The provisions | ||||||
5 | added to this Section by
Public Act 85-1200 (and restored | ||||||
6 | by Public Act 87-895) shall be
construed as declaratory of | ||||||
7 | existing law and not as a new enactment. If,
in any year, | ||||||
8 | the increase in base employment within Illinois over the
| ||||||
9 | preceding year is less than 1%, the additional credit | ||||||
10 | shall be limited to that
percentage times a fraction, the | ||||||
11 | numerator of which is .5% and the denominator
of which is | ||||||
12 | 1%, but shall not exceed .5%. The investment credit shall | ||||||
13 | not be
allowed to the extent that it would reduce a | ||||||
14 | taxpayer's liability in any tax
year below zero, nor may | ||||||
15 | any credit for qualified property be allowed for any
year | ||||||
16 | other than the year in which the property was placed in | ||||||
17 | service in
Illinois. For tax years ending on or after | ||||||
18 | December 31, 1987, and on or
before December 31, 1988, the | ||||||
19 | credit shall be allowed for the tax year in
which the | ||||||
20 | property is placed in service, or, if the amount of the | ||||||
21 | credit
exceeds the tax liability for that year, whether it | ||||||
22 | exceeds the original
liability or the liability as later | ||||||
23 | amended, such excess may be carried
forward and applied to | ||||||
24 | the tax liability of the 5 taxable years following
the | ||||||
25 | excess credit years if the taxpayer (i) makes investments | ||||||
26 | which cause
the creation of a minimum of 2,000 full-time |
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1 | equivalent jobs in Illinois,
(ii) is located in an | ||||||
2 | enterprise zone established pursuant to the Illinois
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3 | Enterprise Zone Act and (iii) is certified by the | ||||||
4 | Department of Commerce
and Community Affairs (now | ||||||
5 | Department of Commerce and Economic Opportunity) as | ||||||
6 | complying with the requirements specified in
clause (i) | ||||||
7 | and (ii) by July 1, 1986. The Department of Commerce and
| ||||||
8 | Community Affairs (now Department of Commerce and Economic | ||||||
9 | Opportunity) shall notify the Department of Revenue of all | ||||||
10 | such
certifications immediately. For tax years ending | ||||||
11 | after December 31, 1988,
the credit shall be allowed for | ||||||
12 | the tax year in which the property is
placed in service, | ||||||
13 | or, if the amount of the credit exceeds the tax
liability | ||||||
14 | for that year, whether it exceeds the original liability | ||||||
15 | or the
liability as later amended, such excess may be | ||||||
16 | carried forward and applied
to the tax liability of the 5 | ||||||
17 | taxable years following the excess credit
years. The | ||||||
18 | credit shall be applied to the earliest year for which | ||||||
19 | there is
a liability. If there is credit from more than one | ||||||
20 | tax year that is
available to offset a liability, earlier | ||||||
21 | credit shall be applied first. | ||||||
22 | (2) The term "qualified property" means property | ||||||
23 | which: | ||||||
24 | (A) is tangible, whether new or used, including | ||||||
25 | buildings and structural
components of buildings and | ||||||
26 | signs that are real property, but not including
land |
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1 | or improvements to real property that are not a | ||||||
2 | structural component of a
building such as | ||||||
3 | landscaping, sewer lines, local access roads, fencing, | ||||||
4 | parking
lots, and other appurtenances; | ||||||
5 | (B) is depreciable pursuant to Section 167 of the | ||||||
6 | Internal Revenue Code,
except that "3-year property" | ||||||
7 | as defined in Section 168(c)(2)(A) of that
Code is not | ||||||
8 | eligible for the credit provided by this subsection | ||||||
9 | (e); | ||||||
10 | (C) is acquired by purchase as defined in Section | ||||||
11 | 179(d) of
the Internal Revenue Code; | ||||||
12 | (D) is used in Illinois by a taxpayer who is | ||||||
13 | primarily engaged in
manufacturing, or in mining coal | ||||||
14 | or fluorite, or in retailing, or was placed in service | ||||||
15 | on or after July 1, 2006 in a River Edge Redevelopment | ||||||
16 | Zone established pursuant to the River Edge | ||||||
17 | Redevelopment Zone Act; and | ||||||
18 | (E) has not previously been used in Illinois in | ||||||
19 | such a manner and by
such a person as would qualify for | ||||||
20 | the credit provided by this subsection
(e) or | ||||||
21 | subsection (f). | ||||||
22 | (3) For purposes of this subsection (e), | ||||||
23 | "manufacturing" means
the material staging and production | ||||||
24 | of tangible personal property by
procedures commonly | ||||||
25 | regarded as manufacturing, processing, fabrication, or
| ||||||
26 | assembling which changes some existing material into new |
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1 | shapes, new
qualities, or new combinations. For purposes | ||||||
2 | of this subsection
(e) the term "mining" shall have the | ||||||
3 | same meaning as the term "mining" in
Section 613(c) of the | ||||||
4 | Internal Revenue Code. For purposes of this subsection
| ||||||
5 | (e), the term "retailing" means the sale of tangible | ||||||
6 | personal property for use or consumption and not for | ||||||
7 | resale, or
services rendered in conjunction with the sale | ||||||
8 | of tangible personal property for use or consumption and | ||||||
9 | not for resale. For purposes of this subsection (e), | ||||||
10 | "tangible personal property" has the same meaning as when | ||||||
11 | that term is used in the Retailers' Occupation Tax Act, | ||||||
12 | and, for taxable years ending after December 31, 2008, | ||||||
13 | does not include the generation, transmission, or | ||||||
14 | distribution of electricity. | ||||||
15 | (4) The basis of qualified property shall be the basis
| ||||||
16 | used to compute the depreciation deduction for federal | ||||||
17 | income tax purposes. | ||||||
18 | (5) If the basis of the property for federal income | ||||||
19 | tax depreciation
purposes is increased after it has been | ||||||
20 | placed in service in Illinois by
the taxpayer, the amount | ||||||
21 | of such increase shall be deemed property placed
in | ||||||
22 | service on the date of such increase in basis. | ||||||
23 | (6) The term "placed in service" shall have the same
| ||||||
24 | meaning as under Section 46 of the Internal Revenue Code. | ||||||
25 | (7) If during any taxable year, any property ceases to
| ||||||
26 | be qualified property in the hands of the taxpayer within |
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| |||||||
1 | 48 months after
being placed in service, or the situs of | ||||||
2 | any qualified property is
moved outside Illinois within 48 | ||||||
3 | months after being placed in service, the
Personal | ||||||
4 | Property Tax Replacement Income Tax for such taxable year | ||||||
5 | shall be
increased. Such increase shall be determined by | ||||||
6 | (i) recomputing the
investment credit which would have | ||||||
7 | been allowed for the year in which
credit for such | ||||||
8 | property was originally allowed by eliminating such
| ||||||
9 | property from such computation and, (ii) subtracting such | ||||||
10 | recomputed credit
from the amount of credit previously | ||||||
11 | allowed. For the purposes of this
paragraph (7), a | ||||||
12 | reduction of the basis of qualified property resulting
| ||||||
13 | from a redetermination of the purchase price shall be | ||||||
14 | deemed a disposition
of qualified property to the extent | ||||||
15 | of such reduction. | ||||||
16 | (8) Unless the investment credit is extended by law, | ||||||
17 | the
basis of qualified property shall not include costs | ||||||
18 | incurred after
December 31, 2018, except for costs | ||||||
19 | incurred pursuant to a binding
contract entered into on or | ||||||
20 | before December 31, 2018. | ||||||
21 | (9) Each taxable year ending before December 31, 2000, | ||||||
22 | a partnership may
elect to pass through to its
partners | ||||||
23 | the credits to which the partnership is entitled under | ||||||
24 | this subsection
(e) for the taxable year. A partner may | ||||||
25 | use the credit allocated to him or her
under this | ||||||
26 | paragraph only against the tax imposed in subsections (c) |
| |||||||
| |||||||
1 | and (d) of
this Section. If the partnership makes that | ||||||
2 | election, those credits shall be
allocated among the | ||||||
3 | partners in the partnership in accordance with the rules
| ||||||
4 | set forth in Section 704(b) of the Internal Revenue Code, | ||||||
5 | and the rules
promulgated under that Section, and the | ||||||
6 | allocated amount of the credits shall
be allowed to the | ||||||
7 | partners for that taxable year. The partnership shall make
| ||||||
8 | this election on its Personal Property Tax Replacement | ||||||
9 | Income Tax return for
that taxable year. The election to | ||||||
10 | pass through the credits shall be
irrevocable. | ||||||
11 | For taxable years ending on or after December 31, | ||||||
12 | 2000, a
partner that qualifies its
partnership for a | ||||||
13 | subtraction under subparagraph (I) of paragraph (2) of
| ||||||
14 | subsection (d) of Section 203 or a shareholder that | ||||||
15 | qualifies a Subchapter S
corporation for a subtraction | ||||||
16 | under subparagraph (S) of paragraph (2) of
subsection (b) | ||||||
17 | of Section 203 shall be allowed a credit under this | ||||||
18 | subsection
(e) equal to its share of the credit earned | ||||||
19 | under this subsection (e) during
the taxable year by the | ||||||
20 | partnership or Subchapter S corporation, determined in
| ||||||
21 | accordance with the determination of income and | ||||||
22 | distributive share of
income under Sections 702 and 704 | ||||||
23 | and Subchapter S of the Internal Revenue
Code. This | ||||||
24 | paragraph is exempt from the provisions of Section 250. | ||||||
25 | (f) Investment credit; Enterprise Zone; River Edge | ||||||
26 | Redevelopment Zone. |
| |||||||
| |||||||
1 | (1) A taxpayer shall be allowed a credit against the | ||||||
2 | tax imposed
by subsections (a) and (b) of this Section for | ||||||
3 | investment in qualified
property which is placed in | ||||||
4 | service in an Enterprise Zone created
pursuant to the | ||||||
5 | Illinois Enterprise Zone Act or, for property placed in | ||||||
6 | service on or after July 1, 2006, a River Edge | ||||||
7 | Redevelopment Zone established pursuant to the River Edge | ||||||
8 | Redevelopment Zone Act. For partners, shareholders
of | ||||||
9 | Subchapter S corporations, and owners of limited liability | ||||||
10 | companies,
if the liability company is treated as a | ||||||
11 | partnership for purposes of
federal and State income | ||||||
12 | taxation, there shall be allowed a credit under
this | ||||||
13 | subsection (f) to be determined in accordance with the | ||||||
14 | determination
of income and distributive share of income | ||||||
15 | under Sections 702 and 704 and
Subchapter S of the | ||||||
16 | Internal Revenue Code. The credit shall be .5% of the
| ||||||
17 | basis for such property. The credit shall be available | ||||||
18 | only in the taxable
year in which the property is placed in | ||||||
19 | service in the Enterprise Zone or River Edge Redevelopment | ||||||
20 | Zone and
shall not be allowed to the extent that it would | ||||||
21 | reduce a taxpayer's
liability for the tax imposed by | ||||||
22 | subsections (a) and (b) of this Section to
below zero. For | ||||||
23 | tax years ending on or after December 31, 1985, the credit
| ||||||
24 | shall be allowed for the tax year in which the property is | ||||||
25 | placed in
service, or, if the amount of the credit exceeds | ||||||
26 | the tax liability for that
year, whether it exceeds the |
| |||||||
| |||||||
1 | original liability or the liability as later
amended, such | ||||||
2 | excess may be carried forward and applied to the tax
| ||||||
3 | liability of the 5 taxable years following the excess | ||||||
4 | credit year.
The credit shall be applied to the earliest | ||||||
5 | year for which there is a
liability. If there is credit | ||||||
6 | from more than one tax year that is available
to offset a | ||||||
7 | liability, the credit accruing first in time shall be | ||||||
8 | applied
first. | ||||||
9 | (2) The term qualified property means property which: | ||||||
10 | (A) is tangible, whether new or used, including | ||||||
11 | buildings and
structural components of buildings; | ||||||
12 | (B) is depreciable pursuant to Section 167 of the | ||||||
13 | Internal Revenue
Code, except that "3-year property" | ||||||
14 | as defined in Section 168(c)(2)(A) of
that Code is not | ||||||
15 | eligible for the credit provided by this subsection | ||||||
16 | (f); | ||||||
17 | (C) is acquired by purchase as defined in Section | ||||||
18 | 179(d) of
the Internal Revenue Code; | ||||||
19 | (D) is used in the Enterprise Zone or River Edge | ||||||
20 | Redevelopment Zone by the taxpayer; and | ||||||
21 | (E) has not been previously used in Illinois in | ||||||
22 | such a manner and by
such a person as would qualify for | ||||||
23 | the credit provided by this subsection
(f) or | ||||||
24 | subsection (e). | ||||||
25 | (3) The basis of qualified property shall be the basis | ||||||
26 | used to compute
the depreciation deduction for federal |
| |||||||
| |||||||
1 | 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 the Enterprise
Zone or River Edge | ||||||
5 | Redevelopment Zone by the taxpayer, the amount of such | ||||||
6 | increase shall be deemed property
placed in service on the | ||||||
7 | date of such increase in basis. | ||||||
8 | (5) The term "placed in service" shall have the same | ||||||
9 | meaning as under
Section 46 of the Internal Revenue Code. | ||||||
10 | (6) If during any taxable year, any property ceases to | ||||||
11 | be qualified
property in the hands of the taxpayer within | ||||||
12 | 48 months after being placed
in service, or the situs of | ||||||
13 | any qualified property is moved outside the
Enterprise | ||||||
14 | Zone or River Edge Redevelopment Zone within 48 months | ||||||
15 | after being placed in service, the tax
imposed under | ||||||
16 | subsections (a) and (b) of this Section for such taxable | ||||||
17 | year
shall be increased. Such increase shall be determined | ||||||
18 | by (i) recomputing
the investment credit which would have | ||||||
19 | been allowed for the year in which
credit for such | ||||||
20 | property was originally allowed by eliminating such
| ||||||
21 | property from such computation, and (ii) subtracting such | ||||||
22 | recomputed credit
from the amount of credit previously | ||||||
23 | allowed. For the purposes of this
paragraph (6), a | ||||||
24 | reduction of the basis of qualified property resulting
| ||||||
25 | from a redetermination of the purchase price shall be | ||||||
26 | deemed a disposition
of qualified property to the extent |
| |||||||
| |||||||
1 | of such reduction. | ||||||
2 | (7) There shall be allowed an additional credit equal | ||||||
3 | to 0.5% of the basis of qualified property placed in | ||||||
4 | service during the taxable year in a River Edge | ||||||
5 | Redevelopment Zone, provided such property is placed in | ||||||
6 | service on or after July 1, 2006, and the taxpayer's base | ||||||
7 | employment within Illinois has increased by 1% or more | ||||||
8 | over the preceding year as determined by the taxpayer's | ||||||
9 | employment records filed with the Illinois Department of | ||||||
10 | Employment Security. Taxpayers who are new to Illinois | ||||||
11 | shall be deemed to have met the 1% growth in base | ||||||
12 | employment for the first year in which they file | ||||||
13 | employment records with the Illinois Department of | ||||||
14 | Employment Security. If, in any year, the increase in base | ||||||
15 | employment within Illinois over the preceding year is less | ||||||
16 | than 1%, the additional credit shall be limited to that | ||||||
17 | percentage times a fraction, the numerator of which is | ||||||
18 | 0.5% and the denominator of which is 1%, but shall not | ||||||
19 | exceed 0.5%.
| ||||||
20 | (8) For taxable years beginning on or after January 1, | ||||||
21 | 2021, there shall be allowed an Enterprise Zone | ||||||
22 | construction jobs credit against the taxes imposed under | ||||||
23 | subsections (a) and (b) of this Section as provided in | ||||||
24 | Section 13 of the Illinois Enterprise Zone Act. | ||||||
25 | The credit or credits may not reduce the taxpayer's | ||||||
26 | liability to less than zero. If the amount of the credit or |
| |||||||
| |||||||
1 | credits exceeds the taxpayer's liability, the excess may | ||||||
2 | be carried forward and applied against the taxpayer's | ||||||
3 | liability in succeeding calendar years in the same manner | ||||||
4 | provided under paragraph (4) of Section 211 of this Act. | ||||||
5 | The credit or credits shall be applied to the earliest | ||||||
6 | year for which there is a tax liability. If there are | ||||||
7 | credits from more than one taxable year that are available | ||||||
8 | to offset a liability, the earlier credit shall be applied | ||||||
9 | first. | ||||||
10 | For partners, shareholders of Subchapter S | ||||||
11 | corporations, and owners of limited liability companies, | ||||||
12 | if the liability company is treated as a partnership for | ||||||
13 | the purposes of federal and State income taxation, there | ||||||
14 | shall be allowed a credit under this Section to be | ||||||
15 | determined in accordance with the determination of income | ||||||
16 | and distributive share of income under Sections 702 and | ||||||
17 | 704 and Subchapter S of the Internal Revenue Code. | ||||||
18 | The total aggregate amount of credits awarded under | ||||||
19 | the Blue Collar Jobs Act (Article 20 of Public Act 101-9) | ||||||
20 | shall not exceed $20,000,000 in any State fiscal year. | ||||||
21 | This paragraph (8) is exempt from the provisions of | ||||||
22 | Section 250. | ||||||
23 | (g) (Blank). | ||||||
24 | (h) Investment credit; High Impact Business. | ||||||
25 | (1) Subject to subsections (b) and (b-5) of Section
| ||||||
26 | 5.5 of the Illinois Enterprise Zone Act, a taxpayer shall |
| |||||||
| |||||||
1 | be allowed a credit
against the tax imposed by subsections | ||||||
2 | (a) and (b) of this Section for
investment in qualified
| ||||||
3 | property which is placed in service by a Department of | ||||||
4 | Commerce and Economic Opportunity
designated High Impact | ||||||
5 | Business. The credit shall be .5% of the basis
for such | ||||||
6 | property. The credit shall not be available (i) until the | ||||||
7 | minimum
investments in qualified property set forth in | ||||||
8 | subdivision (a)(3)(A) of
Section 5.5 of the Illinois
| ||||||
9 | Enterprise Zone Act have been satisfied
or (ii) until the | ||||||
10 | time authorized in subsection (b-5) of the Illinois
| ||||||
11 | Enterprise Zone Act for entities designated as High Impact | ||||||
12 | Businesses under
subdivisions (a)(3)(B), (a)(3)(C), and | ||||||
13 | (a)(3)(D) of Section 5.5 of the Illinois
Enterprise Zone | ||||||
14 | Act, and shall not be allowed to the extent that it would
| ||||||
15 | reduce a taxpayer's liability for the tax imposed by | ||||||
16 | subsections (a) and (b) of
this Section to below zero. The | ||||||
17 | credit applicable to such investments shall be
taken in | ||||||
18 | the taxable year in which such investments have been | ||||||
19 | completed. The
credit for additional investments beyond | ||||||
20 | the minimum investment by a designated
high impact | ||||||
21 | business authorized under subdivision (a)(3)(A) of Section | ||||||
22 | 5.5 of
the Illinois Enterprise Zone Act shall be available | ||||||
23 | only in the taxable year in
which the property is placed in | ||||||
24 | service and shall not be allowed to the extent
that it | ||||||
25 | would reduce a taxpayer's liability for the tax imposed by | ||||||
26 | subsections
(a) and (b) of this Section to below zero.
For |
| |||||||
| |||||||
1 | tax years ending on or after December 31, 1987, the credit | ||||||
2 | shall be
allowed for the tax year in which the property is | ||||||
3 | placed in service, or, 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, such
| ||||||
6 | 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,
the credit accruing first in time shall be | ||||||
12 | applied first. | ||||||
13 | Changes made in this subdivision (h)(1) by Public Act | ||||||
14 | 88-670
restore changes made by Public Act 85-1182 and | ||||||
15 | reflect existing law. | ||||||
16 | (2) The term qualified property means property which: | ||||||
17 | (A) is tangible, whether new or used, including | ||||||
18 | buildings and
structural components of buildings; | ||||||
19 | (B) is depreciable pursuant to Section 167 of the | ||||||
20 | Internal Revenue
Code, except that "3-year property" | ||||||
21 | as defined in Section 168(c)(2)(A) of
that Code is not | ||||||
22 | eligible for the credit provided by this subsection | ||||||
23 | (h); | ||||||
24 | (C) is acquired by purchase as defined in Section | ||||||
25 | 179(d) of the
Internal Revenue Code; and | ||||||
26 | (D) is not eligible for the Enterprise Zone |
| |||||||
| |||||||
1 | Investment Credit provided
by subsection (f) of this | ||||||
2 | Section. | ||||||
3 | (3) The basis of qualified property shall be the basis | ||||||
4 | used to compute
the depreciation deduction for federal | ||||||
5 | income tax purposes. | ||||||
6 | (4) If the basis of the property for federal income | ||||||
7 | tax depreciation
purposes is increased after it has been | ||||||
8 | placed in service in a federally
designated Foreign Trade | ||||||
9 | Zone or Sub-Zone located in Illinois by the taxpayer,
the | ||||||
10 | amount of such increase shall be deemed property placed in | ||||||
11 | service on
the date of such increase in basis. | ||||||
12 | (5) The term "placed in service" shall have the same | ||||||
13 | meaning as under
Section 46 of the Internal Revenue 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 |
| |||||||
| |||||||
1 | allowed. For the purposes of this
paragraph (6), a | ||||||
2 | reduction of the basis of qualified property resulting
| ||||||
3 | from a redetermination of the purchase price shall be | ||||||
4 | deemed a disposition
of qualified property to the extent | ||||||
5 | of such reduction. | ||||||
6 | (7) Beginning with tax years ending after December 31, | ||||||
7 | 1996, if a
taxpayer qualifies for the credit under this | ||||||
8 | subsection (h) and thereby is
granted a tax abatement and | ||||||
9 | the taxpayer relocates its entire facility in
violation of | ||||||
10 | the explicit terms and length of the contract under | ||||||
11 | Section
18-183 of the Property Tax Code, the tax imposed | ||||||
12 | under subsections
(a) and (b) of this Section shall be | ||||||
13 | increased for the taxable year
in which the taxpayer | ||||||
14 | relocated its facility by an amount equal to the
amount of | ||||||
15 | credit received by the taxpayer under this subsection (h). | ||||||
16 | (h-5) High Impact Business construction jobs credit. For | ||||||
17 | taxable years beginning on or after January 1, 2021, there | ||||||
18 | shall also be allowed a High Impact Business construction jobs | ||||||
19 | credit against the tax imposed under subsections (a) and (b) | ||||||
20 | of this Section as provided in subsections (i) and (j) of | ||||||
21 | Section 5.5 of the Illinois Enterprise Zone Act. | ||||||
22 | The credit or credits may not reduce the taxpayer's | ||||||
23 | liability to less than zero. If the amount of the credit or | ||||||
24 | credits exceeds the taxpayer's liability, the excess may be | ||||||
25 | carried forward and applied against the taxpayer's liability | ||||||
26 | in succeeding calendar years in the manner provided under |
| |||||||
| |||||||
1 | paragraph (4) of Section 211 of this Act. The credit or credits | ||||||
2 | shall be applied to the earliest year for which there is a tax | ||||||
3 | liability. If there are credits from more than one taxable | ||||||
4 | year that are available to offset a liability, the earlier | ||||||
5 | credit shall be applied first. | ||||||
6 | For partners, shareholders of Subchapter S corporations, | ||||||
7 | and owners of limited liability companies, if the liability | ||||||
8 | company is treated as a partnership for the purposes of | ||||||
9 | federal and State income taxation, there shall be allowed a | ||||||
10 | credit under this Section to be determined in accordance with | ||||||
11 | the determination of income and distributive share of income | ||||||
12 | under Sections 702 and 704 and Subchapter S of the Internal | ||||||
13 | Revenue Code. | ||||||
14 | The total aggregate amount of credits awarded under the | ||||||
15 | Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not | ||||||
16 | exceed $20,000,000 in any State fiscal year. | ||||||
17 | This subsection (h-5) is exempt from the provisions of | ||||||
18 | Section 250. | ||||||
19 | (i) Credit for Personal Property Tax Replacement Income | ||||||
20 | Tax.
For tax years ending prior to December 31, 2003, a credit | ||||||
21 | shall be allowed
against the tax imposed by
subsections (a) | ||||||
22 | and (b) of this Section for the tax imposed by subsections (c)
| ||||||
23 | and (d) of this Section. This credit shall be computed by | ||||||
24 | multiplying the tax
imposed by subsections (c) and (d) of this | ||||||
25 | Section by a fraction, the numerator
of which is base income | ||||||
26 | allocable to Illinois and the denominator of which is
Illinois |
| |||||||
| |||||||
1 | base income, and further multiplying the product by the tax | ||||||
2 | rate
imposed by subsections (a) and (b) of this Section. | ||||||
3 | Any credit earned on or after December 31, 1986 under
this | ||||||
4 | subsection which is unused in the year
the credit is computed | ||||||
5 | because it exceeds the tax liability imposed by
subsections | ||||||
6 | (a) and (b) for that year (whether it exceeds the original
| ||||||
7 | liability or the liability as later amended) may be carried | ||||||
8 | forward and
applied to the tax liability imposed by | ||||||
9 | subsections (a) and (b) of the 5
taxable years following the | ||||||
10 | excess credit year, provided that no credit may
be carried | ||||||
11 | forward to any year ending on or
after December 31, 2003. This | ||||||
12 | credit shall be
applied first to the earliest year for which | ||||||
13 | there is a liability. If
there is a credit under this | ||||||
14 | subsection from more than one tax year that is
available to | ||||||
15 | offset a liability the earliest credit arising under this
| ||||||
16 | subsection shall be applied first. | ||||||
17 | If, during any taxable year ending on or after December | ||||||
18 | 31, 1986, the
tax imposed by subsections (c) and (d) of this | ||||||
19 | Section for which a taxpayer
has claimed a credit under this | ||||||
20 | subsection (i) is reduced, the amount of
credit for such tax | ||||||
21 | shall also be reduced. Such reduction shall be
determined by | ||||||
22 | recomputing the credit to take into account the reduced tax
| ||||||
23 | imposed by subsections (c) and (d). If any portion of the
| ||||||
24 | reduced amount of credit has been carried to a different | ||||||
25 | taxable year, an
amended return shall be filed for such | ||||||
26 | taxable year to reduce the amount of
credit claimed. |
| |||||||
| |||||||
1 | (j) Training expense credit. Beginning with tax years | ||||||
2 | ending on or
after December 31, 1986 and prior to December 31, | ||||||
3 | 2003, a taxpayer shall be
allowed a credit against the
tax | ||||||
4 | imposed by subsections (a) and (b) under this Section
for all | ||||||
5 | amounts paid or accrued, on behalf of all persons
employed by | ||||||
6 | the taxpayer in Illinois or Illinois residents employed
| ||||||
7 | outside of Illinois by a taxpayer, for educational or | ||||||
8 | vocational training in
semi-technical or technical fields or | ||||||
9 | semi-skilled or skilled fields, which
were deducted from gross | ||||||
10 | income in the computation of taxable income. The
credit | ||||||
11 | against the tax imposed by subsections (a) and (b) shall be | ||||||
12 | 1.6% of
such training expenses. For partners, shareholders of | ||||||
13 | subchapter S
corporations, and owners of limited liability | ||||||
14 | companies, if the liability
company is treated as a | ||||||
15 | partnership for purposes of federal and State income
taxation, | ||||||
16 | there shall be allowed a credit under this subsection (j) to be
| ||||||
17 | determined in accordance with the determination of income and | ||||||
18 | distributive
share of income under Sections 702 and 704 and | ||||||
19 | subchapter S of the Internal
Revenue Code. | ||||||
20 | Any credit allowed under this subsection which is unused | ||||||
21 | in the year
the credit is earned may be carried forward to each | ||||||
22 | of the 5 taxable
years following the year for which the credit | ||||||
23 | is first computed until it is
used. This credit shall be | ||||||
24 | applied first to the earliest year for which
there is a | ||||||
25 | liability. If there is a credit under this subsection from | ||||||
26 | more
than one tax year that is available to offset a liability, |
| |||||||
| |||||||
1 | the earliest
credit arising under this subsection shall be | ||||||
2 | applied first. No carryforward
credit may be claimed in any | ||||||
3 | tax year ending on or after
December 31, 2003. | ||||||
4 | (k) Research and development credit. For tax years ending | ||||||
5 | after July 1, 1990 and prior to
December 31, 2003, and | ||||||
6 | beginning again for tax years ending on or after December 31, | ||||||
7 | 2004, and ending prior to January 1, 2027, a taxpayer shall be
| ||||||
8 | allowed a credit against the tax imposed by subsections (a) | ||||||
9 | and (b) of this
Section for increasing research activities in | ||||||
10 | this State. The credit
allowed against the tax imposed by | ||||||
11 | subsections (a) and (b) shall be equal
to 6 1/2% of the | ||||||
12 | qualifying expenditures for increasing research activities
in | ||||||
13 | this State. For partners, shareholders of subchapter S | ||||||
14 | corporations, and
owners of limited liability companies, if | ||||||
15 | the liability company is treated as a
partnership for purposes | ||||||
16 | of federal and State income taxation, there shall be
allowed a | ||||||
17 | credit under this subsection to be determined in accordance | ||||||
18 | with the
determination of income and distributive share of | ||||||
19 | income under Sections 702 and
704 and subchapter S of the | ||||||
20 | Internal Revenue Code. | ||||||
21 | For purposes of this subsection, the following terms have
| ||||||
22 | the following meanings: | ||||||
23 | " Qualifying qualifying expenditures" means the
| ||||||
24 | qualifying expenditures as defined for the federal credit | ||||||
25 | for increasing
research activities which would be | ||||||
26 | allowable under Section 41 of the
Internal Revenue Code |
| |||||||
| |||||||
1 | and which are conducted in this State . , | ||||||
2 | " Qualifying qualifying
expenditures for increasing | ||||||
3 | research activities in this State" means the
excess of | ||||||
4 | qualifying expenditures for the taxable year in which | ||||||
5 | incurred
over qualifying expenditures for the base | ||||||
6 | period . , | ||||||
7 | " Qualifying qualifying expenditures
for the base | ||||||
8 | period" means : (1) for taxable years ending prior to
| ||||||
9 | December 31, 2023, the average of the qualifying | ||||||
10 | expenditures for
each year in the base period ; , and (2) | ||||||
11 | for
taxable years ending on or after December 31, 2023, | ||||||
12 | 50% of
the average of the qualifying expenditures for each | ||||||
13 | year
in the base period. | ||||||
14 | " Base base period" means the 3 taxable years
| ||||||
15 | immediately preceding the taxable year for which the | ||||||
16 | determination is
being made. | ||||||
17 | Any credit in excess of the tax liability for the taxable | ||||||
18 | year
may be carried forward. A taxpayer may elect to have the
| ||||||
19 | unused credit shown on its final completed return carried over | ||||||
20 | as a credit
against the tax liability for the following 5 | ||||||
21 | taxable years or until it has
been fully used, whichever | ||||||
22 | occurs first; provided that no credit earned in a tax year | ||||||
23 | ending prior to December 31, 2003 may be carried forward to any | ||||||
24 | year ending on or after December 31, 2003. | ||||||
25 | If an unused credit is carried forward to a given year from | ||||||
26 | 2 or more
earlier years, that credit arising in the earliest |
| |||||||
| |||||||
1 | year will be applied
first against the tax liability for the | ||||||
2 | given year. If a tax liability for
the given year still | ||||||
3 | remains, the credit from the next earliest year will
then be | ||||||
4 | applied, and so on, until all credits have been used or no tax
| ||||||
5 | liability for the given year remains. Any remaining unused | ||||||
6 | credit or
credits then will be carried forward to the next | ||||||
7 | following year in which a
tax liability is incurred, except | ||||||
8 | that no credit can be carried forward to
a year which is more | ||||||
9 | than 5 years after the year in which the expense for
which the | ||||||
10 | credit is given was incurred. | ||||||
11 | No inference shall be drawn from Public Act 91-644 in | ||||||
12 | construing this Section for taxable years beginning before | ||||||
13 | January
1, 1999. | ||||||
14 | It is the intent of the General Assembly that the research | ||||||
15 | and development credit under this subsection (k) shall apply | ||||||
16 | continuously for all tax years ending on or after December 31, | ||||||
17 | 2004 and ending prior to January 1, 2027, including, but not | ||||||
18 | limited to, the period beginning on January 1, 2016 and ending | ||||||
19 | on July 6, 2017 (the effective date of Public Act 100-22). All | ||||||
20 | actions taken in reliance on the continuation of the credit | ||||||
21 | under this subsection (k) by any taxpayer are hereby | ||||||
22 | validated. | ||||||
23 | This subsection (k) is exempt from the provisions of
| ||||||
24 | Section 250. | ||||||
25 | (l) Environmental Remediation Tax Credit. | ||||||
26 | (i) For tax years ending after December 31, 1997 and |
| |||||||
| |||||||
1 | on or before
December 31, 2001, a taxpayer shall be | ||||||
2 | allowed a credit against the tax
imposed by subsections | ||||||
3 | (a) and (b) of this Section for certain amounts paid
for | ||||||
4 | unreimbursed eligible remediation costs, as specified in | ||||||
5 | this subsection.
For purposes of this Section, | ||||||
6 | "unreimbursed eligible remediation costs" means
costs | ||||||
7 | approved by the Illinois Environmental Protection Agency | ||||||
8 | ("Agency") under
Section 58.14 of the Environmental | ||||||
9 | Protection Act that were paid in performing
environmental | ||||||
10 | remediation at a site for which a No Further Remediation | ||||||
11 | Letter
was issued by the Agency and recorded under Section | ||||||
12 | 58.10 of the Environmental
Protection Act. The credit must | ||||||
13 | be claimed for the taxable year in which
Agency approval | ||||||
14 | of the eligible remediation costs is granted. The credit | ||||||
15 | is
not available to any taxpayer if the taxpayer or any | ||||||
16 | related party caused or
contributed to, in any material | ||||||
17 | respect, a release of regulated substances on,
in, or | ||||||
18 | under the site that was identified and addressed by the | ||||||
19 | remedial
action pursuant to the Site Remediation Program | ||||||
20 | of the Environmental Protection
Act. After the Pollution | ||||||
21 | Control Board rules are adopted pursuant to the
Illinois | ||||||
22 | Administrative Procedure Act for the administration and | ||||||
23 | enforcement of
Section 58.9 of the Environmental | ||||||
24 | Protection Act, determinations as to credit
availability | ||||||
25 | for purposes of this Section shall be made consistent with | ||||||
26 | those
rules. For purposes of this Section, "taxpayer" |
| |||||||
| |||||||
1 | includes a person whose tax
attributes the taxpayer has | ||||||
2 | succeeded to under Section 381 of the Internal
Revenue | ||||||
3 | Code and "related party" includes the persons disallowed a | ||||||
4 | deduction
for losses by paragraphs (b), (c), and (f)(1) of | ||||||
5 | Section 267 of the Internal
Revenue Code by virtue of | ||||||
6 | being a related taxpayer, as well as any of its
partners. | ||||||
7 | The credit allowed against the tax imposed by subsections | ||||||
8 | (a) and
(b) shall be equal to 25% of the unreimbursed | ||||||
9 | eligible remediation costs in
excess of $100,000 per site, | ||||||
10 | except that the $100,000 threshold shall not apply
to any | ||||||
11 | site contained in an enterprise zone as determined by the | ||||||
12 | Department of
Commerce and Community Affairs (now | ||||||
13 | Department of Commerce and Economic Opportunity). The | ||||||
14 | total credit allowed shall not exceed
$40,000 per year | ||||||
15 | with a maximum total of $150,000 per site. For partners | ||||||
16 | and
shareholders of subchapter S corporations, there shall | ||||||
17 | be 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 | and
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.
The | ||||||
25 | term "unused credit" does not include any amounts of | ||||||
26 | unreimbursed eligible
remediation costs in excess of the |
| |||||||
| |||||||
1 | maximum credit per site authorized under
paragraph (i). | ||||||
2 | This credit shall be applied first to the earliest year
| ||||||
3 | for which there is a liability. If there is a credit under | ||||||
4 | this subsection
from more than one tax year that is | ||||||
5 | available to offset a liability, the
earliest credit | ||||||
6 | arising under this subsection shall be applied first. A
| ||||||
7 | credit allowed under this subsection may be sold to a | ||||||
8 | buyer as part of a sale
of all or part of the remediation | ||||||
9 | site for which the credit was granted. The
purchaser of a | ||||||
10 | remediation site and the tax credit shall succeed to the | ||||||
11 | unused
credit and remaining carry-forward period of the | ||||||
12 | seller. To perfect the
transfer, the assignor shall record | ||||||
13 | the transfer in the chain of title for the
site and provide | ||||||
14 | written notice to the Director of the Illinois Department | ||||||
15 | of
Revenue of the assignor's intent to sell the | ||||||
16 | remediation site and the amount of
the tax credit to be | ||||||
17 | transferred as a portion of the sale. In no event may a
| ||||||
18 | credit be transferred to any taxpayer if the taxpayer or a | ||||||
19 | related party would
not be eligible under the provisions | ||||||
20 | of subsection (i). | ||||||
21 | (iii) For purposes of this Section, the term "site" | ||||||
22 | shall have the same
meaning as under Section 58.2 of the | ||||||
23 | Environmental Protection Act. | ||||||
24 | (m) Education expense credit. Beginning with tax years | ||||||
25 | ending after
December 31, 1999, a taxpayer who
is the | ||||||
26 | custodian of one or more qualifying pupils shall be allowed a |
| |||||||
| |||||||
1 | credit
against the tax imposed by subsections (a) and (b) of | ||||||
2 | this Section for
qualified education expenses incurred on | ||||||
3 | behalf of the qualifying pupils.
The credit shall be equal to | ||||||
4 | 25% of qualified education expenses, but in no
event may the | ||||||
5 | total credit under this subsection claimed by a
family that is | ||||||
6 | the
custodian of qualifying pupils exceed (i) $500 for tax | ||||||
7 | years ending prior to December 31, 2017, and (ii) $750 for tax | ||||||
8 | years ending on or after December 31, 2017. In no event shall a | ||||||
9 | credit under
this subsection reduce the taxpayer's liability | ||||||
10 | under this Act to less than
zero. Notwithstanding any other | ||||||
11 | provision of law, for taxable years beginning on or after | ||||||
12 | January 1, 2017, no taxpayer may claim a credit under this | ||||||
13 | subsection (m) if the taxpayer's adjusted gross income for the | ||||||
14 | taxable year exceeds (i) $500,000, in the case of spouses | ||||||
15 | filing a joint federal tax return or (ii) $250,000, in the case | ||||||
16 | of all other taxpayers. This subsection is exempt from the | ||||||
17 | provisions of Section 250 of this
Act. | ||||||
18 | For purposes of this subsection: | ||||||
19 | "Qualifying pupils" means individuals who (i) are | ||||||
20 | residents of the State of
Illinois, (ii) are under the age of | ||||||
21 | 21 at the close of the school year for
which a credit is | ||||||
22 | sought, and (iii) during the school year for which a credit
is | ||||||
23 | sought were full-time pupils enrolled in a kindergarten | ||||||
24 | through twelfth
grade education program at any school, as | ||||||
25 | defined in this subsection. | ||||||
26 | "Qualified education expense" means the amount incurred
on |
| |||||||
| |||||||
1 | behalf of a qualifying pupil in excess of $250 for tuition, | ||||||
2 | book fees, and
lab fees at the school in which the pupil is | ||||||
3 | enrolled during the regular school
year. | ||||||
4 | "School" means any public or nonpublic elementary or | ||||||
5 | secondary school in
Illinois that is in compliance with Title | ||||||
6 | VI of the Civil Rights Act of 1964
and attendance at which | ||||||
7 | satisfies the requirements of Section 26-1 of the
School Code, | ||||||
8 | except that nothing shall be construed to require a child to
| ||||||
9 | attend any particular public or nonpublic school to qualify | ||||||
10 | for the credit
under this Section. | ||||||
11 | "Custodian" means, with respect to qualifying pupils, an | ||||||
12 | Illinois resident
who is a parent, the parents, a legal | ||||||
13 | guardian, or the legal guardians of the
qualifying pupils. | ||||||
14 | (n) River Edge Redevelopment Zone site remediation tax | ||||||
15 | credit.
| ||||||
16 | (i) For tax years ending on or after December 31, | ||||||
17 | 2006, a taxpayer shall be allowed a credit against the tax | ||||||
18 | imposed by subsections (a) and (b) of this Section for | ||||||
19 | certain amounts paid for unreimbursed eligible remediation | ||||||
20 | costs, as specified in this subsection. For purposes of | ||||||
21 | this Section, "unreimbursed eligible remediation costs" | ||||||
22 | means costs approved by the Illinois Environmental | ||||||
23 | Protection Agency ("Agency") under Section 58.14a of the | ||||||
24 | Environmental Protection Act that were paid in performing | ||||||
25 | environmental remediation at a site within a River Edge | ||||||
26 | Redevelopment Zone for which a No Further Remediation |
| |||||||
| |||||||
1 | Letter was issued by the Agency and recorded under Section | ||||||
2 | 58.10 of the Environmental Protection Act. The credit must | ||||||
3 | be claimed for the taxable year in which Agency approval | ||||||
4 | of the eligible remediation costs is granted. The credit | ||||||
5 | is not available to any taxpayer if the taxpayer or any | ||||||
6 | related party caused or contributed to, in any material | ||||||
7 | respect, a release of regulated substances on, in, or | ||||||
8 | under the site that was identified and addressed by the | ||||||
9 | remedial action pursuant to the Site Remediation Program | ||||||
10 | of the Environmental Protection Act. Determinations as to | ||||||
11 | credit availability for purposes of this Section shall be | ||||||
12 | made consistent with rules adopted by the Pollution | ||||||
13 | Control Board pursuant to the Illinois Administrative | ||||||
14 | Procedure Act for the administration and enforcement of | ||||||
15 | Section 58.9 of the Environmental Protection Act. For | ||||||
16 | purposes of this Section, "taxpayer" includes a person | ||||||
17 | whose tax attributes the taxpayer has succeeded to under | ||||||
18 | Section 381 of the Internal Revenue Code and "related | ||||||
19 | party" includes the persons disallowed a deduction for | ||||||
20 | losses by paragraphs (b), (c), and (f)(1) of Section 267 | ||||||
21 | of the Internal Revenue Code by virtue of being a related | ||||||
22 | taxpayer, as well as any of its partners. The credit | ||||||
23 | allowed against the tax imposed by subsections (a) and (b) | ||||||
24 | shall be equal to 25% of the unreimbursed eligible | ||||||
25 | remediation costs in excess of $100,000 per site. | ||||||
26 | (ii) A credit allowed under this subsection that is |
| |||||||
| |||||||
1 | unused in the year the credit is earned may be carried | ||||||
2 | forward to each of the 5 taxable years following the year | ||||||
3 | for which the credit is first earned until it is used. This | ||||||
4 | credit shall be applied first to the earliest year for | ||||||
5 | which there is a liability. If there is a credit under this | ||||||
6 | subsection from more than one tax year that is available | ||||||
7 | to offset a liability, the earliest credit arising under | ||||||
8 | this subsection shall be applied first. A credit allowed | ||||||
9 | under this subsection may be sold to a buyer as part of a | ||||||
10 | sale of all or part of the remediation site for which the | ||||||
11 | credit was granted. The purchaser of a remediation site | ||||||
12 | and the tax credit shall succeed to the unused credit and | ||||||
13 | remaining carry-forward period of the seller. To perfect | ||||||
14 | the transfer, the assignor shall record the transfer in | ||||||
15 | the chain of title for the site and provide written notice | ||||||
16 | to the Director of the Illinois Department of Revenue of | ||||||
17 | the assignor's intent to sell the remediation site and the | ||||||
18 | amount of the tax credit to be transferred as a portion of | ||||||
19 | the sale. In no event may a credit be transferred to any | ||||||
20 | taxpayer if the taxpayer or a related party would not be | ||||||
21 | eligible under the provisions of subsection (i). | ||||||
22 | (iii) For purposes of this Section, the term "site" | ||||||
23 | shall have the same meaning as under Section 58.2 of the | ||||||
24 | Environmental Protection Act. | ||||||
25 | (o) For each of taxable years during the Compassionate Use | ||||||
26 | of Medical Cannabis Program, a surcharge is imposed on all |
| |||||||
| |||||||
1 | taxpayers on income arising from the sale or exchange of | ||||||
2 | capital assets, depreciable business property, real property | ||||||
3 | used in the trade or business, and Section 197 intangibles of | ||||||
4 | an organization registrant under the Compassionate Use of | ||||||
5 | Medical Cannabis Program Act. The amount of the surcharge is | ||||||
6 | equal to the amount of federal income tax liability for the | ||||||
7 | taxable year attributable to those sales and exchanges. The | ||||||
8 | surcharge imposed does not apply if: | ||||||
9 | (1) the medical cannabis cultivation center | ||||||
10 | registration, medical cannabis dispensary registration, or | ||||||
11 | the property of a registration is transferred as a result | ||||||
12 | of any of the following: | ||||||
13 | (A) bankruptcy, a receivership, or a debt | ||||||
14 | adjustment initiated by or against the initial | ||||||
15 | registration or the substantial owners of the initial | ||||||
16 | registration; | ||||||
17 | (B) cancellation, revocation, or termination of | ||||||
18 | any registration by the Illinois Department of Public | ||||||
19 | Health; | ||||||
20 | (C) a determination by the Illinois Department of | ||||||
21 | Public Health that transfer of the registration is in | ||||||
22 | the best interests of Illinois qualifying patients as | ||||||
23 | defined by the Compassionate Use of Medical Cannabis | ||||||
24 | Program Act; | ||||||
25 | (D) the death of an owner of the equity interest in | ||||||
26 | a registrant; |
| |||||||
| |||||||
1 | (E) the acquisition of a controlling interest in | ||||||
2 | the stock or substantially all of the assets of a | ||||||
3 | publicly traded company; | ||||||
4 | (F) a transfer by a parent company to a wholly | ||||||
5 | owned subsidiary; or | ||||||
6 | (G) the transfer or sale to or by one person to | ||||||
7 | another person where both persons were initial owners | ||||||
8 | of the registration when the registration was issued; | ||||||
9 | or | ||||||
10 | (2) the cannabis cultivation center registration, | ||||||
11 | medical cannabis dispensary registration, or the | ||||||
12 | controlling interest in a registrant's property is | ||||||
13 | transferred in a transaction to lineal descendants in | ||||||
14 | which no gain or loss is recognized or as a result of a | ||||||
15 | transaction in accordance with Section 351 of the Internal | ||||||
16 | Revenue Code in which no gain or loss is recognized. | ||||||
17 | (p) Pass-through entity tax. | ||||||
18 | (1) For taxable years ending on or after December 31, | ||||||
19 | 2021 and beginning prior to January 1, 2026, a partnership | ||||||
20 | (other than a publicly traded partnership under Section | ||||||
21 | 7704 of the Internal Revenue Code) or Subchapter S | ||||||
22 | corporation may elect to apply the provisions of this | ||||||
23 | subsection. A separate election shall be made for each | ||||||
24 | taxable year. Such election shall be made at such time, | ||||||
25 | and in such form and manner as prescribed by the | ||||||
26 | Department, and, once made, is irrevocable. |
| |||||||
| |||||||
1 | (2) Entity-level tax. A partnership or Subchapter S | ||||||
2 | corporation electing to apply the provisions of this | ||||||
3 | subsection shall be subject to a tax for the privilege of | ||||||
4 | earning or receiving income in this State in an amount | ||||||
5 | equal to 4.95% of the taxpayer's net income for the | ||||||
6 | taxable year. | ||||||
7 | (3) Net income defined. | ||||||
8 | (A) In general. For purposes of paragraph (2), the | ||||||
9 | term net income has the same meaning as defined in | ||||||
10 | Section 202 of this Act, except that the following | ||||||
11 | provisions shall not apply: | ||||||
12 | (i) the standard exemption allowed under | ||||||
13 | Section 204; | ||||||
14 | (ii) the deduction for net losses allowed | ||||||
15 | under Section 207; | ||||||
16 | (iii) in the case of an S corporation, the | ||||||
17 | modification under Section 203(b)(2)(S); and | ||||||
18 | (iv) in the case of a partnership, the | ||||||
19 | modifications under Section 203(d)(2)(H) and | ||||||
20 | Section 203(d)(2)(I). | ||||||
21 | (B) Special rule for tiered partnerships. If a | ||||||
22 | taxpayer making the election under paragraph (1) is a | ||||||
23 | partner of another taxpayer making the election under | ||||||
24 | paragraph (1), net income shall be computed as | ||||||
25 | provided in subparagraph (A), except that the taxpayer | ||||||
26 | shall subtract its distributive share of the net |
| |||||||
| |||||||
1 | income of the electing partnership (including its | ||||||
2 | distributive share of the net income of the electing | ||||||
3 | partnership derived as a distributive share from | ||||||
4 | electing partnerships in which it is a partner). | ||||||
5 | (4) Credit for entity level tax. Each partner or | ||||||
6 | shareholder of a taxpayer making the election under this | ||||||
7 | Section shall be allowed a credit against the tax imposed | ||||||
8 | under subsections (a) and (b) of Section 201 of this Act | ||||||
9 | for the taxable year of the partnership or Subchapter S | ||||||
10 | corporation for which an election is in effect ending | ||||||
11 | within or with the taxable year of the partner or | ||||||
12 | shareholder in an amount equal to 4.95% times the partner | ||||||
13 | or shareholder's distributive share of the net income of | ||||||
14 | the electing partnership or Subchapter S corporation, but | ||||||
15 | not to exceed the partner's or shareholder's share of the | ||||||
16 | tax imposed under paragraph (1) which is actually paid by | ||||||
17 | the partnership or Subchapter S corporation. If the | ||||||
18 | taxpayer is a partnership or Subchapter S corporation that | ||||||
19 | is itself a partner of a partnership making the election | ||||||
20 | under paragraph (1), the credit under this paragraph shall | ||||||
21 | be allowed to the taxpayer's partners or shareholders (or | ||||||
22 | if the partner is a partnership or Subchapter S | ||||||
23 | corporation then its partners or shareholders) in | ||||||
24 | accordance with the determination of income and | ||||||
25 | distributive share of income under Sections 702 and 704 | ||||||
26 | and Subchapter S of the Internal Revenue Code. If the |
| |||||||
| |||||||
1 | amount of the credit allowed under this paragraph exceeds | ||||||
2 | the partner's or shareholder's liability for tax imposed | ||||||
3 | under subsections (a) and (b) of Section 201 of this Act | ||||||
4 | for the taxable year, such excess shall be treated as an | ||||||
5 | overpayment for purposes of Section 909 of this Act. | ||||||
6 | (5) Nonresidents. A nonresident individual who is a | ||||||
7 | partner or shareholder of a partnership or Subchapter S | ||||||
8 | corporation for a taxable year for which an election is in | ||||||
9 | effect under paragraph (1) shall not be required to file | ||||||
10 | an income tax return under this Act for such taxable year | ||||||
11 | if the only source of net income of the individual (or the | ||||||
12 | individual and the individual's spouse in the case of a | ||||||
13 | joint return) is from an entity making the election under | ||||||
14 | paragraph (1) and the credit allowed to the partner or | ||||||
15 | shareholder under paragraph (4) equals or exceeds the | ||||||
16 | individual's liability for the tax imposed under | ||||||
17 | subsections (a) and (b) of Section 201 of this Act for the | ||||||
18 | taxable year. | ||||||
19 | (6) Liability for tax. Except as provided in this | ||||||
20 | paragraph, a partnership or Subchapter S making the | ||||||
21 | election under paragraph (1) is liable for the | ||||||
22 | entity-level tax imposed under paragraph (2). If the | ||||||
23 | electing partnership or corporation fails to pay the full | ||||||
24 | amount of tax deemed assessed under paragraph (2), the | ||||||
25 | partners or shareholders shall be liable to pay the tax | ||||||
26 | assessed (including penalties and interest). Each partner |
| |||||||
| |||||||
1 | or shareholder shall be liable for the unpaid assessment | ||||||
2 | based on the ratio of the partner's or shareholder's share | ||||||
3 | of the net income of the partnership over the total net | ||||||
4 | income of the partnership. If the partnership or | ||||||
5 | Subchapter S corporation fails to pay the tax assessed | ||||||
6 | (including penalties and interest) and thereafter an | ||||||
7 | amount of such tax is paid by the partners or | ||||||
8 | shareholders, such amount shall not be collected from the | ||||||
9 | partnership or corporation. | ||||||
10 | (7) Foreign tax. For purposes of the credit allowed | ||||||
11 | under Section 601(b)(3) of this Act, tax paid by a | ||||||
12 | partnership or Subchapter S corporation to another state | ||||||
13 | which, as determined by the Department, is substantially | ||||||
14 | similar to the tax imposed under this subsection, shall be | ||||||
15 | considered tax paid by the partner or shareholder to the | ||||||
16 | extent that the partner's or shareholder's share of the | ||||||
17 | income of the partnership or Subchapter S corporation | ||||||
18 | allocated and apportioned to such other state bears to the | ||||||
19 | total income of the partnership or Subchapter S | ||||||
20 | corporation allocated or apportioned to such other state. | ||||||
21 | (8) Suspension of withholding. The provisions of | ||||||
22 | Section 709.5 of this Act shall not apply to a partnership | ||||||
23 | or Subchapter S corporation for the taxable year for which | ||||||
24 | an election under paragraph (1) is in effect. | ||||||
25 | (9) Requirement to pay estimated tax. For each taxable | ||||||
26 | year for which an election under paragraph (1) is in |
| |||||||
| |||||||
1 | effect, a partnership or Subchapter S corporation is | ||||||
2 | required to pay estimated tax for such taxable year under | ||||||
3 | Sections 803 and 804 of this Act if the amount payable as | ||||||
4 | estimated tax can reasonably be expected to exceed $500. | ||||||
5 | (10) The provisions of this subsection shall apply | ||||||
6 | only with respect to taxable years for which the | ||||||
7 | limitation on individual deductions applies under Section | ||||||
8 | 164(b)(6) of the Internal Revenue Code. | ||||||
9 | (Source: P.A. 101-9, eff. 6-5-19; 101-31, eff. 6-28-19; | ||||||
10 | 101-207, eff. 8-2-19; 101-363, eff. 8-9-19; 102-558, eff. | ||||||
11 | 8-20-21; 102-658, eff. 8-27-21.)
| ||||||
12 | Section 99. Effective date. This Act takes effect upon | ||||||
13 | becoming law.
|