Bill Text: IL HB3157 | 2013-2014 | 98th General Assembly | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Illinois Income Tax Act. In a Section concerning apportionment of business income, provides that, if the apportionment provisions do not fairly represent the market for the person's goods, services, or other sources of business income (instead of "the extent of a person's business activity in this State"), a person may petition for, or the Director may permit or require, the following: (1) separate accounting; (2) the exclusion of any one or more factors; (3) the inclusion of one or more additional factors; or (4) the employment of any other method to effectuate an equitable allocation and apportionment of the person's business income. Makes changes concerning gains or losses included in the net income of a nonresident partners and shareholders. Makes changes concerning unitary business groups. Makes other changes.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2013-08-16 - Public Act . . . . . . . . . 98-0478 [HB3157 Detail]

Download: Illinois-2013-HB3157-Enrolled.html

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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Income Tax Act is amended by
changing Sections 304, 502, and 709.5 as follows:
(35 ILCS 5/304) (from Ch. 120, par. 3-304)
Sec. 304. Business income of persons other than residents.
(a) In general. The business income of a person other than
a resident shall be allocated to this State if such person's
business income is derived solely from this State. If a person
other than a resident derives business income from this State
and one or more other states, then, for tax years ending on or
before December 30, 1998, and except as otherwise provided by
this Section, such person's business income shall be
apportioned to this State by multiplying the income by a
fraction, the numerator of which is the sum of the property
factor (if any), the payroll factor (if any) and 200% of the
sales factor (if any), and the denominator of which is 4
reduced by the number of factors other than the sales factor
which have a denominator of zero and by an additional 2 if the
sales factor has a denominator of zero. For tax years ending on
or after December 31, 1998, and except as otherwise provided by
this Section, persons other than residents who derive business

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income from this State and one or more other states shall
compute their apportionment factor by weighting their
property, payroll, and sales factors as provided in subsection
(h) of this Section.
(1) Property factor.
(A) The property factor is a fraction, the numerator of
which is the average value of the person's real and
tangible personal property owned or rented and used in the
trade or business in this State during the taxable year and
the denominator of which is the average value of all the
person's real and tangible personal property owned or
rented and used in the trade or business during the taxable
year.
(B) Property owned by the person is valued at its
original cost. Property rented by the person is valued at 8
times the net annual rental rate. Net annual rental rate is
the annual rental rate paid by the person less any annual
rental rate received by the person from sub-rentals.
(C) The average value of property shall be determined
by averaging the values at the beginning and ending of the
taxable year but the Director may require the averaging of
monthly values during the taxable year if reasonably
required to reflect properly the average value of the
person's property.
(2) Payroll factor.
(A) The payroll factor is a fraction, the numerator of

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which is the total amount paid in this State during the
taxable year by the person for compensation, and the
denominator of which is the total compensation paid
everywhere during the taxable year.
(B) Compensation is paid in this State if:
(i) The individual's service is performed entirely
within this State;
(ii) The individual's service is performed both
within and without this State, but the service
performed without this State is incidental to the
individual's service performed within this State; or
(iii) Some of the service is performed within this
State and either the base of operations, or if there is
no base of operations, the place from which the service
is directed or controlled is within this State, or the
base of operations or the place from which the service
is directed or controlled is not in any state in which
some part of the service is performed, but the
individual's residence is in this State.
(iv) Compensation paid to nonresident professional
athletes.
(a) General. The Illinois source income of a
nonresident individual who is a member of a
professional athletic team includes the portion of the
individual's total compensation for services performed
as a member of a professional athletic team during the

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taxable year which the number of duty days spent within
this State performing services for the team in any
manner during the taxable year bears to the total
number of duty days spent both within and without this
State during the taxable year.
(b) Travel days. Travel days that do not involve
either a game, practice, team meeting, or other similar
team event are not considered duty days spent in this
State. However, such travel days are considered in the
total duty days spent both within and without this
State.
(c) Definitions. For purposes of this subpart
(iv):
(1) The term "professional athletic team"
includes, but is not limited to, any professional
baseball, basketball, football, soccer, or hockey
team.
(2) The term "member of a professional
athletic team" includes those employees who are
active players, players on the disabled list, and
any other persons required to travel and who travel
with and perform services on behalf of a
professional athletic team on a regular basis.
This includes, but is not limited to, coaches,
managers, and trainers.
(3) Except as provided in items (C) and (D) of

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this subpart (3), the term "duty days" means all
days during the taxable year from the beginning of
the professional athletic team's official
pre-season training period through the last game
in which the team competes or is scheduled to
compete. Duty days shall be counted for the year in
which they occur, including where a team's
official pre-season training period through the
last game in which the team competes or is
scheduled to compete, occurs during more than one
tax year.
(A) Duty days shall also include days on
which a member of a professional athletic team
performs service for a team on a date that does
not fall within the foregoing period (e.g.,
participation in instructional leagues, the
"All Star Game", or promotional "caravans").
Performing a service for a professional
athletic team includes conducting training and
rehabilitation activities, when such
activities are conducted at team facilities.
(B) Also included in duty days are game
days, practice days, days spent at team
meetings, promotional caravans, preseason
training camps, and days served with the team
through all post-season games in which the team

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competes or is scheduled to compete.
(C) Duty days for any person who joins a
team during the period from the beginning of
the professional athletic team's official
pre-season training period through the last
game in which the team competes, or is
scheduled to compete, shall begin on the day
that person joins the team. Conversely, duty
days for any person who leaves a team during
this period shall end on the day that person
leaves the team. Where a person switches teams
during a taxable year, a separate duty-day
calculation shall be made for the period the
person was with each team.
(D) Days for which a member of a
professional athletic team is not compensated
and is not performing services for the team in
any manner, including days when such member of
a professional athletic team has been
suspended without pay and prohibited from
performing any services for the team, shall not
be treated as duty days.
(E) Days for which a member of a
professional athletic team is on the disabled
list and does not conduct rehabilitation
activities at facilities of the team, and is

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not otherwise performing services for the team
in Illinois, shall not be considered duty days
spent in this State. All days on the disabled
list, however, are considered to be included in
total duty days spent both within and without
this State.
(4) The term "total compensation for services
performed as a member of a professional athletic
team" means the total compensation received during
the taxable year for services performed:
(A) from the beginning of the official
pre-season training period through the last
game in which the team competes or is scheduled
to compete during that taxable year; and
(B) during the taxable year on a date which
does not fall within the foregoing period
(e.g., participation in instructional leagues,
the "All Star Game", or promotional caravans).
This compensation shall include, but is not
limited to, salaries, wages, bonuses as described
in this subpart, and any other type of compensation
paid during the taxable year to a member of a
professional athletic team for services performed
in that year. This compensation does not include
strike benefits, severance pay, termination pay,
contract or option year buy-out payments,

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expansion or relocation payments, or any other
payments not related to services performed for the
team.
For purposes of this subparagraph, "bonuses"
included in "total compensation for services
performed as a member of a professional athletic
team" subject to the allocation described in
Section 302(c)(1) are: bonuses earned as a result
of play (i.e., performance bonuses) during the
season, including bonuses paid for championship,
playoff or "bowl" games played by a team, or for
selection to all-star league or other honorary
positions; and bonuses paid for signing a
contract, unless the payment of the signing bonus
is not conditional upon the signee playing any
games for the team or performing any subsequent
services for the team or even making the team, the
signing bonus is payable separately from the
salary and any other compensation, and the signing
bonus is nonrefundable.
(3) Sales factor.
(A) The sales factor is a fraction, the numerator of
which is the total sales of the person in this State during
the taxable year, and the denominator of which is the total
sales of the person everywhere during the taxable year.
(B) Sales of tangible personal property are in this

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State if:
(i) The property is delivered or shipped to a
purchaser, other than the United States government,
within this State regardless of the f. o. b. point or
other conditions of the sale; or
(ii) The property is shipped from an office, store,
warehouse, factory or other place of storage in this
State and either the purchaser is the United States
government or the person is not taxable in the state of
the purchaser; provided, however, that premises owned
or leased by a person who has independently contracted
with the seller for the printing of newspapers,
periodicals or books shall not be deemed to be an
office, store, warehouse, factory or other place of
storage for purposes of this Section. Sales of tangible
personal property are not in this State if the seller
and purchaser would be members of the same unitary
business group but for the fact that either the seller
or purchaser is a person with 80% or more of total
business activity outside of the United States and the
property is purchased for resale.
(B-1) Patents, copyrights, trademarks, and similar
items of intangible personal property.
(i) Gross receipts from the licensing, sale, or
other disposition of a patent, copyright, trademark,
or similar item of intangible personal property, other

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than gross receipts governed by paragraph (B-7) of this
item (3), are in this State to the extent the item is
utilized in this State during the year the gross
receipts are included in gross income.
(ii) Place of utilization.
(I) A patent is utilized in a state to the
extent that it is employed in production,
fabrication, manufacturing, or other processing in
the state or to the extent that a patented product
is produced in the state. If a patent is utilized
in more than one state, the extent to which it is
utilized in any one state shall be a fraction equal
to the gross receipts of the licensee or purchaser
from sales or leases of items produced,
fabricated, manufactured, or processed within that
state using the patent and of patented items
produced within that state, divided by the total of
such gross receipts for all states in which the
patent is utilized.
(II) A copyright is utilized in a state to the
extent that printing or other publication
originates in the state. If a copyright is utilized
in more than one state, the extent to which it is
utilized in any one state shall be a fraction equal
to the gross receipts from sales or licenses of
materials printed or published in that state

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divided by the total of such gross receipts for all
states in which the copyright is utilized.
(III) Trademarks and other items of intangible
personal property governed by this paragraph (B-1)
are utilized in the state in which the commercial
domicile of the licensee or purchaser is located.
(iii) If the state of utilization of an item of
property governed by this paragraph (B-1) cannot be
determined from the taxpayer's books and records or
from the books and records of any person related to the
taxpayer within the meaning of Section 267(b) of the
Internal Revenue Code, 26 U.S.C. 267, the gross
receipts attributable to that item shall be excluded
from both the numerator and the denominator of the
sales factor.
(B-2) Gross receipts from the license, sale, or other
disposition of patents, copyrights, trademarks, and
similar items of intangible personal property, other than
gross receipts governed by paragraph (B-7) of this item
(3), may be included in the numerator or denominator of the
sales factor only if gross receipts from licenses, sales,
or other disposition of such items comprise more than 50%
of the taxpayer's total gross receipts included in gross
income during the tax year and during each of the 2
immediately preceding tax years; provided that, when a
taxpayer is a member of a unitary business group, such

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determination shall be made on the basis of the gross
receipts of the entire unitary business group.
(B-5) For taxable years ending on or after December 31,
2008, except as provided in subsections (ii) through (vii),
receipts from the sale of telecommunications service or
mobile telecommunications service are in this State if the
customer's service address is in this State.
(i) For purposes of this subparagraph (B-5), the
following terms have the following meanings:
"Ancillary services" means services that are
associated with or incidental to the provision of
"telecommunications services", including but not
limited to "detailed telecommunications billing",
"directory assistance", "vertical service", and "voice
mail services".
"Air-to-Ground Radiotelephone service" means a
radio service, as that term is defined in 47 CFR 22.99,
in which common carriers are authorized to offer and
provide radio telecommunications service for hire to
subscribers in aircraft.
"Call-by-call Basis" means any method of charging
for telecommunications services where the price is
measured by individual calls.
"Communications Channel" means a physical or
virtual path of communications over which signals are
transmitted between or among customer channel

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termination points.
"Conference bridging service" means an "ancillary
service" that links two or more participants of an
audio or video conference call and may include the
provision of a telephone number. "Conference bridging
service" does not include the "telecommunications
services" used to reach the conference bridge.
"Customer Channel Termination Point" means the
location where the customer either inputs or receives
the communications.
"Detailed telecommunications billing service"
means an "ancillary service" of separately stating
information pertaining to individual calls on a
customer's billing statement.
"Directory assistance" means an "ancillary
service" of providing telephone number information,
and/or address information.
"Home service provider" means the facilities based
carrier or reseller with which the customer contracts
for the provision of mobile telecommunications
services.
"Mobile telecommunications service" means
commercial mobile radio service, as defined in Section
20.3 of Title 47 of the Code of Federal Regulations as
in effect on June 1, 1999.
"Place of primary use" means the street address

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representative of where the customer's use of the
telecommunications service primarily occurs, which
must be the residential street address or the primary
business street address of the customer. In the case of
mobile telecommunications services, "place of primary
use" must be within the licensed service area of the
home service provider.
"Post-paid telecommunication service" means the
telecommunications service obtained by making a
payment on a call-by-call basis either through the use
of a credit card or payment mechanism such as a bank
card, travel card, credit card, or debit card, or by
charge made to a telephone number which is not
associated with the origination or termination of the
telecommunications service. A post-paid calling
service includes telecommunications service, except a
prepaid wireless calling service, that would be a
prepaid calling service except it is not exclusively a
telecommunication service.
"Prepaid telecommunication service" means the
right to access exclusively telecommunications
services, which must be paid for in advance and which
enables the origination of calls using an access number
or authorization code, whether manually or
electronically dialed, and that is sold in
predetermined units or dollars of which the number

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declines with use in a known amount.
"Prepaid Mobile telecommunication service" means a
telecommunications service that provides the right to
utilize mobile wireless service as well as other
non-telecommunication services, including but not
limited to ancillary services, which must be paid for
in advance that is sold in predetermined units or
dollars of which the number declines with use in a
known amount.
"Private communication service" means a
telecommunication service that entitles the customer
to exclusive or priority use of a communications
channel or group of channels between or among
termination points, regardless of the manner in which
such channel or channels are connected, and includes
switching capacity, extension lines, stations, and any
other associated services that are provided in
connection with the use of such channel or channels.
"Service address" means:
(a) The location of the telecommunications
equipment to which a customer's call is charged and
from which the call originates or terminates,
regardless of where the call is billed or paid;
(b) If the location in line (a) is not known,
service address means the origination point of the
signal of the telecommunications services first

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identified by either the seller's
telecommunications system or in information
received by the seller from its service provider
where the system used to transport such signals is
not that of the seller; and
(c) If the locations in line (a) and line (b)
are not known, the service address means the
location of the customer's place of primary use.
"Telecommunications service" means the electronic
transmission, conveyance, or routing of voice, data,
audio, video, or any other information or signals to a
point, or between or among points. The term
"telecommunications service" includes such
transmission, conveyance, or routing in which computer
processing applications are used to act on the form,
code or protocol of the content for purposes of
transmission, conveyance or routing without regard to
whether such service is referred to as voice over
Internet protocol services or is classified by the
Federal Communications Commission as enhanced or value
added. "Telecommunications service" does not include:
(a) Data processing and information services
that allow data to be generated, acquired, stored,
processed, or retrieved and delivered by an
electronic transmission to a purchaser when such
purchaser's primary purpose for the underlying

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transaction is the processed data or information;
(b) Installation or maintenance of wiring or
equipment on a customer's premises;
(c) Tangible personal property;
(d) Advertising, including but not limited to
directory advertising.
(e) Billing and collection services provided
to third parties;
(f) Internet access service;
(g) Radio and television audio and video
programming services, regardless of the medium,
including the furnishing of transmission,
conveyance and routing of such services by the
programming service provider. Radio and television
audio and video programming services shall include
but not be limited to cable service as defined in
47 USC 522(6) and audio and video programming
services delivered by commercial mobile radio
service providers, as defined in 47 CFR 20.3;
(h) "Ancillary services"; or
(i) Digital products "delivered
electronically", including but not limited to
software, music, video, reading materials or ring
tones.
"Vertical service" means an "ancillary service"
that is offered in connection with one or more

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"telecommunications services", which offers advanced
calling features that allow customers to identify
callers and to manage multiple calls and call
connections, including "conference bridging services".
"Voice mail service" means an "ancillary service"
that enables the customer to store, send or receive
recorded messages. "Voice mail service" does not
include any "vertical services" that the customer may
be required to have in order to utilize the "voice mail
service".
(ii) Receipts from the sale of telecommunications
service sold on an individual call-by-call basis are in
this State if either of the following applies:
(a) The call both originates and terminates in
this State.
(b) The call either originates or terminates
in this State and the service address is located in
this State.
(iii) Receipts from the sale of postpaid
telecommunications service at retail are in this State
if the origination point of the telecommunication
signal, as first identified by the service provider's
telecommunication system or as identified by
information received by the seller from its service
provider if the system used to transport
telecommunication signals is not the seller's, is

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located in this State.
(iv) Receipts from the sale of prepaid
telecommunications service or prepaid mobile
telecommunications service at retail are in this State
if the purchaser obtains the prepaid card or similar
means of conveyance at a location in this State.
Receipts from recharging a prepaid telecommunications
service or mobile telecommunications service is in
this State if the purchaser's billing information
indicates a location in this State.
(v) Receipts from the sale of private
communication services are in this State as follows:
(a) 100% of receipts from charges imposed at
each channel termination point in this State.
(b) 100% of receipts from charges for the total
channel mileage between each channel termination
point in this State.
(c) 50% of the total receipts from charges for
service segments when those segments are between 2
customer channel termination points, 1 of which is
located in this State and the other is located
outside of this State, which segments are
separately charged.
(d) The receipts from charges for service
segments with a channel termination point located
in this State and in two or more other states, and

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which segments are not separately billed, are in
this State based on a percentage determined by
dividing the number of customer channel
termination points in this State by the total
number of customer channel termination points.
(vi) Receipts from charges for ancillary services
for telecommunications service sold to customers at
retail are in this State if the customer's primary
place of use of telecommunications services associated
with those ancillary services is in this State. If the
seller of those ancillary services cannot determine
where the associated telecommunications are located,
then the ancillary services shall be based on the
location of the purchaser.
(vii) Receipts to access a carrier's network or
from the sale of telecommunication services or
ancillary services for resale are in this State as
follows:
(a) 100% of the receipts from access fees
attributable to intrastate telecommunications
service that both originates and terminates in
this State.
(b) 50% of the receipts from access fees
attributable to interstate telecommunications
service if the interstate call either originates
or terminates in this State.

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(c) 100% of the receipts from interstate end
user access line charges, if the customer's
service address is in this State. As used in this
subdivision, "interstate end user access line
charges" includes, but is not limited to, the
surcharge approved by the federal communications
commission and levied pursuant to 47 CFR 69.
(d) Gross receipts from sales of
telecommunication services or from ancillary
services for telecommunications services sold to
other telecommunication service providers for
resale shall be sourced to this State using the
apportionment concepts used for non-resale
receipts of telecommunications services if the
information is readily available to make that
determination. If the information is not readily
available, then the taxpayer may use any other
reasonable and consistent method.
(B-7) For taxable years ending on or after December 31,
2008, receipts from the sale of broadcasting services are
in this State if the broadcasting services are received in
this State. For purposes of this paragraph (B-7), the
following terms have the following meanings:
"Advertising revenue" means consideration received
by the taxpayer in exchange for broadcasting services
or allowing the broadcasting of commercials or

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announcements in connection with the broadcasting of
film or radio programming, from sponsorships of the
programming, or from product placements in the
programming.
"Audience factor" means the ratio that the
audience or subscribers located in this State of a
station, a network, or a cable system bears to the
total audience or total subscribers for that station,
network, or cable system. The audience factor for film
or radio programming shall be determined by reference
to the books and records of the taxpayer or by
reference to published rating statistics provided the
method used by the taxpayer is consistently used from
year to year for this purpose and fairly represents the
taxpayer's activity in this State.
"Broadcast" or "broadcasting" or "broadcasting
services" means the transmission or provision of film
or radio programming, whether through the public
airwaves, by cable, by direct or indirect satellite
transmission, or by any other means of communication,
either through a station, a network, or a cable system.
"Film" or "film programming" means the broadcast
on television of any and all performances, events, or
productions, including but not limited to news,
sporting events, plays, stories, or other literary,
commercial, educational, or artistic works, either

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live or through the use of video tape, disc, or any
other type of format or medium. Each episode of a
series of films produced for television shall
constitute separate "film" notwithstanding that the
series relates to the same principal subject and is
produced during one or more tax periods.
"Radio" or "radio programming" means the broadcast
on radio of any and all performances, events, or
productions, including but not limited to news,
sporting events, plays, stories, or other literary,
commercial, educational, or artistic works, either
live or through the use of an audio tape, disc, or any
other format or medium. Each episode in a series of
radio programming produced for radio broadcast shall
constitute a separate "radio programming"
notwithstanding that the series relates to the same
principal subject and is produced during one or more
tax periods.
(i) In the case of advertising revenue from
broadcasting, the customer is the advertiser and
the service is received in this State if the
commercial domicile of the advertiser is in this
State.
(ii) In the case where film or radio
programming is broadcast by a station, a network,
or a cable system for a fee or other remuneration

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received from the recipient of the broadcast, the
portion of the service that is received in this
State is measured by the portion of the recipients
of the broadcast located in this State.
Accordingly, the fee or other remuneration for
such service that is included in the Illinois
numerator of the sales factor is the total of those
fees or other remuneration received from
recipients in Illinois. For purposes of this
paragraph, a taxpayer may determine the location
of the recipients of its broadcast using the
address of the recipient shown in its contracts
with the recipient or using the billing address of
the recipient in the taxpayer's records.
(iii) In the case where film or radio
programming is broadcast by a station, a network,
or a cable system for a fee or other remuneration
from the person providing the programming, the
portion of the broadcast service that is received
by such station, network, or cable system in this
State is measured by the portion of recipients of
the broadcast located in this State. Accordingly,
the amount of revenue related to such an
arrangement that is included in the Illinois
numerator of the sales factor is the total fee or
other total remuneration from the person providing

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the programming related to that broadcast
multiplied by the Illinois audience factor for
that broadcast.
(iv) In the case where film or radio
programming is provided by a taxpayer that is a
network or station to a customer for broadcast in
exchange for a fee or other remuneration from that
customer the broadcasting service is received at
the location of the office of the customer from
which the services were ordered in the regular
course of the customer's trade or business.
Accordingly, in such a case the revenue derived by
the taxpayer that is included in the taxpayer's
Illinois numerator of the sales factor is the
revenue from such customers who receive the
broadcasting service in Illinois.
(v) In the case where film or radio programming
is provided by a taxpayer that is not a network or
station to another person for broadcasting in
exchange for a fee or other remuneration from that
person, the broadcasting service is received at
the location of the office of the customer from
which the services were ordered in the regular
course of the customer's trade or business.
Accordingly, in such a case the revenue derived by
the taxpayer that is included in the taxpayer's

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Illinois numerator of the sales factor is the
revenue from such customers who receive the
broadcasting service in Illinois.
(C) For taxable years ending before December 31, 2008,
sales, other than sales governed by paragraphs (B), (B-1),
and (B-2), are in this State if:
(i) The income-producing activity is performed in
this State; or
(ii) The income-producing activity is performed
both within and without this State and a greater
proportion of the income-producing activity is
performed within this State than without this State,
based on performance costs.
(C-5) For taxable years ending on or after December 31,
2008, sales, other than sales governed by paragraphs (B),
(B-1), (B-2), (B-5), and (B-7), are in this State if any of
the following criteria are met:
(i) Sales from the sale or lease of real property
are in this State if the property is located in this
State.
(ii) Sales from the lease or rental of tangible
personal property are in this State if the property is
located in this State during the rental period. Sales
from the lease or rental of tangible personal property
that is characteristically moving property, including,
but not limited to, motor vehicles, rolling stock,

HB3157 Enrolled - 27 - LRB098 10600 HLH 40863 b
aircraft, vessels, or mobile equipment are in this
State to the extent that the property is used in this
State.
(iii) In the case of interest, net gains (but not
less than zero) and other items of income from
intangible personal property, the sale is in this State
if:
(a) in the case of a taxpayer who is a dealer
in the item of intangible personal property within
the meaning of Section 475 of the Internal Revenue
Code, the income or gain is received from a
customer in this State. For purposes of this
subparagraph, a customer is in this State if the
customer is an individual, trust or estate who is a
resident of this State and, for all other
customers, if the customer's commercial domicile
is in this State. Unless the dealer has actual
knowledge of the residence or commercial domicile
of a customer during a taxable year, the customer
shall be deemed to be a customer in this State if
the billing address of the customer, as shown in
the records of the dealer, is in this State; or
(b) in all other cases, if the
income-producing activity of the taxpayer is
performed in this State or, if the
income-producing activity of the taxpayer is

HB3157 Enrolled - 28 - LRB098 10600 HLH 40863 b
performed both within and without this State, if a
greater proportion of the income-producing
activity of the taxpayer is performed within this
State than in any other state, based on performance
costs.
(iv) Sales of services are in this State if the
services are received in this State. For the purposes
of this section, gross receipts from the performance of
services provided to a corporation, partnership, or
trust may only be attributed to a state where that
corporation, partnership, or trust has a fixed place of
business. If the state where the services are received
is not readily determinable or is a state where the
corporation, partnership, or trust receiving the
service does not have a fixed place of business, the
services shall be deemed to be received at the location
of the office of the customer from which the services
were ordered in the regular course of the customer's
trade or business. If the ordering office cannot be
determined, the services shall be deemed to be received
at the office of the customer to which the services are
billed. If the taxpayer is not taxable in the state in
which the services are received, the sale must be
excluded from both the numerator and the denominator of
the sales factor. The Department shall adopt rules
prescribing where specific types of service are

HB3157 Enrolled - 29 - LRB098 10600 HLH 40863 b
received, including, but not limited to, publishing,
and utility service.
(D) For taxable years ending on or after December 31,
1995, the following items of income shall not be included
in the numerator or denominator of the sales factor:
dividends; amounts included under Section 78 of the
Internal Revenue Code; and Subpart F income as defined in
Section 952 of the Internal Revenue Code. No inference
shall be drawn from the enactment of this paragraph (D) in
construing this Section for taxable years ending before
December 31, 1995.
(E) Paragraphs (B-1) and (B-2) shall apply to tax years
ending on or after December 31, 1999, provided that a
taxpayer may elect to apply the provisions of these
paragraphs to prior tax years. Such election shall be made
in the form and manner prescribed by the Department, shall
be irrevocable, and shall apply to all tax years; provided
that, if a taxpayer's Illinois income tax liability for any
tax year, as assessed under Section 903 prior to January 1,
1999, was computed in a manner contrary to the provisions
of paragraphs (B-1) or (B-2), no refund shall be payable to
the taxpayer for that tax year to the extent such refund is
the result of applying the provisions of paragraph (B-1) or
(B-2) retroactively. In the case of a unitary business
group, such election shall apply to all members of such
group for every tax year such group is in existence, but

HB3157 Enrolled - 30 - LRB098 10600 HLH 40863 b
shall not apply to any taxpayer for any period during which
that taxpayer is not a member of such group.
(b) Insurance companies.
(1) In general. Except as otherwise provided by
paragraph (2), business income of an insurance company for
a taxable year shall be apportioned to this State by
multiplying such income by a fraction, the numerator of
which is the direct premiums written for insurance upon
property or risk in this State, and the denominator of
which is the direct premiums written for insurance upon
property or risk everywhere. For purposes of this
subsection, the term "direct premiums written" means the
total amount of direct premiums written, assessments and
annuity considerations as reported for the taxable year on
the annual statement filed by the company with the Illinois
Director of Insurance in the form approved by the National
Convention of Insurance Commissioners or such other form as
may be prescribed in lieu thereof.
(2) Reinsurance. If the principal source of premiums
written by an insurance company consists of premiums for
reinsurance accepted by it, the business income of such
company shall be apportioned to this State by multiplying
such income by a fraction, the numerator of which is the
sum of (i) direct premiums written for insurance upon
property or risk in this State, plus (ii) premiums written
for reinsurance accepted in respect of property or risk in

HB3157 Enrolled - 31 - LRB098 10600 HLH 40863 b
this State, and the denominator of which is the sum of
(iii) direct premiums written for insurance upon property
or risk everywhere, plus (iv) premiums written for
reinsurance accepted in respect of property or risk
everywhere. For purposes of this paragraph, premiums
written for reinsurance accepted in respect of property or
risk in this State, whether or not otherwise determinable,
may, at the election of the company, be determined on the
basis of the proportion which premiums written for
reinsurance accepted from companies commercially domiciled
in Illinois bears to premiums written for reinsurance
accepted from all sources, or, alternatively, in the
proportion which the sum of the direct premiums written for
insurance upon property or risk in this State by each
ceding company from which reinsurance is accepted bears to
the sum of the total direct premiums written by each such
ceding company for the taxable year. The election made by a
company under this paragraph for its first taxable year
ending on or after December 31, 2011, shall be binding for
that company for that taxable year and for all subsequent
taxable years, and may be altered only with the written
permission of the Department, which shall not be
unreasonably withheld.
(c) Financial organizations.
(1) In general. For taxable years ending before
December 31, 2008, business income of a financial

HB3157 Enrolled - 32 - LRB098 10600 HLH 40863 b
organization shall be apportioned to this State by
multiplying such income by a fraction, the numerator of
which is its business income from sources within this
State, and the denominator of which is its business income
from all sources. For the purposes of this subsection, the
business income of a financial organization from sources
within this State is the sum of the amounts referred to in
subparagraphs (A) through (E) following, but excluding the
adjusted income of an international banking facility as
determined in paragraph (2):
(A) Fees, commissions or other compensation for
financial services rendered within this State;
(B) Gross profits from trading in stocks, bonds or
other securities managed within this State;
(C) Dividends, and interest from Illinois
customers, which are received within this State;
(D) Interest charged to customers at places of
business maintained within this State for carrying
debit balances of margin accounts, without deduction
of any costs incurred in carrying such accounts; and
(E) Any other gross income resulting from the
operation as a financial organization within this
State. In computing the amounts referred to in
paragraphs (A) through (E) of this subsection, any
amount received by a member of an affiliated group
(determined under Section 1504(a) of the Internal

HB3157 Enrolled - 33 - LRB098 10600 HLH 40863 b
Revenue Code but without reference to whether any such
corporation is an "includible corporation" under
Section 1504(b) of the Internal Revenue Code) from
another member of such group shall be included only to
the extent such amount exceeds expenses of the
recipient directly related thereto.
(2) International Banking Facility. For taxable years
ending before December 31, 2008:
(A) Adjusted Income. The adjusted income of an
international banking facility is its income reduced
by the amount of the floor amount.
(B) Floor Amount. The floor amount shall be the
amount, if any, determined by multiplying the income of
the international banking facility by a fraction, not
greater than one, which is determined as follows:
(i) The numerator shall be:
The average aggregate, determined on a
quarterly basis, of the financial organization's
loans to banks in foreign countries, to foreign
domiciled borrowers (except where secured
primarily by real estate) and to foreign
governments and other foreign official
institutions, as reported for its branches,
agencies and offices within the state on its
"Consolidated Report of Condition", Schedule A,
Lines 2.c., 5.b., and 7.a., which was filed with

HB3157 Enrolled - 34 - LRB098 10600 HLH 40863 b
the Federal Deposit Insurance Corporation and
other regulatory authorities, for the year 1980,
minus
The average aggregate, determined on a
quarterly basis, of such loans (other than loans of
an international banking facility), as reported by
the financial institution for its branches,
agencies and offices within the state, on the
corresponding Schedule and lines of the
Consolidated Report of Condition for the current
taxable year, provided, however, that in no case
shall the amount determined in this clause (the
subtrahend) exceed the amount determined in the
preceding clause (the minuend); and
(ii) the denominator shall be the average
aggregate, determined on a quarterly basis, of the
international banking facility's loans to banks in
foreign countries, to foreign domiciled borrowers
(except where secured primarily by real estate)
and to foreign governments and other foreign
official institutions, which were recorded in its
financial accounts for the current taxable year.
(C) Change to Consolidated Report of Condition and
in Qualification. In the event the Consolidated Report
of Condition which is filed with the Federal Deposit
Insurance Corporation and other regulatory authorities

HB3157 Enrolled - 35 - LRB098 10600 HLH 40863 b
is altered so that the information required for
determining the floor amount is not found on Schedule
A, lines 2.c., 5.b. and 7.a., the financial institution
shall notify the Department and the Department may, by
regulations or otherwise, prescribe or authorize the
use of an alternative source for such information. The
financial institution shall also notify the Department
should its international banking facility fail to
qualify as such, in whole or in part, or should there
be any amendment or change to the Consolidated Report
of Condition, as originally filed, to the extent such
amendment or change alters the information used in
determining the floor amount.
(3) For taxable years ending on or after December 31,
2008, the business income of a financial organization shall
be apportioned to this State by multiplying such income by
a fraction, the numerator of which is its gross receipts
from sources in this State or otherwise attributable to
this State's marketplace and the denominator of which is
its gross receipts everywhere during the taxable year.
"Gross receipts" for purposes of this subparagraph (3)
means gross income, including net taxable gain on
disposition of assets, including securities and money
market instruments, when derived from transactions and
activities in the regular course of the financial
organization's trade or business. The following examples

HB3157 Enrolled - 36 - LRB098 10600 HLH 40863 b
are illustrative:
(i) Receipts from the lease or rental of real or
tangible personal property are in this State if the
property is located in this State during the rental
period. Receipts from the lease or rental of tangible
personal property that is characteristically moving
property, including, but not limited to, motor
vehicles, rolling stock, aircraft, vessels, or mobile
equipment are from sources in this State to the extent
that the property is used in this State.
(ii) Interest income, commissions, fees, gains on
disposition, and other receipts from assets in the
nature of loans that are secured primarily by real
estate or tangible personal property are from sources
in this State if the security is located in this State.
(iii) Interest income, commissions, fees, gains on
disposition, and other receipts from consumer loans
that are not secured by real or tangible personal
property are from sources in this State if the debtor
is a resident of this State.
(iv) Interest income, commissions, fees, gains on
disposition, and other receipts from commercial loans
and installment obligations that are not secured by
real or tangible personal property are from sources in
this State if the proceeds of the loan are to be
applied in this State. If it cannot be determined where

HB3157 Enrolled - 37 - LRB098 10600 HLH 40863 b
the funds are to be applied, the income and receipts
are from sources in this State if the office of the
borrower from which the loan was negotiated in the
regular course of business is located in this State. If
the location of this office cannot be determined, the
income and receipts shall be excluded from the
numerator and denominator of the sales factor.
(v) Interest income, fees, gains on disposition,
service charges, merchant discount income, and other
receipts from credit card receivables are from sources
in this State if the card charges are regularly billed
to a customer in this State.
(vi) Receipts from the performance of services,
including, but not limited to, fiduciary, advisory,
and brokerage services, are in this State if the
services are received in this State within the meaning
of subparagraph (a)(3)(C-5)(iv) of this Section.
(vii) Receipts from the issuance of travelers
checks and money orders are from sources in this State
if the checks and money orders are issued from a
location within this State.
(viii) Receipts from investment assets and
activities and trading assets and activities are
included in the receipts factor as follows:
(1) Interest, dividends, net gains (but not
less than zero) and other income from investment

HB3157 Enrolled - 38 - LRB098 10600 HLH 40863 b
assets and activities from trading assets and
activities shall be included in the receipts
factor. Investment assets and activities and
trading assets and activities include but are not
limited to: investment securities; trading account
assets; federal funds; securities purchased and
sold under agreements to resell or repurchase;
options; futures contracts; forward contracts;
notional principal contracts such as swaps;
equities; and foreign currency transactions. With
respect to the investment and trading assets and
activities described in subparagraphs (A) and (B)
of this paragraph, the receipts factor shall
include the amounts described in such
subparagraphs.
(A) The receipts factor shall include the
amount by which interest from federal funds
sold and securities purchased under resale
agreements exceeds interest expense on federal
funds purchased and securities sold under
repurchase agreements.
(B) The receipts factor shall include the
amount by which interest, dividends, gains and
other income from trading assets and
activities, including but not limited to
assets and activities in the matched book, in

HB3157 Enrolled - 39 - LRB098 10600 HLH 40863 b
the arbitrage book, and foreign currency
transactions, exceed amounts paid in lieu of
interest, amounts paid in lieu of dividends,
and losses from such assets and activities.
(2) The numerator of the receipts factor
includes interest, dividends, net gains (but not
less than zero), and other income from investment
assets and activities and from trading assets and
activities described in paragraph (1) of this
subsection that are attributable to this State.
(A) The amount of interest, dividends, net
gains (but not less than zero), and other
income from investment assets and activities
in the investment account to be attributed to
this State and included in the numerator is
determined by multiplying all such income from
such assets and activities by a fraction, the
numerator of which is the gross income from
such assets and activities which are properly
assigned to a fixed place of business of the
taxpayer within this State and the denominator
of which is the gross income from all such
assets and activities.
(B) The amount of interest from federal
funds sold and purchased and from securities
purchased under resale agreements and

HB3157 Enrolled - 40 - LRB098 10600 HLH 40863 b
securities sold under repurchase agreements
attributable to this State and included in the
numerator is determined by multiplying the
amount described in subparagraph (A) of
paragraph (1) of this subsection from such
funds and such securities by a fraction, the
numerator of which is the gross income from
such funds and such securities which are
properly assigned to a fixed place of business
of the taxpayer within this State and the
denominator of which is the gross income from
all such funds and such securities.
(C) The amount of interest, dividends,
gains, and other income from trading assets and
activities, including but not limited to
assets and activities in the matched book, in
the arbitrage book and foreign currency
transactions (but excluding amounts described
in subparagraphs (A) or (B) of this paragraph),
attributable to this State and included in the
numerator is determined by multiplying the
amount described in subparagraph (B) of
paragraph (1) of this subsection by a fraction,
the numerator of which is the gross income from
such trading assets and activities which are
properly assigned to a fixed place of business

HB3157 Enrolled - 41 - LRB098 10600 HLH 40863 b
of the taxpayer within this State and the
denominator of which is the gross income from
all such assets and activities.
(D) Properly assigned, for purposes of
this paragraph (2) of this subsection, means
the investment or trading asset or activity is
assigned to the fixed place of business with
which it has a preponderance of substantive
contacts. An investment or trading asset or
activity assigned by the taxpayer to a fixed
place of business without the State shall be
presumed to have been properly assigned if:
(i) the taxpayer has assigned, in the
regular course of its business, such asset
or activity on its records to a fixed place
of business consistent with federal or
state regulatory requirements;
(ii) such assignment on its records is
based upon substantive contacts of the
asset or activity to such fixed place of
business; and
(iii) the taxpayer uses such records
reflecting assignment of such assets or
activities for the filing of all state and
local tax returns for which an assignment
of such assets or activities to a fixed

HB3157 Enrolled - 42 - LRB098 10600 HLH 40863 b
place of business is required.
(E) The presumption of proper assignment
of an investment or trading asset or activity
provided in subparagraph (D) of paragraph (2)
of this subsection may be rebutted upon a
showing by the Department, supported by a
preponderance of the evidence, that the
preponderance of substantive contacts
regarding such asset or activity did not occur
at the fixed place of business to which it was
assigned on the taxpayer's records. If the
fixed place of business that has a
preponderance of substantive contacts cannot
be determined for an investment or trading
asset or activity to which the presumption in
subparagraph (D) of paragraph (2) of this
subsection does not apply or with respect to
which that presumption has been rebutted, that
asset or activity is properly assigned to the
state in which the taxpayer's commercial
domicile is located. For purposes of this
subparagraph (E), it shall be presumed,
subject to rebuttal, that taxpayer's
commercial domicile is in the state of the
United States or the District of Columbia to
which the greatest number of employees are

HB3157 Enrolled - 43 - LRB098 10600 HLH 40863 b
regularly connected with the management of the
investment or trading income or out of which
they are working, irrespective of where the
services of such employees are performed, as of
the last day of the taxable year.
(4) (Blank).
(5) (Blank).
(c-1) Federally regulated exchanges. For taxable years
ending on or after December 31, 2012, business income of a
federally regulated exchange shall, at the option of the
federally regulated exchange, be apportioned to this State by
multiplying such income by a fraction, the numerator of which
is its business income from sources within this State, and the
denominator of which is its business income from all sources.
For purposes of this subsection, the business income within
this State of a federally regulated exchange is the sum of the
following:
(1) Receipts attributable to transactions executed on
a physical trading floor if that physical trading floor is
located in this State.
(2) Receipts attributable to all other matching,
execution, or clearing transactions, including without
limitation receipts from the provision of matching,
execution, or clearing services to another entity,
multiplied by (i) for taxable years ending on or after
December 31, 2012 but before December 31, 2013, 63.77%; and

HB3157 Enrolled - 44 - LRB098 10600 HLH 40863 b
(ii) for taxable years ending on or after December 31,
2013, 27.54%.
(3) All other receipts not governed by subparagraphs
(1) or (2) of this subsection (c-1), to the extent the
receipts would be characterized as "sales in this State"
under item (3) of subsection (a) of this Section.
"Federally regulated exchange" means (i) a "registered
entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B),
or (C), (ii) an "exchange" or "clearing agency" within the
meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such
entities regulated under any successor regulatory structure to
the foregoing, and (iv) all taxpayers who are members of the
same unitary business group as a federally regulated exchange,
determined without regard to the prohibition in Section
1501(a)(27) of this Act against including in a unitary business
group taxpayers who are ordinarily required to apportion
business income under different subsections of this Section;
provided that this subparagraph (iv) shall apply only if 50% or
more of the business receipts of the unitary business group
determined by application of this subparagraph (iv) for the
taxable year are attributable to the matching, execution, or
clearing of transactions conducted by an entity described in
subparagraph (i), (ii), or (iii) of this paragraph.
In no event shall the Illinois apportionment percentage
computed in accordance with this subsection (c-1) for any
taxpayer for any tax year be less than the Illinois

HB3157 Enrolled - 45 - LRB098 10600 HLH 40863 b
apportionment percentage computed under this subsection (c-1)
for that taxpayer for the first full tax year ending on or
after December 31, 2013 for which this subsection (c-1) applied
to the taxpayer.
(d) Transportation services. For taxable years ending
before December 31, 2008, business income derived from
furnishing transportation services shall be apportioned to
this State in accordance with paragraphs (1) and (2):
(1) Such business income (other than that derived from
transportation by pipeline) shall be apportioned to this
State by multiplying such income by a fraction, the
numerator of which is the revenue miles of the person in
this State, and the denominator of which is the revenue
miles of the person everywhere. For purposes of this
paragraph, a revenue mile is the transportation of 1
passenger or 1 net ton of freight the distance of 1 mile
for a consideration. Where a person is engaged in the
transportation of both passengers and freight, the
fraction above referred to shall be determined by means of
an average of the passenger revenue mile fraction and the
freight revenue mile fraction, weighted to reflect the
person's
(A) relative railway operating income from total
passenger and total freight service, as reported to the
Interstate Commerce Commission, in the case of
transportation by railroad, and

HB3157 Enrolled - 46 - LRB098 10600 HLH 40863 b
(B) relative gross receipts from passenger and
freight transportation, in case of transportation
other than by railroad.
(2) Such business income derived from transportation
by pipeline shall be apportioned to this State by
multiplying such income by a fraction, the numerator of
which is the revenue miles of the person in this State, and
the denominator of which is the revenue miles of the person
everywhere. For the purposes of this paragraph, a revenue
mile is the transportation by pipeline of 1 barrel of oil,
1,000 cubic feet of gas, or of any specified quantity of
any other substance, the distance of 1 mile for a
consideration.
(3) For taxable years ending on or after December 31,
2008, business income derived from providing
transportation services other than airline services shall
be apportioned to this State by using a fraction, (a) the
numerator of which shall be (i) all receipts from any
movement or shipment of people, goods, mail, oil, gas, or
any other substance (other than by airline) that both
originates and terminates in this State, plus (ii) that
portion of the person's gross receipts from movements or
shipments of people, goods, mail, oil, gas, or any other
substance (other than by airline) that originates in one
state or jurisdiction and terminates in another state or
jurisdiction, that is determined by the ratio that the

HB3157 Enrolled - 47 - LRB098 10600 HLH 40863 b
miles traveled in this State bears to total miles
everywhere and (b) the denominator of which shall be all
revenue derived from the movement or shipment of people,
goods, mail, oil, gas, or any other substance (other than
by airline). Where a taxpayer is engaged in the
transportation of both passengers and freight, the
fraction above referred to shall first be determined
separately for passenger miles and freight miles. Then an
average of the passenger miles fraction and the freight
miles fraction shall be weighted to reflect the taxpayer's:
(A) relative railway operating income from total
passenger and total freight service, as reported to the
Surface Transportation Board, in the case of
transportation by railroad; and
(B) relative gross receipts from passenger and
freight transportation, in case of transportation
other than by railroad.
(4) For taxable years ending on or after December 31,
2008, business income derived from furnishing airline
transportation services shall be apportioned to this State
by multiplying such income by a fraction, the numerator of
which is the revenue miles of the person in this State, and
the denominator of which is the revenue miles of the person
everywhere. For purposes of this paragraph, a revenue mile
is the transportation of one passenger or one net ton of
freight the distance of one mile for a consideration. If a

HB3157 Enrolled - 48 - LRB098 10600 HLH 40863 b
person is engaged in the transportation of both passengers
and freight, the fraction above referred to shall be
determined by means of an average of the passenger revenue
mile fraction and the freight revenue mile fraction,
weighted to reflect the person's relative gross receipts
from passenger and freight airline transportation.
(e) Combined apportionment. Where 2 or more persons are
engaged in a unitary business as described in subsection
(a)(27) of Section 1501, a part of which is conducted in this
State by one or more members of the group, the business income
attributable to this State by any such member or members shall
be apportioned by means of the combined apportionment method.
(f) Alternative allocation. If the allocation and
apportionment provisions of subsections (a) through (e) and of
subsection (h) do not, for taxable years ending before December
31, 2008, fairly represent the extent of a person's business
activity in this State, or, for taxable years ending on or
after December 31, 2008, fairly represent the market for the
person's goods, services, or other sources of business income,
the person may petition for, or the Director may, without a
petition, permit or require, in respect of all or any part of
the person's business activity, if reasonable:
(1) Separate accounting;
(2) The exclusion of any one or more factors;
(3) The inclusion of one or more additional factors
which will fairly represent the person's business

HB3157 Enrolled - 49 - LRB098 10600 HLH 40863 b
activities or market in this State; or
(4) The employment of any other method to effectuate an
equitable allocation and apportionment of the person's
business income.
(g) Cross reference. For allocation of business income by
residents, see Section 301(a).
(h) For tax years ending on or after December 31, 1998, the
apportionment factor of persons who apportion their business
income to this State under subsection (a) shall be equal to:
(1) for tax years ending on or after December 31, 1998
and before December 31, 1999, 16 2/3% of the property
factor plus 16 2/3% of the payroll factor plus 66 2/3% of
the sales factor;
(2) for tax years ending on or after December 31, 1999
and before December 31, 2000, 8 1/3% of the property factor
plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
factor;
(3) for tax years ending on or after December 31, 2000,
the sales factor.
If, in any tax year ending on or after December 31, 1998 and
before December 31, 2000, the denominator of the payroll,
property, or sales factor is zero, the apportionment factor
computed in paragraph (1) or (2) of this subsection for that
year shall be divided by an amount equal to 100% minus the
percentage weight given to each factor whose denominator is
equal to zero.

HB3157 Enrolled - 50 - LRB098 10600 HLH 40863 b
(Source: P.A. 96-763, eff. 8-25-09; 97-507, eff. 8-23-11;
97-636, eff. 6-1-12.)
(35 ILCS 5/502) (from Ch. 120, par. 5-502)
Sec. 502. Returns and notices.
(a) In general. A return with respect to the taxes imposed
by this Act shall be made by every person for any taxable year:
(1) for which such person is liable for a tax imposed
by this Act, or
(2) in the case of a resident or in the case of a
corporation which is qualified to do business in this
State, for which such person is required to make a federal
income tax return, regardless of whether such person is
liable for a tax imposed by this Act. However, this
paragraph shall not require a resident to make a return if
such person has an Illinois base income of the basic amount
in Section 204(b) or less and is either claimed as a
dependent on another person's tax return under the Internal
Revenue Code, or is claimed as a dependent on another
person's tax return under this Act.
Notwithstanding the provisions of paragraph (1), a
nonresident (other than, for taxable years ending on or after
December 31, 2011, a nonresident required to withhold tax under
Section 709.5) whose Illinois income tax liability under
subsections (a), (b), (c), and (d) of Section 201 of this Act
is paid in full after taking into account the credits allowed

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under subsection (f) of this Section or allowed under Section
709.5 of this Act shall not be required to file a return under
this subsection (a).
(b) Fiduciaries and receivers.
(1) Decedents. If an individual is deceased, any return
or notice required of such individual under this Act shall
be made by his executor, administrator, or other person
charged with the property of such decedent.
(2) Individuals under a disability. If an individual is
unable to make a return or notice required under this Act,
the return or notice required of such individual shall be
made by his duly authorized agent, guardian, fiduciary or
other person charged with the care of the person or
property of such individual.
(3) Estates and trusts. Returns or notices required of
an estate or a trust shall be made by the fiduciary
thereof.
(4) Receivers, trustees and assignees for
corporations. In a case where a receiver, trustee in
bankruptcy, or assignee, by order of a court of competent
jurisdiction, by operation of law, or otherwise, has
possession of or holds title to all or substantially all
the property or business of a corporation, whether or not
such property or business is being operated, such receiver,
trustee, or assignee shall make the returns and notices
required of such corporation in the same manner and form as

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corporations are required to make such returns and notices.
(c) Joint returns by husband and wife.
(1) Except as provided in paragraph (3):
(A) if a husband and wife file a joint federal
income tax return for a taxable year ending before
December 31, 2009, they shall file a joint return under
this Act for such taxable year and their liabilities
shall be joint and several;
(B) if a husband and wife file a joint federal
income tax return for a taxable year ending on or after
December 31, 2009, they may elect to file separate
returns under this Act for such taxable year. The
election under this paragraph must be made on or before
the due date (including extensions) of the return and,
once made, shall be irrevocable. If no election is
timely made under this paragraph for a taxable year:
(i) the couple must file a joint return under
this Act for such taxable year,
(ii) their liabilities shall be joint and
several, and
(iii) any overpayment for that taxable year
may be withheld under Section 909 of this Act or
under Section 2505-275 of the Civil Administrative
Code of Illinois and applied against a debt of
either spouse without regard to the amount of the
overpayment attributable to the other spouse; and

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(C) if the federal income tax liability of either
spouse is determined on a separate federal income tax
return, they shall file separate returns under this
Act.
(2) If neither spouse is required to file a federal
income tax return and either or both are required to file a
return under this Act, they may elect to file separate or
joint returns and pursuant to such election their
liabilities shall be separate or joint and several.
(3) If either husband or wife is a resident and the
other is a nonresident, they shall file separate returns in
this State on such forms as may be required by the
Department in which event their tax liabilities shall be
separate; but if they file a joint federal income tax
return for a taxable year, they may elect to determine
their joint net income and file a joint return for that
taxable year under the provisions of paragraph (1) of this
subsection as if both were residents and in such case,
their liabilities shall be joint and several.
(4) Innocent spouses.
(A) However, for tax liabilities arising and paid
prior to August 13, 1999, an innocent spouse shall be
relieved of liability for tax (including interest and
penalties) for any taxable year for which a joint
return has been made, upon submission of proof that the
Internal Revenue Service has made a determination

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under Section 6013(e) of the Internal Revenue Code, for
the same taxable year, which determination relieved
the spouse from liability for federal income taxes. If
there is no federal income tax liability at issue for
the same taxable year, the Department shall rely on the
provisions of Section 6013(e) to determine whether the
person requesting innocent spouse abatement of tax,
penalty, and interest is entitled to that relief.
(B) For tax liabilities arising on and after August
13, 1999 or which arose prior to that date, but remain
unpaid as of that date, if an individual who filed a
joint return for any taxable year has made an election
under this paragraph, the individual's liability for
any tax shown on the joint return shall not exceed the
individual's separate return amount and the
individual's liability for any deficiency assessed for
that taxable year shall not exceed the portion of the
deficiency properly allocable to the individual. For
purposes of this paragraph:
(i) An election properly made pursuant to
Section 6015 of the Internal Revenue Code shall
constitute an election under this paragraph,
provided that the election shall not be effective
until the individual has notified the Department
of the election in the form and manner prescribed
by the Department.

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(ii) If no election has been made under Section
6015, the individual may make an election under
this paragraph in the form and manner prescribed by
the Department, provided that no election may be
made if the Department finds that assets were
transferred between individuals filing a joint
return as part of a scheme by such individuals to
avoid payment of Illinois income tax and the
election shall not eliminate the individual's
liability for any portion of a deficiency
attributable to an error on the return of which the
individual had actual knowledge as of the date of
filing.
(iii) In determining the separate return
amount or portion of any deficiency attributable
to an individual, the Department shall follow the
provisions in subsections (c) and (d) of Section
6015 of the Internal Revenue Code.
(iv) In determining the validity of an
individual's election under subparagraph (ii) and
in determining an electing individual's separate
return amount or portion of any deficiency under
subparagraph (iii), any determination made by the
Secretary of the Treasury, by the United States Tax
Court on petition for review of a determination by
the Secretary of the Treasury, or on appeal from

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the United States Tax Court under Section 6015 of
the Internal Revenue Code regarding criteria for
eligibility or under subsection (d) of Section
6015 of the Internal Revenue Code regarding the
allocation of any item of income, deduction,
payment, or credit between an individual making
the federal election and that individual's spouse
shall be conclusively presumed to be correct. With
respect to any item that is not the subject of a
determination by the Secretary of the Treasury or
the federal courts, in any proceeding involving
this subsection, the individual making the
election shall have the burden of proof with
respect to any item except that the Department
shall have the burden of proof with respect to
items in subdivision (ii).
(v) Any election made by an individual under
this subsection shall apply to all years for which
that individual and the spouse named in the
election have filed a joint return.
(vi) After receiving a notice that the federal
election has been made or after receiving an
election under subdivision (ii), the Department
shall take no collection action against the
electing individual for any liability arising from
a joint return covered by the election until the

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Department has notified the electing individual in
writing that the election is invalid or of the
portion of the liability the Department has
allocated to the electing individual. Within 60
days (150 days if the individual is outside the
United States) after the issuance of such
notification, the individual may file a written
protest of the denial of the election or of the
Department's determination of the liability
allocated to him or her and shall be granted a
hearing within the Department under the provisions
of Section 908. If a protest is filed, the
Department shall take no collection action against
the electing individual until the decision
regarding the protest has become final under
subsection (d) of Section 908 or, if
administrative review of the Department's decision
is requested under Section 1201, until the
decision of the court becomes final.
(d) Partnerships. Every partnership having any base income
allocable to this State in accordance with section 305(c) shall
retain information concerning all items of income, gain, loss
and deduction; the names and addresses of all of the partners,
or names and addresses of members of a limited liability
company, or other persons who would be entitled to share in the
base income of the partnership if distributed; the amount of

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the distributive share of each; and such other pertinent
information as the Department may by forms or regulations
prescribe. The partnership shall make that information
available to the Department when requested by the Department.
(e) For taxable years ending on or after December 31, 1985,
and before December 31, 1993, taxpayers that are corporations
(other than Subchapter S corporations) having the same taxable
year and that are members of the same unitary business group
may elect to be treated as one taxpayer for purposes of any
original return, amended return which includes the same
taxpayers of the unitary group which joined in the election to
file the original return, extension, claim for refund,
assessment, collection and payment and determination of the
group's tax liability under this Act. This subsection (e) does
not permit the election to be made for some, but not all, of
the purposes enumerated above. For taxable years ending on or
after December 31, 1987, corporate members (other than
Subchapter S corporations) of the same unitary business group
making this subsection (e) election are not required to have
the same taxable year.
For taxable years ending on or after December 31, 1993,
taxpayers that are corporations (other than Subchapter S
corporations) and that are members of the same unitary business
group shall be treated as one taxpayer for purposes of any
original return, amended return which includes the same
taxpayers of the unitary group which joined in filing the

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original return, extension, claim for refund, assessment,
collection and payment and determination of the group's tax
liability under this Act.
(f) For taxable years ending prior to December 31, 2014,
the The Department may promulgate regulations to permit
nonresident individual partners of the same partnership,
nonresident Subchapter S corporation shareholders of the same
Subchapter S corporation, and nonresident individuals
transacting an insurance business in Illinois under a Lloyds
plan of operation, and nonresident individual members of the
same limited liability company that is treated as a partnership
under Section 1501 (a)(16) of this Act, to file composite
individual income tax returns reflecting the composite income
of such individuals allocable to Illinois and to make composite
individual income tax payments. For taxable years ending prior
to December 31, 2014, the The Department may by regulation also
permit such composite returns to include the income tax owed by
Illinois residents attributable to their income from
partnerships, Subchapter S corporations, insurance businesses
organized under a Lloyds plan of operation, or limited
liability companies that are treated as partnership under
Section 1501(a)(16) of this Act, in which case such Illinois
residents will be permitted to claim credits on their
individual returns for their shares of the composite tax
payments. This paragraph of subsection (f) applies to taxable
years ending on or after December 31, 1987 and ending prior to

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December 31, 2014.
For taxable years ending on or after December 31, 1999, the
Department may, by regulation, also permit any persons
transacting an insurance business organized under a Lloyds plan
of operation to file composite returns reflecting the income of
such persons allocable to Illinois and the tax rates applicable
to such persons under Section 201 and to make composite tax
payments and shall, by regulation, also provide that the income
and apportionment factors attributable to the transaction of an
insurance business organized under a Lloyds plan of operation
by any person joining in the filing of a composite return
shall, for purposes of allocating and apportioning income under
Article 3 of this Act and computing net income under Section
202 of this Act, be excluded from any other income and
apportionment factors of that person or of any unitary business
group, as defined in subdivision (a)(27) of Section 1501, to
which that person may belong.
For taxable years ending on or after December 31, 2008,
every nonresident shall be allowed a credit against his or her
liability under subsections (a) and (b) of Section 201 for any
amount of tax reported on a composite return and paid on his or
her behalf under this subsection (f). Residents (other than
persons transacting an insurance business organized under a
Lloyds plan of operation) may claim a credit for taxes reported
on a composite return and paid on their behalf under this
subsection (f) only as permitted by the Department by rule.

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(f-5) For taxable years ending on or after December 31,
2008, the Department may adopt rules to provide that, when a
partnership or Subchapter S corporation has made an error in
determining the amount of any item of income, deduction,
addition, subtraction, or credit required to be reported on its
return that affects the liability imposed under this Act on a
partner or shareholder, the partnership or Subchapter S
corporation may report the changes in liabilities of its
partners or shareholders and claim a refund of the resulting
overpayments, or pay the resulting underpayments, on behalf of
its partners and shareholders.
(g) The Department may adopt rules to authorize the
electronic filing of any return required to be filed under this
Section.
(Source: P.A. 96-520, eff. 8-14-09; 97-507, eff. 8-23-11.)
(35 ILCS 5/709.5)
Sec. 709.5. Withholding by partnerships, Subchapter S
corporations, and trusts.
(a) In general. For each taxable year ending on or after
December 31, 2008, every partnership (other than a publicly
traded partnership under Section 7704 of the Internal Revenue
Code or investment partnership), Subchapter S corporation, and
trust must withhold from each nonresident partner,
shareholder, or beneficiary (other than a partner,
shareholder, or beneficiary who is exempt from tax under

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Section 501(a) of the Internal Revenue Code or under Section
205 of this Act, who is included on a composite return filed by
the partnership or Subchapter S corporation for the taxable
year under subsection (f) of Section 502 of this Act), or who
is a retired partner, to the extent that partner's
distributions are exempt from tax under Section 203(a)(2)(F) of
this Act) an amount equal to the sum distributable share of (i)
the share of business income of the partnership, Subchapter S
corporation, or trust apportionable to Illinois plus (ii) for
taxable years ending on or after December 31, 2014, the share
of nonbusiness income of the partnership, Subchapter S
corporation, or trust allocated to Illinois under Section 303
of this Act (other than an amount allocated to the commercial
domicile of the taxpayer under Section 303 of this Act) that is
distributable to of that partner, shareholder, or beneficiary
under Sections 702 and 704 and Subchapter S of the Internal
Revenue Code, whether or not distributed, (iii) multiplied by
the applicable rates of tax for that partner, or shareholder,
or beneficiary under subsections (a) through (d) of Section 201
of this Act, and (iv) net of the share of any credit under
Article 2 of this Act that is distributable by the partnership,
Subchapter S corporation, or trust and allowable against the
tax liability of that partner, shareholder, or beneficiary for
a taxable year ending on or after December 31, 2014.
(b) Credit for taxes withheld. Any amount withheld under
subsection (a) of this Section and paid to the Department shall

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be treated as a payment of the estimated tax liability or of
the liability for withholding under this Section of the
partner, shareholder, or beneficiary to whom the income is
distributable for the taxable year in which that person
incurred a liability under this Act with respect to that
income. The Department shall adopt rules pursuant to which a
partner, shareholder, or beneficiary may claim a credit against
its obligation for withholding under this Section for amounts
withheld under this Section with respect to income
distributable to it by a partnership, Subchapter S corporation,
or trust and allowing its partners, shareholders, or
beneficiaries to claim a credit under this subsection (b) for
those withheld amounts.
(c) Exemption from withholding.
(1) A partnership, Subchapter S corporation, or trust
shall not be required to withhold tax under subsection (a)
of this Section with respect to any nonresident partner,
shareholder, or beneficiary (other than an individual)
from whom the partnership, S corporation, or trust has
received a certificate, completed in the form and manner
prescribed by the Department, stating that such
nonresident partner, shareholder, or beneficiary shall:
(A) file all returns that the partner,
shareholder, or beneficiary is required to file under
Section 502 of this Act and make timely payment of all
taxes imposed under Section 201 of this Act or under

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this Section on the partner, shareholder, or
beneficiary with respect to income of the partnership,
S corporation, or trust; and
(B) be subject to personal jurisdiction in this
State for purposes of the collection of income taxes,
together with related interest and penalties, imposed
on the partner, shareholder, or beneficiary with
respect to the income of the partnership, S
corporation, or trust.
(2) The Department may revoke the exemption provided by
this subsection (c) at any time that it determines that the
nonresident partner, shareholder, or beneficiary is not
abiding by the terms of the certificate. The Department
shall notify the partnership, S corporation, or trust that
it has revoked a certificate by notice left at the usual
place of business of the partnership, S corporation, or
trust or by mail to the last known address of the
partnership, S corporation, or trust.
(3) A partnership, S corporation, or trust that
receives a certificate under this subsection (c) properly
completed by a nonresident partner, shareholder, or
beneficiary shall not be required to withhold any amount
from that partner, shareholder, or beneficiary, the
payment of which would be due under Section 711(a-5) of
this Act after the receipt of the certificate and no
earlier than 60 days after the Department has notified the

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partnership, S corporation, or trust that the certificate
has been revoked.
(4) Certificates received by a the partnership, S
corporation, or trust under this subsection (c) must be
retained by the partnership, S corporation, or trust and a
record of such certificates must be provided to the
Department, in a format in which the record is available
for review by the Department, upon request by the
Department. The Department may, by rule, require the record
of certificates to be maintained and provided to the
Department electronically.
(Source: P.A. 97-507, eff. 8-23-11.)