Bill Text: IL HB3876 | 2009-2010 | 96th General Assembly | Introduced

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Bill Title: Amends the Department of Revenue Law of the Civil Administrative Code of Illinois to provide that, if the Department determines that an overpayment has occurred on an original return filed under specified tax Acts, it shall issue a credit memorandum to the taxpayer without the necessity of the taxpayer filing a claim for credit. Amends Illinois State Collection Act of 1986 to remove provisions concerning the Debt Collection Board and makes conforming changes in the Illinois Procurement Code. Amends the Illinois Income Tax Act to (i) include a tax credit to a taxpayer who was required to add back insurance premiums in the amount equal to the amount of any reimbursement received from the insurance company for any loss covered by a policy for which those premiums were paid, to the extent of the federal income tax deduction that would have been allowable for the loss in computing adjusted gross income if not for the reimbursement, (ii) make changes concerning net losses, and (iii) make various administrative and technical changes. Amends the Motor Fuel Tax Law. Removes a requirement that retailers of motor fuel must report losses due to theft. Contains provisions concerning licensing of vehicles during disasters. Amends various Acts governing units of local governments to exempt the sale of modifications to a motor vehicle for the purpose of rendering it usable by a disabled person from certain taxes imposed by the units of local government. Makes other changes. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2009-03-13 - Rule 19(a) / Re-referred to Rules Committee [HB3876 Detail]

Download: Illinois-2009-HB3876-Introduced.html

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96TH GENERAL ASSEMBLY State of Illinois 2009 and 2010 HB3876 Introduced 2/26/2009, by Rep. Linda Chapa LaVia SYNOPSIS AS INTRODUCED:
See Index
Amends the Department of Revenue Law of the Civil Administrative Code of Illinois to provide that, if the Department determines that an overpayment has occurred on an original return filed under specified tax Acts, it shall issue a credit memorandum to the taxpayer without the necessity of the taxpayer filing a claim for credit. Amends Illinois State Collection Act of 1986 to remove provisions concerning the Debt Collection Board and makes conforming changes in the Illinois Procurement Code. Amends the Illinois Income Tax Act to (i) include a tax credit to a taxpayer who was required to add back insurance premiums in the amount equal to the amount of any reimbursement received from the insurance company for any loss covered by a policy for which those premiums were paid, to the extent of the federal income tax deduction that would have been allowable for the loss in computing adjusted gross income if not for the reimbursement, (ii) make changes concerning net losses, and (iii) make various administrative and technical changes. Amends the Motor Fuel Tax Law. Removes a requirement that retailers of motor fuel must report losses due to theft. Contains provisions concerning licensing of vehicles during disasters. Amends various Acts governing units of local governments to exempt the sale of modifications to a motor vehicle for the purpose of rendering it usable by a disabled person from certain taxes imposed by the units of local government. Makes other changes. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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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 Department of Revenue Law of the Civil
Administrative Code of Illinois is amended by adding Section
2505-800 as follows:
(20 ILCS 2505/2505-800 new)
Sec. 2505-800. Credit memorandum. Notwithstanding the
provisions of any other Act to the contrary, if the Department,
after review of its records and without the submission by a
taxpayer of any additional documentation, returns, or
schedules, determines that an overpayment has occurred on an
original return filed under the Electricity Excise Tax Law, the
Telecommunications Excise Tax Act, the Simplified Municipal
Telecommunications Tax Act, the Telecommunications
Infrastructure Maintenance Fee Act, the Gas Revenue Tax Act,
the Gas Use Tax Law, the Hotel Operators' Occupation Tax Act,
the Cigarette Tax Act, the Cigarette Use Tax Act, the Tobacco
Products Tax Act of 1995, the Bingo License and Tax Act, the
Charitable Games Act, the Illinois Pull Tabs and Jar Games Act,
and the Liquor Control Act of 1934, it shall issue a credit
memorandum to the taxpayer without the necessity of the
taxpayer filing a claim for credit. The time period during

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which the Department may issue a credit memorandum under this
Section shall be limited to the period of 3 years from the date
of the overpayment by the taxpayer. Issuance of a credit
memorandum under this Section is subject to the offset
provisions of Section 2505-275 of this Act.
Section 7. The State Finance Act is amended by changing
Section 13.3 as follows:
(30 ILCS 105/13.3) (from Ch. 127, par. 149.3)
Sec. 13.3. Petty cash funds; purchasing cards.
(a) Any State agency may establish and maintain petty cash
funds for the purpose of making change, purchasing items of
small cost, payment of postage due, and for other nominal
expenditures which cannot be administered economically and
efficiently through customary procurement practices.
Petty cash funds may be established and maintained from
moneys which are appropriated to the agency for Contractual
Services. In the case of an agency which receives a single
appropriation for its ordinary and contingent expenses, the
agency may establish a petty cash fund from the appropriated
funds.
Before the establishment of any petty cash fund, the agency
shall submit to the State Comptroller a survey of the need for
the fund. The survey shall also establish that sufficient
internal accounting controls exist. The Comptroller shall

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investigate such need and if he determines that it exists and
that adequate accounting controls exist, shall approve the
establishment of the fund. The Comptroller shall have the power
to revoke any approval previously made under this Section.
Petty cash funds established under this Section shall be
operated and maintained on the imprest system and no fund shall
exceed $1,000, except that the Department of Revenue may
maintain a fund not exceeding $2,000 for each Department of
Revenue facility and the Secretary of State may maintain a fund
of not exceeding $2,000 for each Chicago Motor Vehicle
Facility, each Springfield Public Service Facility, and the
Motor Vehicle Facilities in Champaign, Decatur, Marion,
Naperville, Peoria, Rockford, Granite City, Quincy, and
Carbondale, to be used solely for the purpose of making change.
Except for purchases made by procurement card as provided in
subsection (b) of this Section, single transactions shall be
limited to amounts less than $50, and all transactions
occurring in the fund shall be reported and accounted for as
may be provided in the uniform accounting system developed by
the State Comptroller and the rules and regulations
implementing that accounting system. All amounts in any such
fund of less than $1,000 but over $100 shall be kept in a
checking account in a bank, or savings and loan association or
trust company which is insured by the United States government
or any agency of the United States government, except that in
funds maintained in each Department of Revenue Facility,

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Chicago Motor Vehicle Facilities, each Springfield Public
Service Facility, and the Motor Vehicle Facilities in
Champaign, Decatur, Marion, Naperville, Peoria, Rockford,
Granite City, Quincy, and Carbondale, all amounts in the fund
may be retained on the premises of such facilities.
No bank or savings and loan association shall receive
public funds as permitted by this Section, unless it has
complied with the requirements established pursuant to Section
6 of "An Act relating to certain investments of public funds by
public agencies", approved July 23, 1943, as now or hereafter
amended.
An internal audit shall be performed of any petty cash fund
which receives reimbursements of more than $5,000 in a fiscal
year.
Upon succession in the custodianship of any petty cash
fund, both the former and successor custodians shall sign a
statement, in triplicate, showing the exact status of the fund
at the time of the transfer. The original copy shall be kept on
file in the office wherein the fund exists, and each signer
shall be entitled to retain one copy.
(b) The Comptroller may provide by rule for the use of
purchasing cards by State agencies to pay for purchases that
otherwise may be paid out of the agency's petty cash fund. Any
rule adopted hereunder shall impose a single transaction limit,
which shall not be greater than $500.
The rules of the Comptroller may include but shall not be

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limited to:
(1) standards for the issuance of purchasing cards to
State agencies based upon the best interests of the State;
(2) procedures for recording purchasing card
transactions within the State accounting system, which may
provide for summary reporting;
(3) procedures for auditing purchasing card
transactions on a post-payment basis;
(4) standards for awarding contracts with a purchasing
card vendor to acquire purchasing cards for use by State
agencies; and
(5) procedures for the Comptroller to charge against
State agency appropriations for payment of purchasing card
expenditures without the use of the voucher and warrant
system.
(c) As used in this Section, "State agency" means any
department, officer, authority, public corporation,
quasi-public corporation, commission, board, institution,
State college or university, or other public agency created by
the State, other than units of local government and school
districts.
(Source: P.A. 90-33, eff. 6-27-97; 91-704, eff. 7-1-00.)
(30 ILCS 210/8 rep.)
Section 10. The Illinois State Collection Act of 1986 is
amended by repealing Section 8.

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Section 15. The Illinois Procurement Code is amended by
changing Sections 50-11 and 50-60 as follows:
(30 ILCS 500/50-11)
Sec. 50-11. Debt delinquency.
(a) No person shall submit a bid for or enter into a
contract with a State agency under this Code if that person
knows or should know that he or she or any affiliate is
delinquent in the payment of any debt to the State, unless the
person or affiliate has entered into a deferred payment plan to
pay off the debt. For purposes of this Section, the phrase
"delinquent in the payment of any debt" shall be determined by
the Debt Collection Board or, after the effective date of this
amendatory Act of the 96th General Assembly, the Department of
Revenue. For purposes of this Section, the term "affiliate"
means any entity that (1) directly, indirectly, or
constructively controls another entity, (2) is directly,
indirectly, or constructively controlled by another entity, or
(3) is subject to the control of a common entity. For purposes
of this subsection (a), a person controls an entity if the
person owns, directly or individually, more than 10% of the
voting securities of that entity. As used in this subsection
(a), the term "voting security" means a security that (1)
confers upon the holder the right to vote for the election of
members of the board of directors or similar governing body of

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the business or (2) is convertible into, or entitles the holder
to receive upon its exercise, a security that confers such a
right to vote. A general partnership interest is a voting
security.
(b) Every bid submitted to and contract executed by the
State shall contain a certification by the bidder or contractor
that the contractor and its affiliate is not barred from being
awarded a contract under this Section and that the contractor
acknowledges that the contracting State agency may declare the
contract void if the certification completed pursuant to this
subsection (b) is false.
(Source: P.A. 92-404, eff. 7-1-02; 93-25, eff. 6-20-03.)
(30 ILCS 500/50-60)
Sec. 50-60. Voidable contracts.
(a) If any contract is entered into or purchase or
expenditure of funds is made in violation of this Code or any
other law, the contract may be declared void by the chief
procurement officer or may be ratified and affirmed, provided
the chief procurement officer determines that ratification is
in the best interests of the State. If the contract is ratified
and affirmed, it shall be without prejudice to the State's
rights to any appropriate damages.
(b) If, during the term of a contract, the contracting
agency determines that the contractor is delinquent in the
payment of debt as set forth in Section 50-11 of this Code, the

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State agency may declare the contract void if it determines
that voiding the contract is in the best interests of the
State. The Debt Collection Board or, after the effective date
of this amendatory Act of the 96th General Assembly, the
Department of Revenue shall adopt rules for the implementation
of this subsection (b).
(c) If, during the term of a contract, the contracting
agency determines that the contractor is in violation of
Section 50-10.5 of this Code, the contracting agency shall
declare the contract void.
(Source: P.A. 92-404, eff. 7-1-02; 93-600, eff. 1-1-04.)
Section 20. The Illinois Income Tax Act is amended by
changing Sections 201, 203, 204, 205, 207, 214, 304, 502, 506,
601, 701, 702, 703, 704A, 804, 909, 911, 1002, 1101, and 1405.4
as follows:
(35 ILCS 5/201) (from Ch. 120, par. 2-201)
Sec. 201. Tax Imposed.
(a) In general. A tax measured by net income is hereby
imposed on every individual, corporation, trust and estate for
each taxable year ending after July 31, 1969 on the privilege
of earning or receiving income in or as a resident of this
State. Such tax shall be in addition to all other occupation or
privilege taxes imposed by this State or by any municipal
corporation or political subdivision thereof.

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(b) Rates. The tax imposed by subsection (a) of this
Section shall be determined as follows, except as adjusted by
subsection (d-1):
(1) In the case of an individual, trust or estate, for
taxable years ending prior to July 1, 1989, an amount equal
to 2 1/2% of the taxpayer's net income for the taxable
year.
(2) In the case of an individual, trust or estate, for
taxable years beginning prior to July 1, 1989 and ending
after June 30, 1989, an amount equal to the sum of (i) 2
1/2% of the taxpayer's net income for the period prior to
July 1, 1989, as calculated under Section 202.3, and (ii)
3% of the taxpayer's net income for the period after June
30, 1989, as calculated under Section 202.3.
(3) In the case of an individual, trust or estate, for
taxable years beginning after June 30, 1989, an amount
equal to 3% of the taxpayer's net income for the taxable
year.
(4) (Blank).
(5) (Blank).
(6) In the case of a corporation, for taxable years
ending prior to July 1, 1989, an amount equal to 4% of the
taxpayer's net income for the taxable year.
(7) In the case of a corporation, for taxable years
beginning prior to July 1, 1989 and ending after June 30,
1989, an amount equal to the sum of (i) 4% of the

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taxpayer's net income for the period prior to July 1, 1989,
as calculated under Section 202.3, and (ii) 4.8% of the
taxpayer's net income for the period after June 30, 1989,
as calculated under Section 202.3.
(8) In the case of a corporation, for taxable years
beginning after June 30, 1989, an amount equal to 4.8% of
the taxpayer's net income for the taxable year.
(c) Personal Property Tax Replacement Income Tax.
Beginning on July 1, 1979 and thereafter, in addition to such
income tax, there is also hereby imposed the Personal Property
Tax Replacement Income Tax measured by net income on every
corporation (including Subchapter S corporations), partnership
and trust, for each taxable year ending after June 30, 1979.
Such taxes are imposed on the privilege of earning or receiving
income in or as a resident of this State. The Personal Property
Tax Replacement Income Tax shall be in addition to the income
tax imposed by subsections (a) and (b) of this Section and in
addition to all other occupation or privilege taxes imposed by
this State or by any municipal corporation or political
subdivision thereof.
(d) Additional Personal Property Tax Replacement Income
Tax Rates. The personal property tax replacement income tax
imposed by this subsection and subsection (c) of this Section
in the case of a corporation, other than a Subchapter S
corporation and except as adjusted by subsection (d-1), shall
be an additional amount equal to 2.85% of such taxpayer's net

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income for the taxable year, except that beginning on January
1, 1981, and thereafter, the rate of 2.85% specified in this
subsection shall be reduced to 2.5%, and in the case of a
partnership, trust or a Subchapter S corporation shall be an
additional amount equal to 1.5% of such taxpayer's net income
for the taxable year.
(d-1) Rate reduction for certain foreign insurers. In the
case of a foreign insurer, as defined by Section 35A-5 of the
Illinois Insurance Code, whose state or country of domicile
imposes on insurers domiciled in Illinois a retaliatory tax
(excluding any insurer whose premiums from reinsurance assumed
are 50% or more of its total insurance premiums as determined
under paragraph (2) of subsection (b) of Section 304, except
that for purposes of this determination premiums from
reinsurance do not include premiums from inter-affiliate
reinsurance arrangements), beginning with taxable years ending
on or after December 31, 1999, the sum of the rates of tax
imposed by subsections (b) and (d) shall be reduced (but not
increased) to the rate at which the total amount of tax imposed
under this Act, net of all credits allowed under this Act,
shall equal (i) the total amount of tax that would be imposed
on the foreign insurer's net income allocable to Illinois for
the taxable year by such foreign insurer's state or country of
domicile if that net income were subject to all income taxes
and taxes measured by net income imposed by such foreign
insurer's state or country of domicile, net of all credits

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allowed or (ii) a rate of zero if no such tax is imposed on such
income by the foreign insurer's state of domicile. For the
purposes of this subsection (d-1), an inter-affiliate includes
a mutual insurer under common management.
(1) For the purposes of subsection (d-1), in no event
shall the sum of the rates of tax imposed by subsections
(b) and (d) be reduced below the rate at which the sum of:
(A) the total amount of tax imposed on such foreign
insurer under this Act for a taxable year, net of all
credits allowed under this Act, plus
(B) the privilege tax imposed by Section 409 of the
Illinois Insurance Code, the fire insurance company
tax imposed by Section 12 of the Fire Investigation
Act, and the fire department taxes imposed under
Section 11-10-1 of the Illinois Municipal Code,
equals 1.25% for taxable years ending prior to December 31,
2003, or 1.75% for taxable years ending on or after
December 31, 2003, of the net taxable premiums written for
the taxable year, as described by subsection (1) of Section
409 of the Illinois Insurance Code. This paragraph will in
no event increase the rates imposed under subsections (b)
and (d).
(2) Any reduction in the rates of tax imposed by this
subsection shall be applied first against the rates imposed
by subsection (b) and only after the tax imposed by
subsection (a) net of all credits allowed under this

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Section other than the credit allowed under subsection (i)
has been reduced to zero, against the rates imposed by
subsection (d).
This subsection (d-1) is exempt from the provisions of
Section 250.
(e) Investment credit. A taxpayer shall be allowed a credit
against the Personal Property Tax Replacement Income Tax for
investment in qualified property.
(1) A taxpayer shall be allowed a credit equal to .5%
of the basis of qualified property placed in service during
the taxable year, provided such property is placed in
service on or after July 1, 1984. There shall be allowed an
additional credit equal to .5% of the basis of qualified
property placed in service during the taxable year,
provided such property is placed in service on or after
July 1, 1986, and the taxpayer's base employment within
Illinois has increased by 1% or more over the preceding
year as determined by the taxpayer's employment records
filed with the Illinois Department of Employment Security.
Taxpayers who are new to Illinois shall be deemed to have
met the 1% growth in base employment for the first year in
which they file employment records with the Illinois
Department of Employment Security. The provisions added to
this Section by Public Act 85-1200 (and restored by Public
Act 87-895) shall be construed as declaratory of existing
law and not as a new enactment. If, in any year, the

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increase in base employment within Illinois over the
preceding year is less than 1%, the additional credit shall
be limited to that percentage times a fraction, the
numerator of which is .5% and the denominator of which is
1%, but shall not exceed .5%. The investment credit shall
not be allowed to the extent that it would reduce a
taxpayer's liability in any tax year below zero, nor may
any credit for qualified property be allowed for any year
other than the year in which the property was placed in
service in Illinois. For tax years ending on or after
December 31, 1987, and on or before December 31, 1988, the
credit shall be allowed for the tax year in which the
property is placed in service, or, if the amount of the
credit exceeds the tax liability for that year, whether it
exceeds the original liability or the liability as later
amended, such excess may be carried forward and applied to
the tax liability of the 5 taxable years following the
excess credit years if the taxpayer (i) makes investments
which cause the creation of a minimum of 2,000 full-time
equivalent jobs in Illinois, (ii) is located in an
enterprise zone established pursuant to the Illinois
Enterprise Zone Act and (iii) is certified by the
Department of Commerce and Community Affairs (now
Department of Commerce and Economic Opportunity) as
complying with the requirements specified in clause (i) and
(ii) by July 1, 1986. The Department of Commerce and

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Community Affairs (now Department of Commerce and Economic
Opportunity) shall notify the Department of Revenue of all
such certifications immediately. For tax years ending
after December 31, 1988, the credit shall be allowed for
the tax year in which the property is placed in service,
or, if the amount of the credit exceeds the tax liability
for that year, whether it exceeds the original liability or
the liability as later amended, such excess may be carried
forward and applied to the tax liability of the 5 taxable
years following the excess credit years. The credit shall
be applied to the earliest year for which there is a
liability. If there is credit from more than one tax year
that is available to offset a liability, earlier credit
shall be applied first.
(2) The term "qualified property" means property
which:
(A) is tangible, whether new or used, including
buildings and structural components of buildings and
signs that are real property, but not including land or
improvements to real property that are not a structural
component of a building such as landscaping, sewer
lines, local access roads, fencing, parking lots, and
other appurtenances;
(B) is depreciable pursuant to Section 167 of the
Internal Revenue Code, except that "3-year property"
as defined in Section 168(c)(2)(A) of that Code is not

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eligible for the credit provided by this subsection
(e);
(C) is acquired by purchase as defined in Section
179(d) of the Internal Revenue Code;
(D) is used in Illinois by a taxpayer who is
primarily engaged in manufacturing, or in mining coal
or fluorite, or in retailing, or was placed in service
on or after July 1, 2006 in a River Edge Redevelopment
Zone established pursuant to the River Edge
Redevelopment Zone Act; and
(E) has not previously been used in Illinois in
such a manner and by such a person as would qualify for
the credit provided by this subsection (e) or
subsection (f).
(3) For purposes of this subsection (e),
"manufacturing" means the material staging and production
of tangible personal property by procedures commonly
regarded as manufacturing, processing, fabrication, or
assembling which changes some existing material into new
shapes, new qualities, or new combinations. For purposes of
this subsection (e) the term "mining" shall have the same
meaning as the term "mining" in Section 613(c) of the
Internal Revenue Code. For purposes of this subsection (e),
the term "retailing" means the sale of tangible personal
property or services rendered in conjunction with the sale
of tangible consumer goods or commodities.

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(4) The basis of qualified property shall be the basis
used to compute the depreciation deduction for federal
income tax purposes.
(5) If the basis of the property for federal income tax
depreciation purposes is increased after it has been placed
in service in Illinois by the taxpayer, the amount of such
increase shall be deemed property placed in service on the
date of such increase in basis.
(6) The term "placed in service" shall have the same
meaning as under Section 46 of the Internal Revenue Code.
(7) If during any taxable year, any property ceases to
be qualified property in the hands of the taxpayer within
48 months after being placed in service, or the situs of
any qualified property is moved outside Illinois within 48
months after being placed in service, the Personal Property
Tax Replacement Income Tax for such taxable year shall be
increased. Such increase shall be determined by (i)
recomputing the investment credit which would have been
allowed for the year in which credit for such property was
originally allowed by eliminating such property from such
computation and, (ii) subtracting such recomputed credit
from the amount of credit previously allowed. For the
purposes of this paragraph (7), a reduction of the basis of
qualified property resulting from a redetermination of the
purchase price shall be deemed a disposition of qualified
property to the extent of such reduction.

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(8) Unless the investment credit is extended by law,
the basis of qualified property shall not include costs
incurred after December 31, 2008, except for costs incurred
pursuant to a binding contract entered into on or before
December 31, 2008.
(9) Each taxable year ending before December 31, 2000,
a partnership may elect to pass through to its partners the
credits to which the partnership is entitled under this
subsection (e) for the taxable year. A partner may use the
credit allocated to him or her under this paragraph only
against the tax imposed in subsections (c) and (d) of this
Section. If the partnership makes that election, those
credits shall be allocated among the partners in the
partnership in accordance with the rules set forth in
Section 704(b) of the Internal Revenue Code, and the rules
promulgated under that Section, and the allocated amount of
the credits shall be allowed to the partners for that
taxable year. The partnership shall make this election on
its Personal Property Tax Replacement Income Tax return for
that taxable year. The election to pass through the credits
shall be irrevocable.
For taxable years ending on or after December 31, 2000,
a partner that qualifies its partnership for a subtraction
under subparagraph (I) of paragraph (2) of subsection (d)
of Section 203 or a shareholder that qualifies a Subchapter
S corporation for a subtraction under subparagraph (S) of

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paragraph (2) of subsection (b) of Section 203 shall be
allowed a credit under this subsection (e) equal to its
share of the credit earned under this subsection (e) during
the taxable year by the partnership or Subchapter S
corporation, determined in accordance with the
determination of income and distributive share of income
under Sections 702 and 704 and Subchapter S of the Internal
Revenue Code. This paragraph is exempt from the provisions
of Section 250.
(f) Investment credit; Enterprise Zone; River Edge
Redevelopment Zone.
(1) A taxpayer shall be allowed a credit against the
tax imposed by subsections (a) and (b) of this Section for
investment in qualified property which is placed in service
in an Enterprise Zone created pursuant to the Illinois
Enterprise Zone Act or, for property placed in service on
or after July 1, 2006, a River Edge Redevelopment Zone
established pursuant to the River Edge Redevelopment Zone
Act. For partners, shareholders of Subchapter S
corporations, and owners of limited liability companies,
if the liability company is treated as a partnership for
purposes of federal and State income taxation, there shall
be allowed a credit under this subsection (f) to be
determined in accordance with the determination of income
and distributive share of income under Sections 702 and 704
and Subchapter S of the Internal Revenue Code. The credit

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shall be .5% of the basis for such property. The credit
shall be available only in the taxable year in which the
property is placed in service in the Enterprise Zone or
River Edge Redevelopment Zone and shall not be allowed to
the extent that it would reduce a taxpayer's liability for
the tax imposed by subsections (a) and (b) of this Section
to below zero. For tax years ending on or after December
31, 1985, the credit shall be allowed for the tax year in
which the property is placed in service, or, if the amount
of the credit exceeds the tax liability for that year,
whether it exceeds the original liability or the liability
as later amended, such excess may be carried forward and
applied to the tax liability of the 5 taxable years
following the excess credit year. The credit shall be
applied to the earliest year for which there is a
liability. If there is credit from more than one tax year
that is available to offset a liability, the credit
accruing first in time shall be applied first.
(2) The term qualified property means property which:
(A) is tangible, whether new or used, including
buildings and structural components of buildings;
(B) is depreciable pursuant to Section 167 of the
Internal Revenue Code, except that "3-year property"
as defined in Section 168(c)(2)(A) of that Code is not
eligible for the credit provided by this subsection
(f);

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(C) is acquired by purchase as defined in Section
179(d) of the Internal Revenue Code;
(D) is used in the Enterprise Zone or River Edge
Redevelopment Zone by the taxpayer; and
(E) has not been previously used in Illinois in
such a manner and by such a person as would qualify for
the credit provided by this subsection (f) or
subsection (e).
(3) The basis of qualified property shall be the basis
used to compute the depreciation deduction for federal
income tax purposes.
(4) If the basis of the property for federal income tax
depreciation purposes is increased after it has been placed
in service in the Enterprise Zone or River Edge
Redevelopment Zone by the taxpayer, the amount of such
increase shall be deemed property placed in service on the
date of such increase in basis.
(5) The term "placed in service" shall have the same
meaning as under Section 46 of the Internal Revenue Code.
(6) If during any taxable year, any property ceases to
be qualified property in the hands of the taxpayer within
48 months after being placed in service, or the situs of
any qualified property is moved outside the Enterprise Zone
or River Edge Redevelopment Zone within 48 months after
being placed in service, the tax imposed under subsections
(a) and (b) of this Section for such taxable year shall be

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increased. Such increase shall be determined by (i)
recomputing the investment credit which would have been
allowed for the year in which credit for such property was
originally allowed by eliminating such property from such
computation, and (ii) subtracting such recomputed credit
from the amount of credit previously allowed. For the
purposes of this paragraph (6), a reduction of the basis of
qualified property resulting from a redetermination of the
purchase price shall be deemed a disposition of qualified
property to the extent of such reduction.
(7) There shall be allowed an additional credit equal
to 0.5% of the basis of qualified property placed in
service during the taxable year in a River Edge
Redevelopment Zone, provided such property is placed in
service on or after July 1, 2006, and the taxpayer's base
employment within Illinois has increased by 1% or more over
the preceding year as determined by the taxpayer's
employment records filed with the Illinois Department of
Employment Security. Taxpayers who are new to Illinois
shall be deemed to have met the 1% growth in base
employment for the first year in which they file employment
records with the Illinois Department of Employment
Security. If, in any year, the increase in base employment
within Illinois over the preceding year is less than 1%,
the additional credit shall be limited to that percentage
times a fraction, the numerator of which is 0.5% and the

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denominator of which is 1%, but shall not exceed 0.5%.
(g) Jobs Tax Credit; Enterprise Zone, River Edge
Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
(1) A taxpayer conducting a trade or business in an
enterprise zone or a High Impact Business designated by the
Department of Commerce and Economic Opportunity or for
taxable years ending on or after December 31, 2006, in a
River Edge Redevelopment Zone conducting a trade or
business in a federally designated Foreign Trade Zone or
Sub-Zone shall be allowed a credit against the tax imposed
by subsections (a) and (b) of this Section in the amount of
$500 per eligible employee hired to work in the zone during
the taxable year.
(2) To qualify for the credit:
(A) the taxpayer must hire 5 or more eligible
employees to work in an enterprise zone, River Edge
Redevelopment Zone, or federally designated Foreign
Trade Zone or Sub-Zone during the taxable year;
(B) the taxpayer's total employment within the
enterprise zone, River Edge Redevelopment Zone, or
federally designated Foreign Trade Zone or Sub-Zone
must increase by 5 or more full-time employees beyond
the total employed in that zone at the end of the
previous tax year for which a jobs tax credit under
this Section was taken, or beyond the total employed by
the taxpayer as of December 31, 1985, whichever is

HB3876 - 24 - LRB096 11650 HLH 22225 b
later; and
(C) the eligible employees must be employed 180
consecutive days in order to be deemed hired for
purposes of this subsection.
(3) An "eligible employee" means an employee who is:
(A) Certified by the Department of Commerce and
Economic Opportunity as "eligible for services"
pursuant to regulations promulgated in accordance with
Title II of the Job Training Partnership Act, Training
Services for the Disadvantaged or Title III of the Job
Training Partnership Act, Employment and Training
Assistance for Dislocated Workers Program.
(B) Hired after the enterprise zone, River Edge
Redevelopment Zone, or federally designated Foreign
Trade Zone or Sub-Zone was designated or the trade or
business was located in that zone, whichever is later.
(C) Employed in the enterprise zone, River Edge
Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
An employee is employed in an enterprise zone, River
Edge Redevelopment Zone, or federally designated
Foreign Trade Zone or Sub-Zone if his services are
rendered there or it is the base of operations for the
services performed.
(D) A full-time employee working 30 or more hours
per week.
(4) For tax years ending on or after December 31, 1985

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and prior to December 31, 1988, the credit shall be allowed
for the tax year in which the eligible employees are hired.
For tax years ending on or after December 31, 1988, the
credit shall be allowed for the tax year immediately
following the tax year in which the eligible employees are
hired. If the amount of the credit exceeds the tax
liability for that year, whether it exceeds the original
liability or the liability as later amended, such excess
may be carried forward and applied to the tax liability of
the 5 taxable years following the excess credit year. The
credit shall be applied to the earliest year for which
there is a liability. If there is credit from more than one
tax year that is available to offset a liability, earlier
credit shall be applied first.
(5) The Department of Revenue shall promulgate such
rules and regulations as may be deemed necessary to carry
out the purposes of this subsection (g).
(6) The credit shall be available for eligible
employees hired on or after January 1, 1986.
(h) Investment credit; High Impact Business.
(1) Subject to subsections (b) and (b-5) of Section 5.5
of the Illinois Enterprise Zone Act, a taxpayer shall be
allowed a credit against the tax imposed by subsections (a)
and (b) of this Section for investment in qualified
property which is placed in service by a Department of
Commerce and Economic Opportunity designated High Impact

HB3876 - 26 - LRB096 11650 HLH 22225 b
Business. The credit shall be .5% of the basis for such
property. The credit shall not be available (i) until the
minimum investments in qualified property set forth in
subdivision (a)(3)(A) of Section 5.5 of the Illinois
Enterprise Zone Act have been satisfied or (ii) until the
time authorized in subsection (b-5) of the Illinois
Enterprise Zone Act for entities designated as High Impact
Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
(a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
Act, and shall not be allowed to the extent that it would
reduce a taxpayer's liability for the tax imposed by
subsections (a) and (b) of this Section to below zero. The
credit applicable to such investments shall be taken in the
taxable year in which such investments have been completed.
The credit for additional investments beyond the minimum
investment by a designated high impact business authorized
under subdivision (a)(3)(A) of Section 5.5 of the Illinois
Enterprise Zone Act shall be available only in the taxable
year in which the property is placed in service and shall
not be allowed to the extent that it would reduce a
taxpayer's liability for the tax imposed by subsections (a)
and (b) of this Section to below zero. For tax years ending
on or after December 31, 1987, the credit shall be allowed
for the tax year in which the property is placed in
service, or, if the amount of the credit exceeds the tax
liability for that year, whether it exceeds the original

HB3876 - 27 - LRB096 11650 HLH 22225 b
liability or the liability as later amended, such excess
may be carried forward and applied to the tax liability of
the 5 taxable years following the excess credit year. The
credit shall be applied to the earliest year for which
there is a liability. If there is credit from more than one
tax year that is available to offset a liability, the
credit accruing first in time shall be applied first.
Changes made in this subdivision (h)(1) by Public Act
88-670 restore changes made by Public Act 85-1182 and
reflect existing law.
(2) The term qualified property means property which:
(A) is tangible, whether new or used, including
buildings and structural components of buildings;
(B) is depreciable pursuant to Section 167 of the
Internal Revenue Code, except that "3-year property"
as defined in Section 168(c)(2)(A) of that Code is not
eligible for the credit provided by this subsection
(h);
(C) is acquired by purchase as defined in Section
179(d) of the Internal Revenue Code; and
(D) is not eligible for the Enterprise Zone
Investment Credit provided by subsection (f) of this
Section.
(3) The basis of qualified property shall be the basis
used to compute the depreciation deduction for federal
income tax purposes.

HB3876 - 28 - LRB096 11650 HLH 22225 b
(4) If the basis of the property for federal income tax
depreciation purposes is increased after it has been placed
in service in a federally designated Foreign Trade Zone or
Sub-Zone located in Illinois by the taxpayer, the amount of
such increase shall be deemed property placed in service on
the date of such increase in basis.
(5) The term "placed in service" shall have the same
meaning as under Section 46 of the Internal Revenue Code.
(6) If during any taxable year ending on or before
December 31, 1996, any property ceases to be qualified
property in the hands of the taxpayer within 48 months
after being placed in service, or the situs of any
qualified property is moved outside Illinois within 48
months after being placed in service, the tax imposed under
subsections (a) and (b) of this Section for such taxable
year shall be increased. Such increase shall be determined
by (i) recomputing the investment credit which would have
been allowed for the year in which credit for such property
was originally allowed by eliminating such property from
such computation, and (ii) subtracting such recomputed
credit from the amount of credit previously allowed. For
the purposes of this paragraph (6), a reduction of the
basis of qualified property resulting from a
redetermination of the purchase price shall be deemed a
disposition of qualified property to the extent of such
reduction.

HB3876 - 29 - LRB096 11650 HLH 22225 b
(7) Beginning with tax years ending after December 31,
1996, if a taxpayer qualifies for the credit under this
subsection (h) and thereby is granted a tax abatement and
the taxpayer relocates its entire facility in violation of
the explicit terms and length of the contract under Section
18-183 of the Property Tax Code, the tax imposed under
subsections (a) and (b) of this Section shall be increased
for the taxable year in which the taxpayer relocated its
facility by an amount equal to the amount of credit
received by the taxpayer under this subsection (h).
(i) Credit for Personal Property Tax Replacement Income
Tax. For tax years ending prior to December 31, 2003, a credit
shall be allowed against the tax imposed by subsections (a) and
(b) of this Section for the tax imposed by subsections (c) and
(d) of this Section. This credit shall be computed by
multiplying the tax imposed by subsections (c) and (d) of this
Section by a fraction, the numerator of which is base income
allocable to Illinois and the denominator of which is Illinois
base income, and further multiplying the product by the tax
rate imposed by subsections (a) and (b) of this Section.
Any credit earned on or after December 31, 1986 under this
subsection which is unused in the year the credit is computed
because it exceeds the tax liability imposed by subsections (a)
and (b) for that year (whether it exceeds the original
liability or the liability as later amended) may be carried
forward and applied to the tax liability imposed by subsections

HB3876 - 30 - LRB096 11650 HLH 22225 b
(a) and (b) of the 5 taxable years following the excess credit
year, provided that no credit may be carried forward to any
year ending on or after December 31, 2003. This credit shall be
applied first to the earliest year for which there is a
liability. If there is a credit under this subsection from more
than one tax year that is available to offset a liability the
earliest credit arising under this subsection shall be applied
first.
If, during any taxable year ending on or after December 31,
1986, the tax imposed by subsections (c) and (d) of this
Section for which a taxpayer has claimed a credit under this
subsection (i) is reduced, the amount of credit for such tax
shall also be reduced. Such reduction shall be determined by
recomputing the credit to take into account the reduced tax
imposed by subsections (c) and (d). If any portion of the
reduced amount of credit has been carried to a different
taxable year, an amended return shall be filed for such taxable
year to reduce the amount of credit claimed.
(j) Training expense credit. Beginning with tax years
ending on or after December 31, 1986 and prior to December 31,
2003, a taxpayer shall be allowed a credit against the tax
imposed by subsections (a) and (b) under this Section for all
amounts paid or accrued, on behalf of all persons employed by
the taxpayer in Illinois or Illinois residents employed outside
of Illinois by a taxpayer, for educational or vocational
training in semi-technical or technical fields or semi-skilled

HB3876 - 31 - LRB096 11650 HLH 22225 b
or skilled fields, which were deducted from gross income in the
computation of taxable income. The credit against the tax
imposed by subsections (a) and (b) shall be 1.6% of such
training expenses. For partners, shareholders of subchapter S
corporations, and owners of limited liability companies, if the
liability company is treated as a partnership for purposes of
federal and State income taxation, there shall be allowed a
credit under this subsection (j) to be determined in accordance
with the determination of income and distributive share of
income under Sections 702 and 704 and subchapter S of the
Internal Revenue Code.
Any credit allowed under this subsection which is unused in
the year the credit is earned may be carried forward to each of
the 5 taxable years following the year for which the credit is
first computed until it is used. This credit shall be applied
first to the earliest year for which there is a liability. If
there is a credit under this subsection from more than one tax
year that is available to offset a liability the earliest
credit arising under this subsection shall be applied first. No
carryforward credit may be claimed in any tax year ending on or
after December 31, 2003.
(k) Research and development credit.
For tax years ending after July 1, 1990 and prior to
December 31, 2003, and beginning again for tax years ending on
or after December 31, 2004, a taxpayer shall be allowed a
credit against the tax imposed by subsections (a) and (b) of

HB3876 - 32 - LRB096 11650 HLH 22225 b
this Section for increasing research activities in this State.
The credit allowed against the tax imposed by subsections (a)
and (b) shall be equal to 6 1/2% of the qualifying expenditures
for increasing research activities in this State. For partners,
shareholders of subchapter S corporations, and owners of
limited liability companies, if the liability company is
treated as a partnership for purposes of federal and State
income taxation, there shall be allowed a credit under this
subsection to be determined in accordance with the
determination of income and distributive share of income under
Sections 702 and 704 and subchapter S of the Internal Revenue
Code.
For purposes of this subsection, "qualifying expenditures"
means the qualifying expenditures as defined for the federal
credit for increasing research activities which would be
allowable under Section 41 of the Internal Revenue Code and
which are conducted in this State, "qualifying expenditures for
increasing research activities in this State" means the excess
of qualifying expenditures for the taxable year in which
incurred over qualifying expenditures for the base period,
"qualifying expenditures for the base period" means the average
of the qualifying expenditures for each year in the base
period, and "base period" means the 3 taxable years immediately
preceding the taxable year for which the determination is being
made.
Any credit in excess of the tax liability for the taxable

HB3876 - 33 - LRB096 11650 HLH 22225 b
year may be carried forward. A taxpayer may elect to have the
unused credit shown on its final completed return carried over
as a credit against the tax liability for the following 5
taxable years or until it has been fully used, whichever occurs
first; provided that no credit earned in a tax year ending
prior to December 31, 2003 may be carried forward to any year
ending on or after December 31, 2003.
If an unused credit is carried forward to a given year from
2 or more earlier years, that credit arising in the earliest
year will be applied first against the tax liability for the
given year. If a tax liability for the given year still
remains, the credit from the next earliest year will then be
applied, and so on, until all credits have been used or no tax
liability for the given year remains. Any remaining unused
credit or credits then will be carried forward to the next
following year in which a tax liability is incurred, except
that no credit can be carried forward to a year which is more
than 5 years after the year in which the expense for which the
credit is given was incurred.
No inference shall be drawn from this amendatory Act of the
91st General Assembly in construing this Section for taxable
years beginning before January 1, 1999.
(l) Environmental Remediation Tax Credit.
(i) For tax years ending after December 31, 1997 and on
or before December 31, 2001, a taxpayer shall be allowed a
credit against the tax imposed by subsections (a) and (b)

HB3876 - 34 - LRB096 11650 HLH 22225 b
of this Section for certain amounts paid for unreimbursed
eligible remediation costs, as specified in this
subsection. For purposes of this Section, "unreimbursed
eligible remediation costs" means costs approved by the
Illinois Environmental Protection Agency ("Agency") under
Section 58.14 of the Environmental Protection Act that were
paid in performing environmental remediation at a site for
which a No Further Remediation Letter was issued by the
Agency and recorded under Section 58.10 of the
Environmental Protection Act. The credit must be claimed
for the taxable year in which Agency approval of the
eligible remediation costs is granted. The credit is not
available to any taxpayer if the taxpayer or any related
party caused or contributed to, in any material respect, a
release of regulated substances on, in, or under the site
that was identified and addressed by the remedial action
pursuant to the Site Remediation Program of the
Environmental Protection Act. After the Pollution Control
Board rules are adopted pursuant to the Illinois
Administrative Procedure Act for the administration and
enforcement of Section 58.9 of the Environmental
Protection Act, determinations as to credit availability
for purposes of this Section shall be made consistent with
those rules. For purposes of this Section, "taxpayer"
includes a person whose tax attributes the taxpayer has
succeeded to under Section 381 of the Internal Revenue Code

HB3876 - 35 - LRB096 11650 HLH 22225 b
and "related party" includes the persons disallowed a
deduction for losses by paragraphs (b), (c), and (f)(1) of
Section 267 of the Internal Revenue Code by virtue of being
a related taxpayer, as well as any of its partners. The
credit allowed against the tax imposed by subsections (a)
and (b) shall be equal to 25% of the unreimbursed eligible
remediation costs in excess of $100,000 per site, except
that the $100,000 threshold shall not apply to any site
contained in an enterprise zone as determined by the
Department of Commerce and Community Affairs (now
Department of Commerce and Economic Opportunity). The
total credit allowed shall not exceed $40,000 per year with
a maximum total of $150,000 per site. For partners and
shareholders of subchapter S corporations, there shall be
allowed a credit under this subsection to be determined in
accordance with the determination of income and
distributive share of income under Sections 702 and 704 and
subchapter S of the Internal Revenue Code.
(ii) A credit allowed under this subsection that is
unused in the year the credit is earned may be carried
forward to each of the 5 taxable years following the year
for which the credit is first earned until it is used. The
term "unused credit" does not include any amounts of
unreimbursed eligible remediation costs in excess of the
maximum credit per site authorized under paragraph (i).
This credit shall be applied first to the earliest year for

HB3876 - 36 - LRB096 11650 HLH 22225 b
which there is a liability. If there is a credit under this
subsection from more than one tax year that is available to
offset a liability, the earliest credit arising under this
subsection shall be applied first. A credit allowed under
this subsection may be sold to a buyer as part of a sale of
all or part of the remediation site for which the credit
was granted. The purchaser of a remediation site and the
tax credit shall succeed to the unused credit and remaining
carry-forward period of the seller. To perfect the
transfer, the assignor shall record the transfer in the
chain of title for the site and provide written notice to
the Director of the Illinois Department of Revenue of the
assignor's intent to sell the remediation site and the
amount of the tax credit to be transferred as a portion of
the sale. In no event may a credit be transferred to any
taxpayer if the taxpayer or a related party would not be
eligible under the provisions of subsection (i).
(iii) For purposes of this Section, the term "site"
shall have the same meaning as under Section 58.2 of the
Environmental Protection Act.
(m) Education expense credit. Beginning with tax years
ending after December 31, 1999, a taxpayer who is the custodian
of one or more qualifying pupils shall be allowed a credit
against the tax imposed by subsections (a) and (b) of this
Section for qualified education expenses incurred on behalf of
the qualifying pupils. The credit shall be equal to 25% of

HB3876 - 37 - LRB096 11650 HLH 22225 b
qualified education expenses, but in no event may the total
credit under this subsection claimed by a family that is the
custodian of qualifying pupils exceed $500. In no event shall a
credit under this subsection reduce the taxpayer's liability
under this Act to less than zero. This subsection is exempt
from the provisions of Section 250 of this Act.
For purposes of this subsection:
"Qualifying pupils" means individuals who (i) are
residents of the State of Illinois, (ii) are under the age of
21 at the close of the school year for which a credit is
sought, and (iii) during the school year for which a credit is
sought were full-time pupils enrolled in a kindergarten through
twelfth grade education program at any school, as defined in
this subsection.
"Qualified education expense" means the amount incurred on
behalf of a qualifying pupil in excess of $250 for tuition,
book fees, and lab fees at the school in which the pupil is
enrolled during the regular school year.
"School" means any public or nonpublic elementary or
secondary school in Illinois that is in compliance with Title
VI of the Civil Rights Act of 1964 and attendance at which
satisfies the requirements of Section 26-1 of the School Code,
except that nothing shall be construed to require a child to
attend any particular public or nonpublic school to qualify for
the credit under this Section.
"Custodian" means, with respect to qualifying pupils, an

HB3876 - 38 - LRB096 11650 HLH 22225 b
Illinois resident who is a parent, the parents, a legal
guardian, or the legal guardians of the qualifying pupils.
(n) River Edge Redevelopment Zone site remediation tax
credit.
(i) For tax years ending on or after December 31, 2006,
a taxpayer shall be allowed a credit against the tax
imposed by subsections (a) and (b) of this Section for
certain amounts paid for unreimbursed eligible remediation
costs, as specified in this subsection. For purposes of
this Section, "unreimbursed eligible remediation costs"
means costs approved by the Illinois Environmental
Protection Agency ("Agency") under Section 58.14a of the
Environmental Protection Act that were paid in performing
environmental remediation at a site within a River Edge
Redevelopment Zone for which a No Further Remediation
Letter was issued by the Agency and recorded under Section
58.10 of the Environmental Protection Act. The credit must
be claimed for the taxable year in which Agency approval of
the eligible remediation costs is granted. The credit is
not available to any taxpayer if the taxpayer or any
related party caused or contributed to, in any material
respect, a release of regulated substances on, in, or under
the site that was identified and addressed by the remedial
action pursuant to the Site Remediation Program of the
Environmental Protection Act. Determinations as to credit
availability for purposes of this Section shall be made

HB3876 - 39 - LRB096 11650 HLH 22225 b
consistent with rules adopted by the Pollution Control
Board pursuant to the Illinois Administrative Procedure
Act for the administration and enforcement of Section 58.9
of the Environmental Protection Act. For purposes of this
Section, "taxpayer" includes a person whose tax attributes
the taxpayer has succeeded to under Section 381 of the
Internal Revenue Code and "related party" includes the
persons disallowed a deduction for losses by paragraphs
(b), (c), and (f)(1) of Section 267 of the Internal Revenue
Code by virtue of being a related taxpayer, as well as any
of its partners. The credit allowed against the tax imposed
by subsections (a) and (b) shall be equal to 25% of the
unreimbursed eligible remediation costs in excess of
$100,000 per site.
(ii) A credit allowed under this subsection that is
unused in the year the credit is earned may be carried
forward to each of the 5 taxable years following the year
for which the credit is first earned until it is used. This
credit shall be applied first to the earliest year for
which there is a liability. If there is a credit under this
subsection from more than one tax year that is available to
offset a liability, the earliest credit arising under this
subsection shall be applied first. A credit allowed under
this subsection may be sold to a buyer as part of a sale of
all or part of the remediation site for which the credit
was granted. The purchaser of a remediation site and the

HB3876 - 40 - LRB096 11650 HLH 22225 b
tax credit shall succeed to the unused credit and remaining
carry-forward period of the seller. To perfect the
transfer, the assignor shall record the transfer in the
chain of title for the site and provide written notice to
the Director of the Illinois Department of Revenue of the
assignor's intent to sell the remediation site and the
amount of the tax credit to be transferred as a portion of
the sale. In no event may a credit be transferred to any
taxpayer if the taxpayer or a related party would not be
eligible under the provisions of subsection (i).
(iii) For purposes of this Section, the term "site"
shall have the same meaning as under Section 58.2 of the
Environmental Protection Act.
(iv) This subsection is exempt from the provisions of
Section 250.
(Source: P.A. 94-1021, eff. 7-12-06; 95-454, eff. 8-27-07.)
(35 ILCS 5/203) (from Ch. 120, par. 2-203)
Sec. 203. Base income defined.
(a) Individuals.
(1) In general. In the case of an individual, base
income means an amount equal to the taxpayer's adjusted
gross income for the taxable year as modified by paragraph
(2).
(2) Modifications. The adjusted gross income referred
to in paragraph (1) shall be modified by adding thereto the

HB3876 - 41 - LRB096 11650 HLH 22225 b
sum of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of adjusted gross income, except
stock dividends of qualified public utilities
described in Section 305(e) of the Internal Revenue
Code;
(B) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of adjusted gross income for the
taxable year;
(C) An amount equal to the amount received during
the taxable year as a recovery or refund of real
property taxes paid with respect to the taxpayer's
principal residence under the Revenue Act of 1939 and
for which a deduction was previously taken under
subparagraph (L) of this paragraph (2) prior to July 1,
1991, the retrospective application date of Article 4
of Public Act 87-17. In the case of multi-unit or
multi-use structures and farm dwellings, the taxes on
the taxpayer's principal residence shall be that
portion of the total taxes for the entire property
which is attributable to such principal residence;
(D) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue

HB3876 - 42 - LRB096 11650 HLH 22225 b
Code, to the extent deducted from gross income in the
computation of adjusted gross income;
(D-5) An amount, to the extent not included in
adjusted gross income, equal to the amount of money
withdrawn by the taxpayer in the taxable year from a
medical care savings account and the interest earned on
the account in the taxable year of a withdrawal
pursuant to subsection (b) of Section 20 of the Medical
Care Savings Account Act or subsection (b) of Section
20 of the Medical Care Savings Account Act of 2000;
(D-10) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation costs
that the individual deducted in computing adjusted
gross income and for which the individual claims a
credit under subsection (l) of Section 201;
(D-15) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of the
Internal Revenue Code;
(D-16) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-15), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under

HB3876 - 43 - LRB096 11650 HLH 22225 b
subparagraph (Z) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was allowed in any taxable year to make a subtraction
modification under subparagraph (Z), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(D-17) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact that foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different

HB3876 - 44 - LRB096 11650 HLH 22225 b
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income under Sections 951 through 964
of the Internal Revenue Code and amounts included in
gross income under Section 78 of the Internal Revenue
Code) with respect to the stock of the same person to
whom the interest was paid, accrued, or incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and

HB3876 - 45 - LRB096 11650 HLH 22225 b
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract or
agreement entered into at arm's-length rates and
terms and the principal purpose for the payment is
not federal or Illinois tax avoidance; or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department

HB3876 - 46 - LRB096 11650 HLH 22225 b
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(D-18) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income under Sections 951 through 964 of the Internal

HB3876 - 47 - LRB096 11650 HLH 22225 b
Revenue Code and amounts included in gross income under
Section 78 of the Internal Revenue Code) with respect
to the stock of the same person to whom the intangible
expenses and costs were directly or indirectly paid,
incurred, or accrued. The preceding sentence does not
apply to the extent that the same dividends caused a
reduction to the addition modification required under
Section 203(a)(2)(D-17) of this Act. As used in this
subparagraph, the term "intangible expenses and costs"
includes (1) expenses, losses, and costs for, or
related to, the direct or indirect acquisition, use,
maintenance or management, ownership, sale, exchange,
or any other disposition of intangible property; (2)
losses incurred, directly or indirectly, from
factoring transactions or discounting transactions;
(3) royalty, patent, technical, and copyright fees;
(4) licensing fees; and (5) other similar expenses and
costs. For purposes of this subparagraph, "intangible
property" includes patents, patent applications, trade
names, trademarks, service marks, copyrights, mask
works, trade secrets, and similar types of intangible
assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who is

HB3876 - 48 - LRB096 11650 HLH 22225 b
subject in a foreign country or state, other than a
state which requires mandatory unitary reporting,
to a tax on or measured by net income with respect
to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if the
taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in

HB3876 - 49 - LRB096 11650 HLH 22225 b
writing to the application or use of an alternative
method of apportionment under Section 304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(D-19) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a

HB3876 - 50 - LRB096 11650 HLH 22225 b
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the stock
of the same person to whom the premiums and costs were
directly or indirectly paid, incurred, or accrued. The
preceding sentence does not apply to the extent that
the same dividends caused a reduction to the addition
modification required under Section 203(a)(2)(D-17) or
Section 203(a)(2)(D-18) of this Act.
(D-20) For taxable years beginning on or after
January 1, 2002 and ending on or before December 31,
2006, in the case of a distribution from a qualified
tuition program under Section 529 of the Internal
Revenue Code, other than (i) a distribution from a
College Savings Pool created under Section 16.5 of the
State Treasurer Act or (ii) a distribution from the
Illinois Prepaid Tuition Trust Fund, an amount equal to
the amount excluded from gross income under Section
529(c)(3)(B). For taxable years beginning on or after
January 1, 2007, in the case of a distribution from a
qualified tuition program under Section 529 of the
Internal Revenue Code, other than (i) a distribution
from a College Savings Pool created under Section 16.5
of the State Treasurer Act, (ii) a distribution from

HB3876 - 51 - LRB096 11650 HLH 22225 b
the Illinois Prepaid Tuition Trust Fund, or (iii) a
distribution from a qualified tuition program under
Section 529 of the Internal Revenue Code that (I)
adopts and determines that its offering materials
comply with the College Savings Plans Network's
disclosure principles and (II) has made reasonable
efforts to inform in-state residents of the existence
of in-state qualified tuition programs by informing
Illinois residents directly and, where applicable, to
inform financial intermediaries distributing the
program to inform in-state residents of the existence
of in-state qualified tuition programs at least
annually, an amount equal to the amount excluded from
gross income under Section 529(c)(3)(B).
For the purposes of this subparagraph (D-20), a
qualified tuition program has made reasonable efforts
if it makes disclosures (which may use the term
"in-state program" or "in-state plan" and need not
specifically refer to Illinois or its qualified
programs by name) (i) directly to prospective
participants in its offering materials or makes a
public disclosure, such as a website posting; and (ii)
where applicable, to intermediaries selling the
out-of-state program in the same manner that the
out-of-state program distributes its offering
materials;

HB3876 - 52 - LRB096 11650 HLH 22225 b
(D-21) For taxable years beginning on or after
January 1, 2007, in the case of transfer of moneys from
a qualified tuition program under Section 529 of the
Internal Revenue Code that is administered by the State
to an out-of-state program, an amount equal to the
amount of moneys previously deducted from base income
under subsection (a)(2)(Y) of this Section.
and by deducting from the total so obtained the sum of the
following amounts:
(E) For taxable years ending before December 31,
2001, any amount included in such total in respect of
any compensation (including but not limited to any
compensation paid or accrued to a serviceman while a
prisoner of war or missing in action) paid to a
resident by reason of being on active duty in the Armed
Forces of the United States and in respect of any
compensation paid or accrued to a resident who as a
governmental employee was a prisoner of war or missing
in action, and in respect of any compensation paid to a
resident in 1971 or thereafter for annual training
performed pursuant to Sections 502 and 503, Title 32,
United States Code as a member of the Illinois National
Guard or, beginning with taxable years ending on or
after December 31, 2007, the National Guard of any
other state. For taxable years ending on or after
December 31, 2001, any amount included in such total in

HB3876 - 53 - LRB096 11650 HLH 22225 b
respect of any compensation (including but not limited
to any compensation paid or accrued to a serviceman
while a prisoner of war or missing in action) paid to a
resident by reason of being a member of any component
of the Armed Forces of the United States and in respect
of any compensation paid or accrued to a resident who
as a governmental employee was a prisoner of war or
missing in action, and in respect of any compensation
paid to a resident in 2001 or thereafter by reason of
being a member of the Illinois National Guard or,
beginning with taxable years ending on or after
December 31, 2007, the National Guard of any other
state. The provisions of this subparagraph (E)
amendatory Act of the 92nd General Assembly are exempt
from the provisions of Section 250;
(F) An amount equal to all amounts included in such
total pursuant to the provisions of Sections 402(a),
402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
Internal Revenue Code, or included in such total as
distributions under the provisions of any retirement
or disability plan for employees of any governmental
agency or unit, or retirement payments to retired
partners, which payments are excluded in computing net
earnings from self employment by Section 1402 of the
Internal Revenue Code and regulations adopted pursuant
thereto;

HB3876 - 54 - LRB096 11650 HLH 22225 b
(G) The valuation limitation amount;
(H) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(I) An amount equal to all amounts included in such
total pursuant to the provisions of Section 111 of the
Internal Revenue Code as a recovery of items previously
deducted from adjusted gross income in the computation
of taxable income;
(J) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in an Enterprise Zone or
zones created under the Illinois Enterprise Zone Act or
a River Edge Redevelopment Zone or zones created under
the River Edge Redevelopment Zone Act, and conducts
substantially all of its operations in an Enterprise
Zone or zones or a River Edge Redevelopment Zone or
zones. This subparagraph (J) is exempt from the
provisions of Section 250;
(K) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated a
High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (J) of paragraph (2) of this subsection

HB3876 - 55 - LRB096 11650 HLH 22225 b
shall not be eligible for the deduction provided under
this subparagraph (K);
(L) For taxable years ending after December 31,
1983, an amount equal to all social security benefits
and railroad retirement benefits included in such
total pursuant to Sections 72(r) and 86 of the Internal
Revenue Code;
(M) With the exception of any amounts subtracted
under subparagraph (N), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a) (2), and 265(2) of the Internal Revenue Code of
1954, as now or hereafter amended, and all amounts of
expenses allocable to interest and disallowed as
deductions by Section 265(1) of the Internal Revenue
Code of 1954, as now or hereafter amended; and (ii) for
taxable years ending on or after August 13, 1999,
Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
the Internal Revenue Code, plus, for taxable years
ending on or after December 31, 2009, Section 45G(e)(3)
of the Internal Revenue Code; the provisions of this
subparagraph are exempt from the provisions of Section
250;
(N) An amount equal to all amounts included in such
total which are exempt from taxation by this State
either by reason of its statutes or Constitution or by
reason of the Constitution, treaties or statutes of the

HB3876 - 56 - LRB096 11650 HLH 22225 b
United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest net
of bond premium amortization;
(O) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(P) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code or of any itemized deduction
taken from adjusted gross income in the computation of
taxable income for restoration of substantial amounts
held under claim of right for the taxable year of 1986;
(Q) An amount equal to any amounts included in such
total, received by the taxpayer as an acceleration in
the payment of life, endowment or annuity benefits in
advance of the time they would otherwise be payable as
an indemnity for a terminal illness;
(R) An amount equal to the amount of any federal or
State bonus paid to veterans of the Persian Gulf War;
(S) An amount, to the extent included in adjusted
gross income, equal to the amount of a contribution
made in the taxable year on behalf of the taxpayer to a

HB3876 - 57 - LRB096 11650 HLH 22225 b
medical care savings account established under the
Medical Care Savings Account Act or the Medical Care
Savings Account Act of 2000 to the extent the
contribution is accepted by the account administrator
as provided in that Act;
(T) An amount, to the extent included in adjusted
gross income, equal to the amount of interest earned in
the taxable year on a medical care savings account
established under the Medical Care Savings Account Act
or the Medical Care Savings Account Act of 2000 on
behalf of the taxpayer, other than interest added
pursuant to item (D-5) of this paragraph (2);
(U) For one taxable year beginning on or after
January 1, 1994, an amount equal to the total amount of
tax imposed and paid under subsections (a) and (b) of
Section 201 of this Act on grant amounts received by
the taxpayer under the Nursing Home Grant Assistance
Act during the taxpayer's taxable years 1992 and 1993;
(V) Beginning with tax years ending on or after
December 31, 1995 and ending with tax years ending on
or before December 31, 2004, an amount equal to the
amount paid by a taxpayer who is a self-employed
taxpayer, a partner of a partnership, or a shareholder
in a Subchapter S corporation for health insurance or
long-term care insurance for that taxpayer or that
taxpayer's spouse or dependents, to the extent that the

HB3876 - 58 - LRB096 11650 HLH 22225 b
amount paid for that health insurance or long-term care
insurance may be deducted under Section 213 of the
Internal Revenue Code of 1986, has not been deducted on
the federal income tax return of the taxpayer, and does
not exceed the taxable income attributable to that
taxpayer's income, self-employment income, or
Subchapter S corporation income; except that no
deduction shall be allowed under this item (V) if the
taxpayer is eligible to participate in any health
insurance or long-term care insurance plan of an
employer of the taxpayer or the taxpayer's spouse. The
amount of the health insurance and long-term care
insurance subtracted under this item (V) shall be
determined by multiplying total health insurance and
long-term care insurance premiums paid by the taxpayer
times a number that represents the fractional
percentage of eligible medical expenses under Section
213 of the Internal Revenue Code of 1986 not actually
deducted on the taxpayer's federal income tax return;
(W) For taxable years beginning on or after January
1, 1998, all amounts included in the taxpayer's federal
gross income in the taxable year from amounts converted
from a regular IRA to a Roth IRA. This paragraph is
exempt from the provisions of Section 250;
(X) For taxable year 1999 and thereafter, an amount
equal to the amount of any (i) distributions, to the

HB3876 - 59 - LRB096 11650 HLH 22225 b
extent includible in gross income for federal income
tax purposes, made to the taxpayer because of his or
her status as a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim and (ii) items of
income, to the extent includible in gross income for
federal income tax purposes, attributable to, derived
from or in any way related to assets stolen from,
hidden from, or otherwise lost to a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime immediately prior to,
during, and immediately after World War II, including,
but not limited to, interest on the proceeds receivable
as insurance under policies issued to a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime by European insurance
companies immediately prior to and during World War II;
provided, however, this subtraction from federal
adjusted gross income does not apply to assets acquired
with such assets or with the proceeds from the sale of
such assets; provided, further, this paragraph shall
only apply to a taxpayer who was the first recipient of
such assets after their recovery and who is a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime or as an heir of the
victim. The amount of and the eligibility for any

HB3876 - 60 - LRB096 11650 HLH 22225 b
public assistance, benefit, or similar entitlement is
not affected by the inclusion of items (i) and (ii) of
this paragraph in gross income for federal income tax
purposes. This paragraph is exempt from the provisions
of Section 250;
(Y) For taxable years beginning on or after January
1, 2002 and ending on or before December 31, 2004,
moneys contributed in the taxable year to a College
Savings Pool account under Section 16.5 of the State
Treasurer Act, except that amounts excluded from gross
income under Section 529(c)(3)(C)(i) of the Internal
Revenue Code shall not be considered moneys
contributed under this subparagraph (Y). For taxable
years beginning on or after January 1, 2005, a maximum
of $10,000 contributed in the taxable year to (i) a
College Savings Pool account under Section 16.5 of the
State Treasurer Act or (ii) the Illinois Prepaid
Tuition Trust Fund, except that amounts excluded from
gross income under Section 529(c)(3)(C)(i) of the
Internal Revenue Code shall not be considered moneys
contributed under this subparagraph (Y). This
subparagraph (Y) is exempt from the provisions of
Section 250;
(Z) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return

HB3876 - 61 - LRB096 11650 HLH 22225 b
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not including
the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied by
0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0.
The aggregate amount deducted under this

HB3876 - 62 - LRB096 11650 HLH 22225 b
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (Z) is exempt from the provisions of
Section 250;
(AA) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-15), then
an amount equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (D-15), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction under
this subparagraph only once with respect to any one
piece of property.
This subparagraph (AA) is exempt from the
provisions of Section 250;
(BB) Any amount included in adjusted gross income,
other than salary, received by a driver in a

HB3876 - 63 - LRB096 11650 HLH 22225 b
ridesharing arrangement using a motor vehicle;
(CC) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction with
a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of that addition modification, and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer that
is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of that
addition modification. This subparagraph (CC) is
exempt from the provisions of Section 250;
(DD) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable

HB3876 - 64 - LRB096 11650 HLH 22225 b
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(a)(2)(D-17) for
interest paid, accrued, or incurred, directly or
indirectly, to the same person. This subparagraph (DD)
is exempt from the provisions of Section 250; and
(EE) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different

HB3876 - 65 - LRB096 11650 HLH 22225 b
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(a)(2)(D-18) for
intangible expenses and costs paid, accrued, or
incurred, directly or indirectly, to the same foreign
person. This subparagraph (EE) is exempt from the
provisions of Section 250; and
(FF) For taxable years ending on or after December
31, 2009, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(a)(2)(D-19), an amount equal to the amount of any
reimbursement received from the insurance company for
any loss covered by a policy for which those premiums
were paid, to the extent of the federal income tax
deduction that would have been allowable for the loss
in computing adjusted gross income if not for the
reimbursement. This subparagraph (FF) is exempt from
the provisions of Section 250.
(b) Corporations.
(1) In general. In the case of a corporation, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. The taxable income referred to in
paragraph (1) shall be modified by adding thereto the sum
of the following amounts:

HB3876 - 66 - LRB096 11650 HLH 22225 b
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest and all distributions
received from regulated investment companies during
the taxable year to the extent excluded from gross
income in the computation of taxable income;
(B) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of taxable income for the taxable year;
(C) In the case of a regulated investment company,
an amount equal to the excess of (i) the net long-term
capital gain for the taxable year, over (ii) the amount
of the capital gain dividends designated as such in
accordance with Section 852(b)(3)(C) of the Internal
Revenue Code and any amount designated under Section
852(b)(3)(D) of the Internal Revenue Code,
attributable to the taxable year (this amendatory Act
of 1995 (Public Act 89-89) is declarative of existing
law and is not a new enactment);
(D) The amount of any net operating loss deduction
taken in arriving at taxable income, other than a net
operating loss carried forward from a taxable year
ending prior to December 31, 1986;
(E) For taxable years in which a net operating loss
carryback or carryforward from a taxable year ending
prior to December 31, 1986 is an element of taxable
income under paragraph (1) of subsection (e) or

HB3876 - 67 - LRB096 11650 HLH 22225 b
subparagraph (E) of paragraph (2) of subsection (e),
the amount by which addition modifications other than
those provided by this subparagraph (E) exceeded
subtraction modifications in such earlier taxable
year, with the following limitations applied in the
order that they are listed:
(i) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall be reduced by the amount of
addition modification under this subparagraph (E)
which related to that net operating loss and which
was taken into account in calculating the base
income of an earlier taxable year, and
(ii) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall not exceed the amount of
such carryback or carryforward;
For taxable years in which there is a net operating
loss carryback or carryforward from more than one other
taxable year ending prior to December 31, 1986, the
addition modification provided in this subparagraph
(E) shall be the sum of the amounts computed
independently under the preceding provisions of this
subparagraph (E) for each such taxable year;

HB3876 - 68 - LRB096 11650 HLH 22225 b
(E-5) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation costs
that the corporation deducted in computing adjusted
gross income and for which the corporation claims a
credit under subsection (l) of Section 201;
(E-10) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of the
Internal Revenue Code;
(E-11) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (E-10), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (T) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was allowed in any taxable year to make a subtraction
modification under subparagraph (T), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with

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respect to any one piece of property;
(E-12) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact the foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of the

HB3876 - 70 - LRB096 11650 HLH 22225 b
same person to whom the interest was paid, accrued, or
incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest

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paid, accrued, or incurred relates to a contract or
agreement entered into at arm's-length rates and
terms and the principal purpose for the payment is
not federal or Illinois tax avoidance; or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(E-13) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same

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unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(b)(2)(E-12) of
this Act. As used in this subparagraph, the term

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"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who is
subject in a foreign country or state, other than a
state which requires mandatory unitary reporting,
to a tax on or measured by net income with respect
to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:

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(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if the
taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an alternative
method of apportionment under Section 304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards

HB3876 - 75 - LRB096 11650 HLH 22225 b
by which the Department will utilize its authority
under Section 404 of this Act;
(E-14) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the stock
of the same person to whom the premiums and costs were
directly or indirectly paid, incurred, or accrued. The
preceding sentence does not apply to the extent that
the same dividends caused a reduction to the addition

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modification required under Section 203(b)(2)(E-12) or
Section 203(b)(2)(E-13) of this Act;
(E-15) For taxable years beginning after December
31, 2008, any deduction for dividends paid by a captive
real estate investment trust that is allowed to a real
estate investment trust under Section 857(b)(2)(B) of
the Internal Revenue Code for dividends paid;
and by deducting from the total so obtained the sum of the
following amounts:
(F) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(G) An amount equal to any amount included in such
total under Section 78 of the Internal Revenue Code;
(H) In the case of a regulated investment company,
an amount equal to the amount of exempt interest
dividends as defined in subsection (b) (5) of Section
852 of the Internal Revenue Code, paid to shareholders
for the taxable year;
(I) With the exception of any amounts subtracted
under subparagraph (J), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a) (2), and 265(a)(2) and amounts disallowed as
interest expense by Section 291(a)(3) of the Internal
Revenue Code, as now or hereafter amended, and all
amounts of expenses allocable to interest and

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disallowed as deductions by Section 265(a)(1) of the
Internal Revenue Code, as now or hereafter amended; and
(ii) for taxable years ending on or after August 13,
1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
832(b)(5)(B)(i) of the Internal Revenue Code, plus,
for tax years ending on or after December 31, 2009,
amounts disallowed as deductions by Section 45G(e)(3)
of the Internal Revenue Code and the policyholders'
share of tax-exempt interest of a life insurance
company under Section 807(a)(2)(B) of the Internal
Revenue Code (in the case of a life insurance company
with gross income from a decrease in reserves for the
tax year) or Section 807(b)(1)(B) of the Internal
Revenue Code (in the case of a life insurance company
allowed a deduction for an increase in reserves for the
tax year); the provisions of this subparagraph are
exempt from the provisions of Section 250;
(J) An amount equal to all amounts included in such
total which are exempt from taxation by this State
either by reason of its statutes or Constitution or by
reason of the Constitution, treaties or statutes of the
United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest net
of bond premium amortization;

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(K) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in an Enterprise Zone or
zones created under the Illinois Enterprise Zone Act or
a River Edge Redevelopment Zone or zones created under
the River Edge Redevelopment Zone Act and conducts
substantially all of its operations in an Enterprise
Zone or zones or a River Edge Redevelopment Zone or
zones. This subparagraph (K) is exempt from the
provisions of Section 250;
(L) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated a
High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (K) of paragraph 2 of this subsection
shall not be eligible for the deduction provided under
this subparagraph (L);
(M) For any taxpayer that is a financial
organization within the meaning of Section 304(c) of
this Act, an amount included in such total as interest
income from a loan or loans made by such taxpayer to a
borrower, to the extent that such a loan is secured by
property which is eligible for the Enterprise Zone
Investment Credit or the River Edge Redevelopment Zone

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Investment Credit. To determine the portion of a loan
or loans that is secured by property eligible for a
Section 201(f) investment credit to the borrower, the
entire principal amount of the loan or loans between
the taxpayer and the borrower should be divided into
the basis of the Section 201(f) investment credit
property which secures the loan or loans, using for
this purpose the original basis of such property on the
date that it was placed in service in the Enterprise
Zone or the River Edge Redevelopment Zone. The
subtraction modification available to taxpayer in any
year under this subsection shall be that portion of the
total interest paid by the borrower with respect to
such loan attributable to the eligible property as
calculated under the previous sentence. This
subparagraph (M) is exempt from the provisions of
Section 250;
(M-1) For any taxpayer that is a financial
organization within the meaning of Section 304(c) of
this Act, an amount included in such total as interest
income from a loan or loans made by such taxpayer to a
borrower, to the extent that such a loan is secured by
property which is eligible for the High Impact Business
Investment Credit. To determine the portion of a loan
or loans that is secured by property eligible for a
Section 201(h) investment credit to the borrower, the

HB3876 - 80 - LRB096 11650 HLH 22225 b
entire principal amount of the loan or loans between
the taxpayer and the borrower should be divided into
the basis of the Section 201(h) investment credit
property which secures the loan or loans, using for
this purpose the original basis of such property on the
date that it was placed in service in a federally
designated Foreign Trade Zone or Sub-Zone located in
Illinois. No taxpayer that is eligible for the
deduction provided in subparagraph (M) of paragraph
(2) of this subsection shall be eligible for the
deduction provided under this subparagraph (M-1). The
subtraction modification available to taxpayers in any
year under this subsection shall be that portion of the
total interest paid by the borrower with respect to
such loan attributable to the eligible property as
calculated under the previous sentence;
(N) Two times any contribution made during the
taxable year to a designated zone organization to the
extent that the contribution (i) qualifies as a
charitable contribution under subsection (c) of
Section 170 of the Internal Revenue Code and (ii) must,
by its terms, be used for a project approved by the
Department of Commerce and Economic Opportunity under
Section 11 of the Illinois Enterprise Zone Act or under
Section 10-10 of the River Edge Redevelopment Zone Act.
This subparagraph (N) is exempt from the provisions of

HB3876 - 81 - LRB096 11650 HLH 22225 b
Section 250;
(O) An amount equal to: (i) 85% for taxable years
ending on or before December 31, 1992, or, a percentage
equal to the percentage allowable under Section
243(a)(1) of the Internal Revenue Code of 1986 for
taxable years ending after December 31, 1992, of the
amount by which dividends included in taxable income
and received from a corporation that is not created or
organized under the laws of the United States or any
state or political subdivision thereof, including, for
taxable years ending on or after December 31, 1988,
dividends received or deemed received or paid or deemed
paid under Sections 951 through 965 964 of the Internal
Revenue Code, exceed the amount of the modification
provided under subparagraph (G) of paragraph (2) of
this subsection (b) which is related to such dividends,
and including, for taxable years ending on or after
December 31, 2008, dividends received from a captive
real estate investment trust; plus (ii) 100% of the
amount by which dividends, included in taxable income
and received, including, for taxable years ending on or
after December 31, 1988, dividends received or deemed
received or paid or deemed paid under Sections 951
through 964 of the Internal Revenue Code and including,
for taxable years ending on or after December 31, 2008,
dividends received from a captive real estate

HB3876 - 82 - LRB096 11650 HLH 22225 b
investment trust, from any such corporation specified
in clause (i) that would but for the provisions of
Section 1504 (b) (3) of the Internal Revenue Code be
treated as a member of the affiliated group which
includes the dividend recipient, exceed the amount of
the modification provided under subparagraph (G) of
paragraph (2) of this subsection (b) which is related
to such dividends. This subparagraph (O) is exempt from
the provisions of Section 250 of this Act;
(P) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(Q) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code of 1986;
(R) On and after July 20, 1999, in the case of an
attorney-in-fact with respect to whom an interinsurer
or a reciprocal insurer has made the election under
Section 835 of the Internal Revenue Code, 26 U.S.C.
835, an amount equal to the excess, if any, of the
amounts paid or incurred by that interinsurer or
reciprocal insurer in the taxable year to the
attorney-in-fact over the deduction allowed to that
interinsurer or reciprocal insurer with respect to the

HB3876 - 83 - LRB096 11650 HLH 22225 b
attorney-in-fact under Section 835(b) of the Internal
Revenue Code for the taxable year; the provisions of
this subparagraph are exempt from the provisions of
Section 250;
(S) For taxable years ending on or after December
31, 1997, in the case of a Subchapter S corporation, an
amount equal to all amounts of income allocable to a
shareholder subject to the Personal Property Tax
Replacement Income Tax imposed by subsections (c) and
(d) of Section 201 of this Act, including amounts
allocable to organizations exempt from federal income
tax by reason of Section 501(a) of the Internal Revenue
Code. This subparagraph (S) is exempt from the
provisions of Section 250;
(T) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not including

HB3876 - 84 - LRB096 11650 HLH 22225 b
the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied by
0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0.
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (T) is exempt from the provisions of
Section 250;
(U) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer

HB3876 - 85 - LRB096 11650 HLH 22225 b
was required in any taxable year to make an addition
modification under subparagraph (E-10), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (E-10), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction under
this subparagraph only once with respect to any one
piece of property.
This subparagraph (U) is exempt from the
provisions of Section 250;
(V) The amount of: (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction with
a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification, (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer that

HB3876 - 86 - LRB096 11650 HLH 22225 b
is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification, and (iii) any insurance premium
income (net of deductions allocable thereto, including
adjustments to loss reserves and payments for losses
with respect to a policy for which the premium was
received) taken into account for the taxable year with
respect to a transaction with a taxpayer that is
required to make an addition modification with respect
to such transaction under Section 203(a)(2)(D-19),
Section 203(b)(2)(E-14), Section 203(c)(2)(G-14), or
Section 203(d)(2)(D-9), but not to exceed the amount of
that addition modification. This subparagraph (V) is
exempt from the provisions of Section 250;
(W) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business

HB3876 - 87 - LRB096 11650 HLH 22225 b
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(b)(2)(E-12) for
interest paid, accrued, or incurred, directly or
indirectly, to the same person. This subparagraph (W)
is exempt from the provisions of Section 250; and
(X) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same

HB3876 - 88 - LRB096 11650 HLH 22225 b
taxable year under Section 203(b)(2)(E-13) for
intangible expenses and costs paid, accrued, or
incurred, directly or indirectly, to the same foreign
person. This subparagraph (X) is exempt from the
provisions of Section 250; .
(Y) For taxable years ending on or after December
31, 2009, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(b)(2)(E-14), an amount equal to the amount of any
reimbursement received from the insurance company for
any loss covered by a policy for which those premiums
were paid, to the extent of the federal income tax
deduction that would have been allowable for the loss
if not for the reimbursement. This subparagraph (Y) is
exempt from the provisions of Section 250; and
(Z) The difference between (i) the excess
inclusion of the taxpayer under Section 860E(c) of the
Internal Revenue Code or (ii) the nondeductible
controlled foreign corporation dividends under Section
965(e)(3) of the Internal Revenue Code, whichever is
less, over the taxable income of the taxpayer, computed
without regard to Section 860E(a)(1) of the Internal
Revenue Code, without regard to Section 965(e)(2)(A)
of the Internal Revenue Code, and without regard to any
net operating loss deduction. This subparagraph (Z) is
exempt from the provisions of Section 250.

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(3) Special rule. For purposes of paragraph (2) (A),
"gross income" in the case of a life insurance company, for
tax years ending on and after December 31, 1994, and prior
to December 31, 2009, shall mean the gross investment
income for the taxable year and, for tax years ending on or
after December 31, 2009, shall mean all amounts included in
life insurance gross income under Section 803(a)(3) of the
Internal Revenue Code.
(c) Trusts and estates.
(1) In general. In the case of a trust or estate, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. Subject to the provisions of
paragraph (3), the taxable income referred to in paragraph
(1) shall be modified by adding thereto the sum of the
following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of taxable income;
(B) In the case of (i) an estate, $600; (ii) a
trust which, under its governing instrument, is
required to distribute all of its income currently,
$300; and (iii) any other trust, $100, but in each such
case, only to the extent such amount was deducted in

HB3876 - 90 - LRB096 11650 HLH 22225 b
the computation of taxable income;
(C) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of taxable income for the taxable year;
(D) The amount of any net operating loss deduction
taken in arriving at taxable income, other than a net
operating loss carried forward from a taxable year
ending prior to December 31, 1986;
(E) For taxable years in which a net operating loss
carryback or carryforward from a taxable year ending
prior to December 31, 1986 is an element of taxable
income under paragraph (1) of subsection (e) or
subparagraph (E) of paragraph (2) of subsection (e),
the amount by which addition modifications other than
those provided by this subparagraph (E) exceeded
subtraction modifications in such taxable year, with
the following limitations applied in the order that
they are listed:
(i) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall be reduced by the amount of
addition modification under this subparagraph (E)
which related to that net operating loss and which
was taken into account in calculating the base
income of an earlier taxable year, and

HB3876 - 91 - LRB096 11650 HLH 22225 b
(ii) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall not exceed the amount of
such carryback or carryforward;
For taxable years in which there is a net operating
loss carryback or carryforward from more than one other
taxable year ending prior to December 31, 1986, the
addition modification provided in this subparagraph
(E) shall be the sum of the amounts computed
independently under the preceding provisions of this
subparagraph (E) for each such taxable year;
(F) For taxable years ending on or after January 1,
1989, an amount equal to the tax deducted pursuant to
Section 164 of the Internal Revenue Code if the trust
or estate is claiming the same tax for purposes of the
Illinois foreign tax credit under Section 601 of this
Act;
(G) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the
computation of taxable income;
(G-5) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation costs
that the trust or estate deducted in computing adjusted
gross income and for which the trust or estate claims a

HB3876 - 92 - LRB096 11650 HLH 22225 b
credit under subsection (l) of Section 201;
(G-10) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of the
Internal Revenue Code; and
(G-11) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (G-10), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (R) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was allowed in any taxable year to make a subtraction
modification under subparagraph (R), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(G-12) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or

HB3876 - 93 - LRB096 11650 HLH 22225 b
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact that the foreign person's business activity
outside the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of the
same person to whom the interest was paid, accrued, or
incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or

HB3876 - 94 - LRB096 11650 HLH 22225 b
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract or
agreement entered into at arm's-length rates and
terms and the principal purpose for the payment is
not federal or Illinois tax avoidance; or

HB3876 - 95 - LRB096 11650 HLH 22225 b
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(G-13) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after

HB3876 - 96 - LRB096 11650 HLH 22225 b
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(c)(2)(G-12) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes: (1)
expenses, losses, and costs for or related to the
direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other

HB3876 - 97 - LRB096 11650 HLH 22225 b
disposition of intangible property; (2) losses
incurred, directly or indirectly, from factoring
transactions or discounting transactions; (3) royalty,
patent, technical, and copyright fees; (4) licensing
fees; and (5) other similar expenses and costs. For
purposes of this subparagraph, "intangible property"
includes patents, patent applications, trade names,
trademarks, service marks, copyrights, mask works,
trade secrets, and similar types of intangible assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who is
subject in a foreign country or state, other than a
state which requires mandatory unitary reporting,
to a tax on or measured by net income with respect
to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and

HB3876 - 98 - LRB096 11650 HLH 22225 b
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if the
taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an alternative
method of apportionment under Section 304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(G-14) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of

HB3876 - 99 - LRB096 11650 HLH 22225 b
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the stock
of the same person to whom the premiums and costs were
directly or indirectly paid, incurred, or accrued. The
preceding sentence does not apply to the extent that
the same dividends caused a reduction to the addition
modification required under Section 203(c)(2)(G-12) or
Section 203(c)(2)(G-13) of this Act.
and by deducting from the total so obtained the sum of the
following amounts:

HB3876 - 100 - LRB096 11650 HLH 22225 b
(H) An amount equal to all amounts included in such
total pursuant to the provisions of Sections 402(a),
402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
Internal Revenue Code or included in such total as
distributions under the provisions of any retirement
or disability plan for employees of any governmental
agency or unit, or retirement payments to retired
partners, which payments are excluded in computing net
earnings from self employment by Section 1402 of the
Internal Revenue Code and regulations adopted pursuant
thereto;
(I) The valuation limitation amount;
(J) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(K) An amount equal to all amounts included in
taxable income as modified by subparagraphs (A), (B),
(C), (D), (E), (F) and (G) which are exempt from
taxation by this State either by reason of its statutes
or Constitution or by reason of the Constitution,
treaties or statutes of the United States; provided
that, in the case of any statute of this State that
exempts income derived from bonds or other obligations
from the tax imposed under this Act, the amount
exempted shall be the interest net of bond premium
amortization;

HB3876 - 101 - LRB096 11650 HLH 22225 b
(L) With the exception of any amounts subtracted
under subparagraph (K), an amount equal to the sum of all
amounts disallowed as deductions by (i) Sections 171(a) (2)
and 265(a)(2) of the Internal Revenue Code, as now or
hereafter amended, and all amounts of expenses allocable to
interest and disallowed as deductions by Section 265(1) of
the Internal Revenue Code of 1954, as now or hereafter
amended; and (ii) for taxable years ending on or after
August 13, 1999, Sections 171(a)(2), 265, 280C, and
832(b)(5)(B)(i) of the Internal Revenue Code, plus, (iii)
for taxable years ending on or after December 31, 2009,
Section 45G(e)(3) of the Internal Revenue Code; the
provisions of this subparagraph are exempt from the
provisions of Section 250;
(M) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in an Enterprise Zone or
zones created under the Illinois Enterprise Zone Act or
a River Edge Redevelopment Zone or zones created under
the River Edge Redevelopment Zone Act and conducts
substantially all of its operations in an Enterprise
Zone or Zones or a River Edge Redevelopment Zone or
zones. This subparagraph (M) is exempt from the
provisions of Section 250;
(N) An amount equal to any contribution made to a
job training project established pursuant to the Tax

HB3876 - 102 - LRB096 11650 HLH 22225 b
Increment Allocation Redevelopment Act;
(O) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated a
High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (M) of paragraph (2) of this subsection
shall not be eligible for the deduction provided under
this subparagraph (O);
(P) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code of 1986;
(Q) For taxable year 1999 and thereafter, an amount
equal to the amount of any (i) distributions, to the
extent includible in gross income for federal income
tax purposes, made to the taxpayer because of his or
her status as a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim and (ii) items of
income, to the extent includible in gross income for
federal income tax purposes, attributable to, derived
from or in any way related to assets stolen from,
hidden from, or otherwise lost to a victim of

HB3876 - 103 - LRB096 11650 HLH 22225 b
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime immediately prior to,
during, and immediately after World War II, including,
but not limited to, interest on the proceeds receivable
as insurance under policies issued to a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime by European insurance
companies immediately prior to and during World War II;
provided, however, this subtraction from federal
adjusted gross income does not apply to assets acquired
with such assets or with the proceeds from the sale of
such assets; provided, further, this paragraph shall
only apply to a taxpayer who was the first recipient of
such assets after their recovery and who is a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime or as an heir of the
victim. The amount of and the eligibility for any
public assistance, benefit, or similar entitlement is
not affected by the inclusion of items (i) and (ii) of
this paragraph in gross income for federal income tax
purposes. This paragraph is exempt from the provisions
of Section 250;
(R) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal

HB3876 - 104 - LRB096 11650 HLH 22225 b
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not including
the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied by
0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0.
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of

HB3876 - 105 - LRB096 11650 HLH 22225 b
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (R) is exempt from the provisions of
Section 250;
(S) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (G-10), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (G-10), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction under
this subparagraph only once with respect to any one
piece of property.
This subparagraph (S) is exempt from the
provisions of Section 250;
(T) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction with

HB3876 - 106 - LRB096 11650 HLH 22225 b
a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer that
is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification. This subparagraph (T) is exempt
from the provisions of Section 250;
(U) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the

HB3876 - 107 - LRB096 11650 HLH 22225 b
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(c)(2)(G-12) for
interest paid, accrued, or incurred, directly or
indirectly, to the same person. This subparagraph (U)
is exempt from the provisions of Section 250; and
(V) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(c)(2)(G-13) for
intangible expenses and costs paid, accrued, or

HB3876 - 108 - LRB096 11650 HLH 22225 b
incurred, directly or indirectly, to the same foreign
person. This subparagraph (V) is exempt from the
provisions of Section 250; .
(W) in the case of an estate, an amount equal to
all amounts included in such total pursuant to the
provisions of Section 111 of the Internal Revenue Code
as a recovery of items previously deducted by the
decedent from adjusted gross income in the computation
of taxable income. This subparagraph (W) is exempt from
Section 250;
(X) an amount equal to the refund included in such
total of any tax deducted for federal income tax
purposes, to the extent that deduction was added back
under subparagraph (F). This subparagraph (X) is
exempt from the provisions of Section 250;
(Y) For taxable years ending on or after December
31, 2009, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(c)(2)(G-14), an amount equal to the amount of any
reimbursement received from the insurance company for
any loss covered by a policy for which those premiums
were paid, to the extent of the federal income tax
deduction that would have been allowable for the loss
if not for the reimbursement. This subparagraph (Y) is
exempt from the provisions of Section 250; and
(Z) The difference between the excess inclusion of

HB3876 - 109 - LRB096 11650 HLH 22225 b
the taxpayer under Section 860E(c) of the Internal
Revenue Code over the taxable income of the taxpayer,
computed without regard to Section 860E(a)(1) and
without regard to any net operating loss deduction.
This subparagraph (Z) is exempt from the provisions of
Section 250.
(3) Limitation. The amount of any modification
otherwise required under this subsection shall, under
regulations prescribed by the Department, be adjusted by
any amounts included therein which were properly paid,
credited, or required to be distributed, or permanently set
aside for charitable purposes pursuant to Internal Revenue
Code Section 642(c) during the taxable year.
(d) Partnerships.
(1) In general. In the case of a partnership, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. The taxable income referred to in
paragraph (1) shall be modified by adding thereto the sum
of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of taxable income;
(B) An amount equal to the amount of tax imposed by

HB3876 - 110 - LRB096 11650 HLH 22225 b
this Act to the extent deducted from gross income for
the taxable year;
(C) The amount of deductions allowed to the
partnership pursuant to Section 707 (c) of the Internal
Revenue Code in calculating its taxable income;
(D) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the
computation of taxable income;
(D-5) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of the
Internal Revenue Code;
(D-6) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-5), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (O) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was allowed in any taxable year to make a subtraction

HB3876 - 111 - LRB096 11650 HLH 22225 b
modification under subparagraph (O), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(D-7) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact the foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts

HB3876 - 112 - LRB096 11650 HLH 22225 b
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of the
same person to whom the interest was paid, accrued, or
incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that

HB3876 - 113 - LRB096 11650 HLH 22225 b
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract or
agreement entered into at arm's-length rates and
terms and the principal purpose for the payment is
not federal or Illinois tax avoidance; or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act; and
(D-8) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in

HB3876 - 114 - LRB096 11650 HLH 22225 b
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred or accrued. The preceding

HB3876 - 115 - LRB096 11650 HLH 22225 b
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(d)(2)(D-7) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets;
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who is
subject in a foreign country or state, other than a
state which requires mandatory unitary reporting,
to a tax on or measured by net income with respect
to such item; or
(ii) any item of intangible expense or cost

HB3876 - 116 - LRB096 11650 HLH 22225 b
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if the
taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an alternative
method of apportionment under Section 304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for

HB3876 - 117 - LRB096 11650 HLH 22225 b
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(D-9) For taxable years ending on or after December
31, 2008, an amount equal to the amount of insurance
premium expenses and costs otherwise allowed as a
deduction in computing base income, and that were paid,
accrued, or incurred, directly or indirectly, to a
person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the stock

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of the same person to whom the premiums and costs were
directly or indirectly paid, incurred, or accrued. The
preceding sentence does not apply to the extent that
the same dividends caused a reduction to the addition
modification required under Section 203(d)(2)(D-7) or
Section 203(d)(2)(D-8) of this Act.
and by deducting from the total so obtained the following
amounts:
(E) The valuation limitation amount;
(F) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(G) An amount equal to all amounts included in
taxable income as modified by subparagraphs (A), (B),
(C) and (D) which are exempt from taxation by this
State either by reason of its statutes or Constitution
or by reason of the Constitution, treaties or statutes
of the United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest net
of bond premium amortization;
(H) Any income of the partnership which
constitutes personal service income as defined in
Section 1348 (b) (1) of the Internal Revenue Code (as
in effect December 31, 1981) or a reasonable allowance

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for compensation paid or accrued for services rendered
by partners to the partnership, whichever is greater;
(I) An amount equal to all amounts of income
distributable to an entity subject to the Personal
Property Tax Replacement Income Tax imposed by
subsections (c) and (d) of Section 201 of this Act
including amounts distributable to organizations
exempt from federal income tax by reason of Section
501(a) of the Internal Revenue Code;
(J) With the exception of any amounts subtracted
under subparagraph (G), an amount equal to the sum of all
amounts disallowed as deductions by (i) Sections 171(a)
(2), and 265(2) of the Internal Revenue Code of 1954, as
now or hereafter amended, and all amounts of expenses
allocable to interest and disallowed as deductions by
Section 265(1) of the Internal Revenue Code, as now or
hereafter amended; and (ii) for taxable years ending on or
after August 13, 1999, Sections 171(a)(2), 265, 280C, and
832(b)(5)(B)(i) of the Internal Revenue Code, plus, (iii)
for taxable years ending on or after December 31, 2009,
Section 45G(e)(3) of the Internal Revenue Code; the
provisions of this subparagraph are exempt from the
provisions of Section 250;
(K) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in an Enterprise Zone or

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zones created under the Illinois Enterprise Zone Act,
enacted by the 82nd General Assembly, or a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations in an Enterprise Zone or Zones or
from a River Edge Redevelopment Zone or zones. This
subparagraph (K) is exempt from the provisions of
Section 250;
(L) An amount equal to any contribution made to a
job training project established pursuant to the Real
Property Tax Increment Allocation Redevelopment Act;
(M) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated a
High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (K) of paragraph (2) of this subsection
shall not be eligible for the deduction provided under
this subparagraph (M);
(N) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code of 1986;
(O) For taxable years 2001 and thereafter, for the

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taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not including
the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied by
0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by

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1.0.
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (O) is exempt from the provisions of
Section 250;
(P) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (D-5), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (D-5), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction under
this subparagraph only once with respect to any one
piece of property.
This subparagraph (P) is exempt from the
provisions of Section 250;

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(Q) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction with
a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer that
is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification. This subparagraph (Q) is exempt
from Section 250;
(R) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person

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who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(d)(2)(D-7) for interest
paid, accrued, or incurred, directly or indirectly, to
the same person. This subparagraph (R) is exempt from
Section 250; and
(S) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the

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addition modification required to be made for the same
taxable year under Section 203(d)(2)(D-8) for
intangible expenses and costs paid, accrued, or
incurred, directly or indirectly, to the same person.
This subparagraph (S) is exempt from Section 250; .
(T) For taxable years ending on or after December
31, 2009, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(d)(2)(D-9), an amount equal to the amount of any
reimbursement received from the insurance company for
any loss covered by a policy for which those premiums
were paid, to the extent of the federal income tax
deduction that would have been allowable for the loss
if not for the reimbursement. This subparagraph (T) is
exempt from the provisions of Section 250; and
(U) The difference between the excess inclusion of
the taxpayer under Section 860E(c) of the Internal
Revenue Code over the taxable income of the taxpayer,
computed without regard to Section 860E(a)(1) and
without regard to any net operating loss deduction.
This subparagraph (U) is exempt from the provisions of
Section 250.
(e) Gross income; adjusted gross income; taxable income.
(1) In general. Subject to the provisions of paragraph
(2) and subsection (b) (3), for purposes of this Section

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and Section 803(e), a taxpayer's gross income, adjusted
gross income, or taxable income for the taxable year shall
mean the amount of gross income, adjusted gross income or
taxable income properly reportable for federal income tax
purposes for the taxable year under the provisions of the
Internal Revenue Code. Taxable income may be less than
zero. However, for taxable years ending on or after
December 31, 1986, net operating loss carryforwards from
taxable years ending prior to December 31, 1986, may not
exceed the sum of federal taxable income for the taxable
year before net operating loss deduction, plus the excess
of addition modifications over subtraction modifications
for the taxable year. For taxable years ending prior to
December 31, 1986, taxable income may never be an amount in
excess of the net operating loss for the taxable year as
defined in subsections (c) and (d) of Section 172 of the
Internal Revenue Code, provided that when taxable income of
a corporation (other than a Subchapter S corporation),
trust, or estate is less than zero and addition
modifications, other than those provided by subparagraph
(E) of paragraph (2) of subsection (b) for corporations or
subparagraph (E) of paragraph (2) of subsection (c) for
trusts and estates, exceed subtraction modifications, an
addition modification must be made under those
subparagraphs for any other taxable year to which the
taxable income less than zero (net operating loss) is

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applied under Section 172 of the Internal Revenue Code or
under subparagraph (E) of paragraph (2) of this subsection
(e) applied in conjunction with Section 172 of the Internal
Revenue Code.
(2) Special rule. For purposes of paragraph (1) of this
subsection, the taxable income properly reportable for
federal income tax purposes shall mean:
(A) Certain life insurance companies. In the case
of a life insurance company subject to the tax imposed
by Section 801 of the Internal Revenue Code, life
insurance company taxable income, plus the amount of
distribution from pre-1984 policyholder surplus
accounts as calculated under Section 815a of the
Internal Revenue Code;
(B) Certain other insurance companies. In the case
of mutual insurance companies subject to the tax
imposed by Section 831 of the Internal Revenue Code,
insurance company taxable income;
(C) Regulated investment companies. In the case of
a regulated investment company subject to the tax
imposed by Section 852 of the Internal Revenue Code,
investment company taxable income;
(D) Real estate investment trusts. In the case of a
real estate investment trust subject to the tax imposed
by Section 857 of the Internal Revenue Code, real
estate investment trust taxable income;

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(E) Consolidated corporations. In the case of a
corporation which is a member of an affiliated group of
corporations filing a consolidated income tax return
for the taxable year for federal income tax purposes,
taxable income determined as if such corporation had
filed a separate return for federal income tax purposes
for the taxable year and each preceding taxable year
for which it was a member of an affiliated group. For
purposes of this subparagraph, the taxpayer's separate
taxable income shall be determined as if the election
provided by Section 243(b) (2) of the Internal Revenue
Code had been in effect for all such years;
(F) Cooperatives. In the case of a cooperative
corporation or association, the taxable income of such
organization determined in accordance with the
provisions of Section 1381 through 1388 of the Internal
Revenue Code, but without regard to the prohibition
against offsetting losses from patronage activities
against income from nonpatronage activities;
(G) Subchapter S corporations. In the case of: (i)
a Subchapter S corporation for which there is in effect
an election for the taxable year under Section 1362 of
the Internal Revenue Code, the taxable income of such
corporation determined in accordance with Section
1363(b) of the Internal Revenue Code, except that
taxable income shall take into account those items

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which are required by Section 1363(b)(1) of the
Internal Revenue Code to be separately stated; and (ii)
a Subchapter S corporation for which there is in effect
a federal election to opt out of the provisions of the
Subchapter S Revision Act of 1982 and have applied
instead the prior federal Subchapter S rules as in
effect on July 1, 1982, the taxable income of such
corporation determined in accordance with the federal
Subchapter S rules as in effect on July 1, 1982; and
(H) Partnerships. In the case of a partnership,
taxable income determined in accordance with Section
703 of the Internal Revenue Code, except that taxable
income shall take into account those items which are
required by Section 703(a)(1) to be separately stated
but which would be taken into account by an individual
in calculating his taxable income.
(3) Recapture of business expenses on disposition of
asset or business. Notwithstanding any other law to the
contrary, if in prior years income from an asset or
business has been classified as business income and in a
later year is demonstrated to be non-business income, then
all expenses, without limitation, deducted in such later
year and in the 2 immediately preceding taxable years
related to that asset or business that generated the
non-business income shall be added back and recaptured as
business income in the year of the disposition of the asset

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or business. Such amount shall be apportioned to Illinois
using the greater of the apportionment fraction computed
for the business under Section 304 of this Act for the
taxable year or the average of the apportionment fractions
computed for the business under Section 304 of this Act for
the taxable year and for the 2 immediately preceding
taxable years.
(f) Valuation limitation amount.
(1) In general. The valuation limitation amount
referred to in subsections (a) (2) (G), (c) (2) (I) and
(d)(2) (E) is an amount equal to:
(A) The sum of the pre-August 1, 1969 appreciation
amounts (to the extent consisting of gain reportable
under the provisions of Section 1245 or 1250 of the
Internal Revenue Code) for all property in respect of
which such gain was reported for the taxable year; plus
(B) The lesser of (i) the sum of the pre-August 1,
1969 appreciation amounts (to the extent consisting of
capital gain) for all property in respect of which such
gain was reported for federal income tax purposes for
the taxable year, or (ii) the net capital gain for the
taxable year, reduced in either case by any amount of
such gain included in the amount determined under
subsection (a) (2) (F) or (c) (2) (H).
(2) Pre-August 1, 1969 appreciation amount.

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(A) If the fair market value of property referred
to in paragraph (1) was readily ascertainable on August
1, 1969, the pre-August 1, 1969 appreciation amount for
such property is the lesser of (i) the excess of such
fair market value over the taxpayer's basis (for
determining gain) for such property on that date
(determined under the Internal Revenue Code as in
effect on that date), or (ii) the total gain realized
and reportable for federal income tax purposes in
respect of the sale, exchange or other disposition of
such property.
(B) If the fair market value of property referred
to in paragraph (1) was not readily ascertainable on
August 1, 1969, the pre-August 1, 1969 appreciation
amount for such property is that amount which bears the
same ratio to the total gain reported in respect of the
property for federal income tax purposes for the
taxable year, as the number of full calendar months in
that part of the taxpayer's holding period for the
property ending July 31, 1969 bears to the number of
full calendar months in the taxpayer's entire holding
period for the property.
(C) The Department shall prescribe such
regulations as may be necessary to carry out the
purposes of this paragraph.

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(g) Double deductions. Unless specifically provided
otherwise, nothing in this Section shall permit the same item
to be deducted more than once.
(h) Legislative intention. Except as expressly provided by
this Section there shall be no modifications or limitations on
the amounts of income, gain, loss or deduction taken into
account in determining gross income, adjusted gross income or
taxable income for federal income tax purposes for the taxable
year, or in the amount of such items entering into the
computation of base income and net income under this Act for
such taxable year, whether in respect of property values as of
August 1, 1969 or otherwise.
(Source: P.A. 94-776, eff. 5-19-06; 94-789, eff. 5-19-06;
94-1021, eff. 7-12-06; 94-1074, eff. 12-26-06; 95-23, eff.
8-3-07; 95-233, eff. 8-16-07; 95-286, eff. 8-20-07; 95-331,
eff. 8-21-07; 95-707, eff. 1-11-08; 95-876, eff. 8-21-08;
revised 10-15-08.)
(35 ILCS 5/204) (from Ch. 120, par. 2-204)
Sec. 204. Standard Exemption.
(a) Allowance of exemption. In computing net income under
this Act, there shall be allowed as an exemption the sum of the
amounts determined under subsections (b), (c) and (d),
multiplied by a fraction the numerator of which is the amount
of the taxpayer's base income allocable to this State for the

HB3876 - 133 - LRB096 11650 HLH 22225 b
taxable year and the denominator of which is the taxpayer's
total base income for the taxable year.
(b) Basic amount. For the purpose of subsection (a) of this
Section, except as provided by subsection (a) of Section 205
and in this subsection, each taxpayer shall be allowed a basic
amount of $1000, except that for corporations the basic amount
shall be zero for tax years ending on or after December 31,
2003, and for individuals the basic amount shall be:
(1) for taxable years ending on or after December 31,
1998 and prior to December 31, 1999, $1,300;
(2) for taxable years ending on or after December 31,
1999 and prior to December 31, 2000, $1,650;
(3) for taxable years ending on or after December 31,
2000, $2,000.
For taxable years ending on or after December 31, 1992, a
taxpayer whose Illinois base income exceeds the basic amount
and who is claimed as a dependent on another person's tax
return under the Internal Revenue Code of 1986 shall not be
allowed any basic amount under this subsection.
(c) Additional amount for individuals. In the case of an
individual taxpayer, there shall be allowed for the purpose of
subsection (a), in addition to the basic amount provided by
subsection (b), an additional exemption equal to the basic
amount for each exemption in excess of one allowable to such
individual taxpayer for the taxable year under Section 151 of
the Internal Revenue Code.

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(d) Additional exemptions for an individual taxpayer and
his or her spouse. In the case of an individual taxpayer and
his or her spouse, he or she shall each be allowed additional
exemptions as follows:
(1) Additional exemption for taxpayer or spouse 65
years of age or older.
(A) For taxpayer. An additional exemption of
$1,000 for the taxpayer if he or she has attained the
age of 65 before the end of the taxable year.
(B) For spouse when a joint return is not filed. An
additional exemption of $1,000 for the spouse of the
taxpayer if a joint return is not made by the taxpayer
and his spouse, and if the spouse has attained the age
of 65 before the end of such taxable year, and, for the
calendar year in which the taxable year of the taxpayer
begins, has no gross income and is not the dependent of
another taxpayer.
(2) Additional exemption for blindness of taxpayer or
spouse.
(A) For taxpayer. An additional exemption of
$1,000 for the taxpayer if he or she is blind at the
end of the taxable year.
(B) For spouse when a joint return is not filed. An
additional exemption of $1,000 for the spouse of the
taxpayer if a separate return is made by the taxpayer,
and if the spouse is blind and, for the calendar year

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in which the taxable year of the taxpayer begins, has
no gross income and is not the dependent of another
taxpayer. For purposes of this paragraph, the
determination of whether the spouse is blind shall be
made as of the end of the taxable year of the taxpayer;
except that if the spouse dies during such taxable year
such determination shall be made as of the time of such
death.
(C) Blindness defined. For purposes of this
subsection, an individual is blind only if his or her
central visual acuity does not exceed 20/200 in the
better eye with correcting lenses, or if his or her
visual acuity is greater than 20/200 but is accompanied
by a limitation in the fields of vision such that the
widest diameter of the visual fields subtends an angle
no greater than 20 degrees.
(e) Cross reference. See Article 3 for the manner of
determining base income allocable to this State.
(f) Application of Section 250. Section 250 does not apply
to the amendments to this Section made by Public Act 90-613.
(Source: P.A. 93-29, eff. 6-20-03.)
(35 ILCS 5/205) (from Ch. 120, par. 2-205)
Sec. 205. Exempt organizations.
(a) Charitable, etc. organizations. The base income of an
organization which is exempt from the federal income tax by

HB3876 - 136 - LRB096 11650 HLH 22225 b
reason of Section 501(a) of the Internal Revenue Code shall not
be determined under section 203 of this Act, but shall be its
unrelated business taxable income as determined under section
512 of the Internal Revenue Code, without any deduction for the
tax imposed by this Act. The standard exemption provided by
section 204 of this Act shall not be allowed in determining the
net income of an organization to which this subsection applies.
(b) Partnerships. A partnership as such shall not be
subject to the tax imposed by subsection 201 (a) and (b) of
this Act, but shall be subject to the replacement tax imposed
by subsection 201 (c) and (d) of this Act and shall compute its
base income as described in subsection (d) of Section 203 of
this Act. For taxable years ending on or after December 31,
2004, an investment partnership, as defined in Section
1501(a)(11.5) of this Act, shall not be subject to the tax
imposed by subsections (c) and (d) of Section 201 of this Act.
A partnership shall file such returns and other information at
such time and in such manner as may be required under Article 5
of this Act. The partners in a partnership shall be liable for
the replacement tax imposed by subsection 201 (c) and (d) of
this Act on such partnership, to the extent such tax is not
paid by the partnership, as provided under the laws of Illinois
governing the liability of partners for the obligations of a
partnership. Persons carrying on business as partners shall be
liable for the tax imposed by subsection 201 (a) and (b) of
this Act only in their separate or individual capacities.

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(c) Subchapter S corporations. A Subchapter S corporation
shall not be subject to the tax imposed by subsection 201 (a)
and (b) of this Act but shall be subject to the replacement tax
imposed by subsection 201 (c) and (d) of this Act and shall
file such returns and other information at such time and in
such manner as may be required under Article 5 of this Act.
(d) Combat zone, terrorist attack, and certain other deaths
death. An individual relieved from the federal income tax for
any taxable year by reason of section 692 of the Internal
Revenue Code shall not be subject to the tax imposed by this
Act for such taxable year.
(e) Certain trusts. A common trust fund described in
Section 584 of the Internal Revenue Code, and any other trust
to the extent that the grantor is treated as the owner thereof
under sections 671 through 678 of the Internal Revenue Code
shall not be subject to the tax imposed by this Act.
(f) Certain business activities. A person not otherwise
subject to the tax imposed by this Act shall not become subject
to the tax imposed by this Act by reason of:
(1) that person's ownership of tangible personal
property located at the premises of a printer in this State
with which the person has contracted for printing, or
(2) activities of the person's employees or agents
located solely at the premises of a printer and related to
quality control, distribution, or printing services
performed by a printer in the State with which the person

HB3876 - 138 - LRB096 11650 HLH 22225 b
has contracted for printing.
(g) A nonprofit risk organization that holds a certificate
of authority under Article VIID of the Illinois Insurance Code
is exempt from the tax imposed under this Act with respect to
its activities or operations in furtherance of the powers
conferred upon it under that Article VIID of the Illinois
Insurance Code.
(Source: P.A. 95-233, eff. 8-16-07; 95-331, eff. 8-21-07.)
(35 ILCS 5/207) (from Ch. 120, par. 2-207)
Sec. 207. Net Losses.
(a) If after applying all of the (i) modifications provided
for in paragraph (2) of Section 203(b), paragraph (2) of
Section 203(c) and paragraph (2) of Section 203(d) and (ii) the
allocation and apportionment provisions of Article 3 of this
Act and subsection (c) of this Section, the taxpayer's net
income results in a loss;
(1) for any taxable year ending prior to December 31,
1999, such loss shall be allowed as a carryover or
carryback deduction in the manner allowed under Section 172
of the Internal Revenue Code;
(2) for any taxable year ending on or after December
31, 1999 and prior to December 31, 2003, such loss shall be
allowed as a carryback to each of the 2 taxable years
preceding the taxable year of such loss and shall be a net
operating loss carryover to each of the 20 taxable years

HB3876 - 139 - LRB096 11650 HLH 22225 b
following the taxable year of such loss; and
(3) for any taxable year ending on or after December
31, 2003, such loss shall be allowed as a net operating
loss carryover to each of the 12 taxable years following
the taxable year of such loss.
(a-5) Election to relinquish carryback and order of
application of losses.
(A) For losses incurred in tax years ending prior
to December 31, 2003, the taxpayer may elect to
relinquish the entire carryback period with respect to
such loss. Such election shall be made in the form and
manner prescribed by the Department and shall be made
by the due date (including extensions of time) for
filing the taxpayer's return for the taxable year in
which such loss is incurred, and such election, once
made, shall be irrevocable.
(B) The entire amount of such loss shall be carried
to the earliest taxable year to which such loss may be
carried. The amount of such loss which shall be carried
to each of the other taxable years shall be the excess,
if any, of the amount of such loss over the sum of the
deductions for carryback or carryover of such loss
allowable for each of the prior taxable years to which
such loss may be carried.
(b) Any loss determined under subsection (a) of this
Section must be carried back or carried forward in the same

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manner for purposes of subsections (a) and (b) of Section 201
of this Act as for purposes of subsections (c) and (d) of
Section 201 of this Act.
(c) Notwithstanding any other provision of this Act: ,
(1) for each taxable year ending on or after December
31, 2008, for purposes of computing the loss for the
taxable year under subsection (a) of this Section and the
deduction taken into account for the taxable year for a net
operating loss carryover under paragraphs (1), (2), and (3)
of subsection (a) of this Section, the loss and net
operating loss carryover shall be reduced in an amount
equal to the reduction to the net operating loss and net
operating loss carryover to the taxable year,
respectively, required under Section 108(b)(2)(A) of the
Internal Revenue Code, multiplied by a fraction, the
numerator of which is the amount of discharge of
indebtedness income that is excluded from gross income for
the taxable year (but only if the taxable year ends on or
after December 31, 2008) under Section 108(a) of the
Internal Revenue Code and that would have been allocated
and apportioned to this State under Article 3 of this Act
but for that exclusion, and the denominator of which is the
total amount of discharge of indebtedness income excluded
from gross income under Section 108(a) of the Internal
Revenue Code for the taxable year. The reduction required
under this subsection (c) shall be made after the

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determination of Illinois net income for the taxable year
in which the indebtedness is discharged; and .
(2) for each taxable year ending on or after December
31, 2009, for purposes of computing the loss for the
taxable year under subsection (a) of this Section, the
taxpayer shall add back to its base income any amount of
income subtracted under Section 203(b)(2), (c)(2) or
(d)(2) of this Act.
(Source: P.A. 95-233, eff. 8-16-07.)
(35 ILCS 5/214)
Sec. 214. Tax credit for affordable housing donations.
(a) Beginning with taxable years ending on or after
December 31, 2001 and until the taxable year ending on December
31, 2011, a taxpayer who makes a donation under Section 7.28 of
the Illinois Housing Development Act is entitled to a credit
against the tax imposed by subsections (a) and (b) of Section
201 in an amount equal to 50% of the value of the donation.
Partners, shareholders of subchapter S corporations, and
owners of limited liability companies (if the limited liability
company is treated as a partnership for purposes of federal and
State income taxation) are entitled to a credit under this
Section to be determined in accordance with the determination
of income and distributive share of income under Sections 702
and 703 and subchapter S of the Internal Revenue Code. Persons
or entities not subject to the tax imposed by subsections (a)

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and (b) of Section 201 and who make a donation under Section
7.28 of the Illinois Housing Development Act are entitled to a
credit as described in this subsection and may transfer that
credit as described in subsection (c).
(b) If the amount of the credit exceeds the tax liability
for the year, the excess may be carried forward and applied to
the tax liability of the 5 taxable years following the excess
credit year. The tax credit shall be applied to the earliest
year for which there is a tax liability. If there are credits
for more than one year that are available to offset a
liability, the earlier credit shall be applied first.
(c) The transfer of the tax credit allowed under this
Section may be made (i) to the purchaser of land that has been
designated solely for affordable housing projects in
accordance with the Illinois Housing Development Act or (ii) to
another donor who has also made a donation in accordance with
Section 7.28 of the Illinois Housing Development Act.
(d) A taxpayer claiming the credit provided by this Section
must maintain and record any information that the Department
may require by regulation regarding the project for which the
credit is claimed. When claiming the credit provided by this
Section, the taxpayer must provide information regarding the
taxpayer's donation to the project under the Illinois Housing
Development Act.
(Source: P.A. 93-369, eff. 7-24-03; 94-46, eff. 6-17-05.)

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(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
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

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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
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

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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
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

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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
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

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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
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

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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
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

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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,
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

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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
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

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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 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

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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
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

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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 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
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 follow terms have the following meanings:
"Ancillary services" means services that are

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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
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.

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"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
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

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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
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

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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
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,

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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
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

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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
"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".

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(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
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.

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(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
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

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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.
(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

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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.
(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), and (B-5), 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

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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,
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

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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
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

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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
received, including, but not limited to, broadcast,
cable, advertising, 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

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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
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

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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
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 taxable years ending before December 31,
2008, 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, 2008, shall be binding for that company for
that taxable year and for all subsequent taxable years, and

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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
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

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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
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

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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
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

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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
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)

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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
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

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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
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.

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(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
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.

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(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
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

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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
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

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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
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

HB3876 - 179 - LRB096 11650 HLH 22225 b
(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
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

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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
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).
(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

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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
(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

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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
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,

HB3876 - 183 - LRB096 11650 HLH 22225 b
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
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

HB3876 - 184 - LRB096 11650 HLH 22225 b
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
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,

HB3876 - 185 - LRB096 11650 HLH 22225 b
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.
(Source: P.A. 94-247, eff. 1-1-06; 95-233, eff. 8-16-07;
95-707, eff. 1-11-08.)
(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

HB3876 - 186 - LRB096 11650 HLH 22225 b
Revenue Code of 1986, 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, 2009, 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
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

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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
corporations are required to make such returns and notices.
(c) Joint returns by husband and wife.
(1) Except as provided in paragraph (3), if a husband
and wife file a joint federal income tax return for a
taxable year they shall file a joint return under this Act
for such taxable year and their liabilities shall be joint
and several, but 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

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Department in which event their tax liabilities shall be
separate; but they may elect to determine their joint net
income and file a joint return 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
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

HB3876 - 189 - LRB096 11650 HLH 22225 b
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.
(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

HB3876 - 190 - LRB096 11650 HLH 22225 b
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
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

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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
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

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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
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

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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
original return, extension, claim for refund, assessment,
collection and payment and determination of the group's tax
liability under this Act.
(f) 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. The Department may by

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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.
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.

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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.
(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. 94-1074, eff. 12-26-06; 95-233, eff. 8-16-07.)
(35 ILCS 5/506) (from Ch. 120, par. 5-506)

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Sec. 506. Federal Returns.
(a) In general. Any person required to make a return for a
taxable year under this Act may, at any time that a deficiency
could be assessed or a refund claimed under this Act in respect
of any item reported or properly reportable on such return or
any amendment thereof, be required to furnish to the Department
a true and correct copy of any return which may pertain to such
item and which was filed by such person under the provisions of
the Internal Revenue Code.
(b) Changes affecting federal income tax. A person shall
notify the Department if:
(1) the taxable income, any item of income or
deduction, the income tax liability, or any tax credit
reported in an original or amended a federal income tax
return of that person for any year or as determined by the
Internal Revenue Service or the courts is altered by
amendment of such return or as a result of any other
recomputation or redetermination of federal taxable income
or loss, and such alteration reflects a change or
settlement with respect to any item or items, affecting the
computation of such person's net income, net loss, or of
any credit provided by Article 2 of this Act for any year
under this Act, or in the number of personal exemptions
allowable to such person under Section 151 of the Internal
Revenue Code, or
(2) the amount of tax required to be withheld by that

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person from compensation paid to employees and required to
be reported by that person on a federal return is altered
by amendment of the return or by any other recomputation or
redetermination that is agreed to or finally determined on
or after January 1, 2003, and the alteration affects the
amount of compensation subject to withholding by that
person under Section 701 of this Act.
Such notification shall be in the form of an amended return or
such other form as the Department may by regulations prescribe,
shall contain the person's name and address and such other
information as the Department may by regulations prescribe,
shall be signed by such person or his duly authorized
representative, and shall be filed not later than 120 days
after such alteration has been agreed to or finally determined
for federal income tax purposes or any federal income tax
deficiency or refund, tentative carryback adjustment,
abatement or credit resulting therefrom has been assessed or
paid, whichever shall first occur.
(Source: P.A. 92-846, eff. 8-23-02.)
(35 ILCS 5/601) (from Ch. 120, par. 6-601)
Sec. 601. Payment on Due Date of Return.
(a) In general. Every taxpayer required to file a return
under this Act shall, without assessment, notice or demand, pay
any tax due thereon to the Department, at the place fixed for
filing, on or before the date fixed for filing such return

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(determined without regard to any extension of time for filing
the return) pursuant to regulations prescribed by the
Department. If, however, the due date for payment of a
taxpayer's federal income tax liability for a tax year (as
provided in the Internal Revenue Code or by Treasury
regulation, or as extended by the Internal Revenue Service) is
later than the date fixed for filing the taxpayer's Illinois
income tax return for that tax year, the Department may, by
rule, prescribe a due date for payment that is not later than
the due date for payment of the taxpayer's federal income tax
liability. For purposes of the Illinois Administrative
Procedure Act, the adoption of rules to prescribe a later due
date for payment shall be deemed an emergency and necessary for
the public interest, safety, and welfare.
(b) Amount payable. In making payment as provided in this
section there shall remain payable only the balance of such tax
remaining due after giving effect to the following:
(1) Withheld tax. Any amount withheld during any
calendar year pursuant to Article 7 from compensation paid
to a taxpayer shall be deemed to have been paid on account
of any tax imposed by subsections 201(a) and (b) of this
Act on such taxpayer for his taxable year beginning in such
calendar year. If more than one taxable year begins in a
calendar year, such amount shall be deemed to have been
paid on account of such tax for the last taxable year so
beginning.

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(2) Estimated and tentative tax payments. Any amount of
estimated tax paid by a taxpayer pursuant to Article 8 for
a taxable year shall be deemed to have been paid on account
of the tax imposed by this Act for such taxable year.
(3) Foreign tax. The aggregate amount of tax which is
imposed upon or measured by income and which is paid by a
resident for a taxable year to another state or states on
income which is also subject to the tax imposed by
subsections 201(a) and (b) of this Act shall be credited
against the tax imposed by subsections 201(a) and (b)
otherwise due under this Act for such taxable year. The
aggregate credit provided under this paragraph shall not
exceed that amount which bears the same ratio to the tax
imposed by subsections 201(a) and (b) otherwise due under
this Act as the amount of the taxpayer's base income
subject to tax both by such other state or states and by
this State bears to his total base income subject to tax by
this State for the taxable year. The credit provided by
this paragraph shall not be allowed if any creditable tax
was deducted in determining base income for the taxable
year. Any person claiming such credit shall attach a
statement in support thereof and shall notify the Director
of any refund or reductions in the amount of tax claimed as
a credit hereunder all in such manner and at such time as
the Department shall by regulations prescribe.
(4) Accumulation and capital gain distributions. If

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the net income of a taxpayer includes amounts included in
his base income by reason of Section 667 668 or 669 of the
Internal Revenue Code (relating to accumulation and
capital gain distributions by a trust, respectively), the
tax imposed on such taxpayer by this Act shall be credited
with his pro rata portion of the taxes imposed by this Act
on such trust for preceding taxable years which would not
have been payable for such preceding years if the trust had
in fact made distributions to its beneficiaries at the
times and in the amounts specified in Section 667 Sections
666 and 669 of the Internal Revenue Code. The credit
provided by this paragraph shall not reduce the tax
otherwise due from the taxpayer to an amount less than that
which would be due if the amounts included by reason of
Section 667 Sections 668 and 669 of the Internal Revenue
Code were excluded from his or her base income.
(c) Cross reference. For application against tax due of
overpayments of tax for a prior year, see Section 909.
(Source: P.A. 94-247, eff. 1-1-06.)
(35 ILCS 5/701) (from Ch. 120, par. 7-701)
Sec. 701. Requirement and Amount of Withholding.
(a) In General. Every employer maintaining an office or
transacting business within this State and required under the
provisions of the Internal Revenue Code to withhold a tax on:
(1) compensation paid in this State (as determined

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under Section 304(a)(2)(B) to an individual; or
(2) payments described in subsection (b) shall deduct
and withhold from such compensation for each payroll period
(as defined in Section 3401 of the Internal Revenue Code)
an amount equal to the amount by which such individual's
compensation exceeds the proportionate part of this
withholding exemption (computed as provided in Section
702) attributable to the payroll period for which such
compensation is payable multiplied by a percentage equal to
the percentage tax rate for individuals provided in
subsection (b) of Section 201.
(b) Payment to Residents. Any payment (including
compensation) to a resident by a payor maintaining an office or
transacting business within this State (including any agency,
officer, or employee of this State or of any political
subdivision of this State) and on which withholding of tax is
required under the provisions of the Internal Revenue Code
shall be deemed to be compensation paid in this State by an
employer to an employee for the purposes of Article 7 and
Section 601(b)(1) to the extent such payment is included in the
recipient's base income and not subjected to withholding by
another state. Notwithstanding any other provision to the
contrary, no amount shall be withheld from unemployment
insurance benefit payments made to an individual pursuant to
the Unemployment Insurance Act unless the individual has
voluntarily elected the withholding pursuant to rules

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promulgated by the Director of Employment Security.
(c) Special Definitions. Withholding shall be considered
required under the provisions of the Internal Revenue Code to
the extent the Internal Revenue Code either requires
withholding or allows for voluntary withholding the payor and
recipient have entered into such a voluntary withholding
agreement. For the purposes of Article 7 and Section 1002(c)
the term "employer" includes any payor who is required to
withhold tax pursuant to this Section.
(d) Reciprocal Exemption. The Director may enter into an
agreement with the taxing authorities of any state which
imposes a tax on or measured by income to provide that
compensation paid in such state to residents of this State
shall be exempt from withholding of such tax; in such case, any
compensation paid in this State to residents of such state
shall be exempt from withholding. All reciprocal agreements
shall be subject to the requirements of Section 2505-575 of the
Department of Revenue Law (20 ILCS 2505/2505-575).
(e) Notwithstanding subsection (a)(2) of this Section, no
withholding is required on payments for which withholding is
required under Section 3405 or 3406 of the Internal Revenue
Code of 1954.
(Source: P.A. 92-846, eff. 8-23-02; 93-634, eff. 1-1-04.)
(35 ILCS 5/702) (from Ch. 120, par. 7-702)
Sec. 702. Amount Exempt from Withholding. For purposes of

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this Section an employee shall be entitled to a withholding
exemption in an amount equal to the basic amount in Section
204(b) for each personal or dependent exemption which he is
entitled to claim on his federal return pursuant to Section 151
of the Internal Revenue Code of 1986; plus an allowance equal
to $1,000 for each $1,000 he is entitled to deduct from gross
income in arriving at adjusted gross income pursuant to Section
62 of the Internal Revenue Code of 1986; plus an additional
allowance equal to $1,000 for each $1,000 eligible for
subtraction on his Illinois income tax return as Illinois real
estate taxes paid during the taxable year; or in any lesser
amount claimed by him. Every employee shall furnish to his
employer such information as is required for the employer to
make an accurate withholding under this Act. The employer may
rely on this information for withholding purposes. If any
employee fails or refuses to furnish such information, the
employer shall withhold the full rate of tax from the
employee's total compensation.
(Source: P.A. 90-613, eff. 7-9-98.)
(35 ILCS 5/703) (from Ch. 120, par. 7-703)
Sec. 703. Information statement. Every employer required
to deduct and withhold tax under this Act from compensation of
an employee, or who would have been required so to deduct and
withhold tax if the employee's withholding exemption were not
in excess of the basic amount in Section 204(b), shall furnish

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in duplicate to each such employee in respect of the
compensation paid by such employer to such employee during the
calendar year on or before January 31 of the succeeding year,
or, if his employment is terminated before the close of such
calendar year, on the date on which the last payment of
compensation is made, a written statement in such form as the
Department may by regulation prescribe showing the amount of
compensation paid by the employer to the employee, the amount
deducted and withheld as tax, the tax-exempt amount contributed
to a medical savings account, and such other information as the
Department shall prescribe. A copy of such statement shall be
filed by the employee with his return for his taxable year to
which it relates (as determined under Section 601(b)(1)).
(Source: P.A. 91-841, eff. 6-22-00; 92-16, eff. 6-28-01.)
(35 ILCS 5/704A)
Sec. 704A. Employer's return and payment of tax withheld.
(a) In general, every employer who deducts and withholds or
is required to deduct and withhold tax under this Act on or
after January 1, 2008 shall make those payments and returns as
provided in this Section.
(b) Returns. Every employer shall, in the form and manner
required by the Department, make returns with respect to taxes
withheld or required to be withheld under this Article 7 for
each quarter beginning on or after January 1, 2008, on or
before the last day of the first month following the close of

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that quarter.
(c) Payments. With respect to amounts withheld or required
to be withheld on or after January 1, 2008:
(1) Semi-weekly payments. For each calendar year, each
employer who withheld or was required to withhold more than
$12,000 during the one-year period ending on June 30 of the
immediately preceding calendar year, payment must be made:
(A) on or before each Friday of the calendar year,
for taxes withheld or required to be withheld on the
immediately preceding Saturday, Sunday, Monday, or
Tuesday;
(B) on or before each Wednesday of the calendar
year, for taxes withheld or required to be withheld on
the immediately preceding Wednesday, Thursday, or
Friday.
(2) Semi-weekly payments. Any employer who withholds
or is required to withhold more than $12,000 in any quarter
of a calendar year is required to make payments on the
dates set forth under item (1) of this subsection (c) for
each remaining quarter of that calendar year and for the
subsequent calendar year.
(3) Monthly payments. Each employer, other than an
employer described in items (1) or (2) of this subsection,
shall pay to the Department, on or before the 15th day of
each month the taxes withheld or required to be withheld
during the immediately preceding month.

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(4) Payments with returns. Each employer shall pay to
the Department, on or before the due date for each return
required to be filed under this Section, any tax withheld
or required to be withheld during the period for which the
return is due and not previously paid to the Department.
(d) Regulatory authority. The Department may, by rule:
(1) If the aggregate amounts required to be withheld
under this Article 7 do not exceed $1,000 for the calendar
year, permit employers, in lieu of the requirements of
subsections (b) and (c), to file annual returns due on or
before January 31 of the following year for taxes withheld
or required to be withheld during that calendar year and to
pay the taxes required to be shown on each such return no
later than the due date for such return.
(2) Provide that any payment required to be made under
subsection (c)(1) or (c)(2) is deemed to be timely to the
extent paid by electronic funds transfer on or before the
due date for deposit of federal income taxes withheld from,
or federal employment taxes due with respect to, the wages
from which the Illinois taxes were withheld.
(3) Designate one or more depositories to which payment
of taxes required to be withheld under this Article 7 must
be paid by some or all employers.
(4) Increase the threshold dollar amounts at which
employers are required to make semi-weekly payments under
subsection (c)(1) or (c)(2).

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(e) Annual return and payment. Every employer who deducts
and withholds or is required to deduct and withhold tax from a
person engaged in domestic service employment, as that term is
defined in Section 3510 of the Internal Revenue Code, may
comply with the requirements of this Section with respect to
such employees by filing an annual return and paying the taxes
required to be deducted and withheld on or before the 15th day
of the fourth month following the close of the employer's
taxable year. The Department may allow the employer's return to
be submitted with the employer's individual income tax return
or to be submitted with a return due from the employer under
Section 1400.2 of the Unemployment Insurance Act.
(f) Magnetic media and electronic filing. Any W-2 Form
that, under the Internal Revenue Code and regulations
promulgated thereunder, is required to be submitted to the
Internal Revenue Service on magnetic media or electronically
must also be submitted to the Department on magnetic media or
electronically for Illinois purposes, if required by the
Department.
(g) Interest on late payment. No interest shall accrue on
any underpayment of an amount due under this Section prior to
the due date (without regard for extensions) of the return on
which the underpaid amount was reported or required to be
reported.
(Source: P.A. 95-8, eff. 6-29-07; 95-707, eff. 1-11-08.)

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(35 ILCS 5/804) (from Ch. 120, par. 8-804)
Sec. 804. Failure to Pay Estimated Tax.
(a) In general. In case of any underpayment of estimated
tax by a taxpayer, except as provided in subsection (d) or (e),
the taxpayer shall be liable to a penalty in an amount
determined at the rate prescribed by Section 3-3 of the Uniform
Penalty and Interest Act upon the amount of the underpayment
(determined under subsection (b)) for each required
installment.
(b) Amount of underpayment. For purposes of subsection (a),
the amount of the underpayment shall be the excess of:
(1) the amount of the installment which would be
required to be paid under subsection (c), over
(2) the amount, if any, of the installment paid on or
before the last date prescribed for payment.
(c) Amount of Required Installments.
(1) Amount.
(A) In General. Except as provided in paragraph
(2), the amount of any required installment shall be
25% of the required annual payment.
(B) Required Annual Payment. For purposes of
subparagraph (A), the term "required annual payment"
means the lesser of
(i) 90% of the tax shown on the return for the
taxable year, or if no return is filed, 90% of the
tax for such year, or

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(ii) 100% of the tax shown on the return of the
taxpayer for the preceding taxable year if a return
showing a liability for tax was filed by the
taxpayer for the preceding taxable year and such
preceding year was a taxable year of 12 months.
(2) Lower Required Installment where Annualized Income
Installment is Less Than Amount Determined Under Paragraph
(1).
(A) In General. In the case of any required
installment if a taxpayer establishes that the
annualized income installment is less than the amount
determined under paragraph (1),
(i) the amount of such required installment
shall be the annualized income installment, and
(ii) any reduction in a required installment
resulting from the application of this
subparagraph shall be recaptured by increasing the
amount of the next required installment determined
under paragraph (1) by the amount of such
reduction, and by increasing subsequent required
installments to the extent that the reduction has
not previously been recaptured under this clause.
(B) Determination of Annualized Income
Installment. In the case of any required installment,
the annualized income installment is the excess, if
any, of

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(i) an amount equal to the applicable
percentage of the tax for the taxable year computed
by placing on an annualized basis the net income
for months in the taxable year ending before the
due date for the installment, over
(ii) the aggregate amount of any prior
required installments for the taxable year.
(C) Applicable Percentage.
In the case of the following The applicable
required installments: percentage is:
1st .............................. 22.5%
2nd ............................... 45%
3rd ............................... 67.5%
4th ............................... 90%
(D) Annualized Net Income; Individuals. For
individuals, net income shall be placed on an
annualized basis by:
(i) multiplying by 12, or in the case of a
taxable year of less than 12 months, by the number
of months in the taxable year, the net income
computed without regard to the standard exemption
for the months in the taxable year ending before
the month in which the installment is required to
be paid;
(ii) dividing the resulting amount by the
number of months in the taxable year ending before

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the month in which such installment date falls; and
(iii) deducting from such amount the standard
exemption allowable for the taxable year, such
standard exemption being determined as of the last
date prescribed for payment of the installment.
(E) Annualized Net Income; Corporations. For
corporations, net income shall be placed on an
annualized basis by multiplying by 12 the taxable
income
(i) for the first 3 months of the taxable year,
in the case of the installment required to be paid
in the 4th month,
(ii) for the first 3 months or for the first 5
months of the taxable year, in the case of the
installment required to be paid in the 6th month,
(iii) for the first 6 months or for the first 8
months of the taxable year, in the case of the
installment required to be paid in the 9th month,
and
(iv) for the first 9 months or for the first 11
months of the taxable year, in the case of the
installment required to be paid in the 12th month
of the taxable year,
then dividing the resulting amount by the number of
months in the taxable year (3, 5, 6, 8, 9, or 11 as the
case may be).

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(d) Exceptions. Notwithstanding the provisions of the
preceding subsections, the penalty imposed by subsection (a)
shall not be imposed if the taxpayer was not required to file
an Illinois income tax return for the preceding taxable year,
or, for individuals, if the taxpayer had no tax liability for
the preceding taxable year and such year was a taxable year of
12 months. The penalty imposed by subsection (a) shall also not
be imposed on any underpayments of estimated tax due before the
effective date of this amendatory Act of 1998 which
underpayments are solely attributable to the change in
apportionment from subsection (a) to subsection (h) of Section
304. The provisions of this amendatory Act of 1998 apply to tax
years ending on or after December 31, 1998.
(e) The penalty imposed for underpayment of estimated tax
by subsection (a) of this Section shall not be imposed to the
extent that the Director or his or her designate determines,
pursuant to Section 3-8 of the Uniform Penalty and Interest Act
that the penalty should not be imposed.
(f) Definition of tax. For purposes of subsections (b) and
(c), the term "tax" means the excess of the tax imposed under
Article 2 of this Act, over the amounts credited against such
tax under Sections 601(b) (3) and (4).
(g) Application of Section in case of tax withheld under
Article 7. For purposes of applying this Section:
(1) in the case of an individual, tax withheld from
compensation for the taxable year shall be deemed a payment

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of estimated tax, and an equal part of such amount shall be
deemed paid on each installment date for such taxable year,
unless the taxpayer establishes the dates on which all
amounts were actually withheld, in which case the amounts
so withheld shall be deemed payments of estimated tax on
the dates on which such amounts were actually withheld;
(2) amounts timely paid by a partnership, Subchapter S
corporation, or trust on behalf of a partner, shareholder,
or beneficiary pursuant to subsection (f) of Section 502 or
Section 709.5 and claimed as a payment of estimated tax
shall be deemed a payment of estimated tax made on the last
day of the taxable year of the partnership, Subchapter S
corporation, or trust for which the income from the
withholding is made was computed; and
(3) all other amounts pursuant to Article 7 shall be
deemed a payment of estimated tax on the date the payment
is made to the taxpayer of the amount from which the tax is
withheld.
(g-5) Amounts withheld under the State Salary and Annuity
Withholding Act. An individual who has amounts withheld under
paragraph (10) of Section 4 of the State Salary and Annuity
Withholding Act may elect to have those amounts treated as
payments of estimated tax made on the dates on which those
amounts are actually withheld.
(i) Short taxable year. The application of this Section to
taxable years of less than 12 months shall be in accordance

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with regulations prescribed by the Department.
The changes in this Section made by Public Act 84-127 shall
apply to taxable years ending on or after January 1, 1986.
(Source: P.A. 95-233, eff. 8-16-07.)
(35 ILCS 5/909) (from Ch. 120, par. 9-909)
Sec. 909. Credits and Refunds.
(a) In general. In the case of any overpayment, the
Department, within the applicable period of limitations for a
claim for refund, may credit the amount of such overpayment,
including any interest allowed thereon, against any liability
in respect of the tax imposed by this Act, regardless of
whether other collection remedies are closed to the Department
on the part of the person who made the overpayment and shall
refund any balance to such person.
(b) Credits against estimated tax. The Department may
prescribe regulations providing for the crediting against the
estimated tax for any taxable year of the amount determined by
the taxpayer or the Department to be an overpayment of the tax
imposed by this Act for a preceding taxable year.
(c) Interest on overpayment. Interest shall be allowed and
paid at the rate and in the manner prescribed in Section 3-2 of
the Uniform Penalty and Interest Act upon any overpayment in
respect of the tax imposed by this Act. For purposes of this
subsection, no amount of tax, for any taxable year, shall be
treated as having been paid before the date on which the tax

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return for such year was due under Section 505, without regard
to any extension of the time for filing such return.
(d) Refund claim. Every claim for refund shall be filed
with the Department in writing in such form as the Department
may by regulations prescribe, and shall state the specific
grounds upon which it is founded.
(e) Notice of denial. As soon as practicable after a claim
for refund is filed, the Department shall examine it and either
issue a notice of refund, abatement or credit to the claimant
or issue a notice of denial. If the Department has failed to
approve or deny the claim before the expiration of 6 months
from the date the claim was filed, the claimant may
nevertheless thereafter file with the Department a written
protest in such form as the Department may by regulation
prescribe. If a protest is filed, the Department shall consider
the claim and, if the taxpayer has so requested, shall grant
the taxpayer or the taxpayer's authorized representative a
hearing within 6 months after the date such request is filed.
(f) Effect of denial. A denial of a claim for refund
becomes final 60 days after the date of issuance of the notice
of such denial except for such amounts denied as to which the
claimant has filed a protest with the Department, as provided
by Section 910.
(g) An overpayment of tax shown on the face of an unsigned
return shall be considered forfeited to the State if after
notice and demand for signature by the Department the taxpayer

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fails to provide a signature and 3 years have passed from the
date the return was filed. An overpayment of tax refunded to a
taxpayer whose return was filed electronically shall be
considered an erroneous refund under Section 912 of this Act
if, after proper notice and demand by the Department, the
taxpayer fails to provide a required signature document. A
notice and demand for signature in the case of a return
reflecting an overpayment may be made by first class mail. This
subsection (g) shall apply to all returns filed pursuant to
this Act since 1969.
(h) This amendatory Act of 1983 applies to returns and
claims for refunds filed with the Department on and after July
1, 1983.
(Source: P.A. 89-399, eff. 8-20-95.)
(35 ILCS 5/911) (from Ch. 120, par. 9-911)
Sec. 911. Limitations on Claims for Refund.
(a) In general. Except as otherwise provided in this Act:
(1) A claim for refund shall be filed not later than 3
years after the date the return was filed (in the case of
returns required under Article 7 of this Act respecting any
amounts withheld as tax, not later than 3 years after the
15th day of the 4th month following the close of the
calendar year in which such withholding was made), or one
year after the date the tax was paid, whichever is the
later; and

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(2) No credit or refund shall be allowed or made with
respect to the year for which the claim was filed unless
such claim is filed within such period.
(b) Federal changes.
(1) In general. In any case where notification of an
alteration is required by Section 506(b), a claim for
refund may be filed within 2 years after the date on which
such notification was due (regardless of whether such
notice was given), but the amount recoverable pursuant to a
claim filed under this Section shall be limited to the
amount of any overpayment resulting under this Act from
recomputation of the taxpayer's net income, net loss, or
Article 2 credits for the taxable year after giving effect
to the item or items reflected in the alteration required
to be reported.
(2) Tentative carryback adjustments paid before
January 1, 1974. If, as the result of the payment before
January 1, 1974 of a federal tentative carryback
adjustment, a notification of an alteration is required
under Section 506(b), a claim for refund may be filed at
any time before January 1, 1976, but the amount recoverable
pursuant to a claim filed under this Section shall be
limited to the amount of any overpayment resulting under
this Act from recomputation of the taxpayer's base income
for the taxable year after giving effect to the federal
alteration resulting from the tentative carryback

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adjustment irrespective of any limitation imposed in
paragraph (l) of this subsection.
(c) Extension by agreement. Where, before the expiration of
the time prescribed in this section for the filing of a claim
for refund, both the Department and the claimant shall have
consented in writing to its filing after such time, such claim
may be filed at any time prior to the expiration of the period
agreed upon. The period so agreed upon may be extended by
subsequent agreements in writing made before the expiration of
the period previously agreed upon. In the case of a taxpayer
who is a partnership, Subchapter S corporation, or trust and
who enters into an agreement with the Department pursuant to
this subsection on or after January 1, 2003, a claim for refund
may be filed by issued to the partners, shareholders, or
beneficiaries of the taxpayer at any time prior to the
expiration of the period agreed upon. Any refund allowed
pursuant to the claim, however, shall be limited to the amount
of any overpayment of tax due under this Act that results from
recomputation of items of income, deduction, credits, or other
amounts of the taxpayer that are taken into account by the
partner, shareholder, or beneficiary in computing its
liability under this Act.
(d) Limit on amount of credit or refund.
(1) Limit where claim filed within 3-year period. If
the claim was filed by the claimant during the 3-year
period prescribed in subsection (a), the amount of the

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credit or refund shall not exceed the portion of the tax
paid within the period, immediately preceding the filing of
the claim, equal to 3 years plus the period of any
extension of time for filing the return.
(2) Limit where claim not filed within 3-year period.
If the claim was not filed within such 3-year period, the
amount of the credit or refund shall not exceed the portion
of the tax paid during the one year immediately preceding
the filing of the claim.
(e) Time return deemed filed. For purposes of this section
a tax return filed before the last day prescribed by law for
the filing of such return (including any extensions thereof)
shall be deemed to have been filed on such last day.
(f) No claim for refund or credit based on the taxpayer's
taking a credit for estimated tax payments as provided by
Section 601(b)(2) or for any amount paid by a taxpayer pursuant
to Section 602(a) or for any amount of credit for tax withheld
pursuant to Article 7 may be filed unless a return was filed
for the tax year not more than 3 years after the due date, as
provided by Section 505, of the return which was required to be
filed relative to the taxable year for which the payments were
made or for which the tax was withheld. The changes in this
subsection (f) made by this amendatory Act of 1987 shall apply
to all taxable years ending on or after December 31, 1969.
(g) Special Period of Limitation with Respect to Net Loss
Carrybacks. If the claim for refund relates to an overpayment

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attributable to a net loss carryback as provided by Section
207, in lieu of the 3 year period of limitation prescribed in
subsection (a), the period shall be that period which ends 3
years after the time prescribed by law for filing the return
(including extensions thereof) for the taxable year of the net
loss which results in such carryback (or, on and after August
13, 1999, with respect to a change in the carryover of an
Article 2 credit to a taxable year resulting from the carryback
of a Section 207 loss incurred in a taxable year beginning on
or after January 1, 2000, the period shall be that period that
ends 3 years after the time prescribed by law for filing the
return (including extensions of that time) for that subsequent
taxable year), or the period prescribed in subsection (c) in
respect of such taxable year, whichever expires later. In the
case of such a claim, the amount of the refund may exceed the
portion of the tax paid within the period provided in
subsection (d) to the extent of the amount of the overpayment
attributable to such carryback. On and after August 13, 1999,
if the claim for refund relates to an overpayment attributable
to the carryover of an Article 2 credit, or of a Section 207
loss, earned, incurred (in a taxable year beginning on or after
January 1, 2000), or used in a year for which a notification of
a change affecting federal taxable income must be filed under
subsection (b) of Section 506, the claim may be filed within
the period prescribed in paragraph (1) of subsection (b) in
respect of the year for which the notification is required. In

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the case of such a claim, the amount of the refund may exceed
the portion of the tax paid within the period provided in
subsection (d) to the extent of the amount of the overpayment
attributable to the recomputation of the taxpayer's Article 2
credits, or Section 207 loss, earned, incurred, or used in the
taxable year for which the notification is given.
(h) Claim for refund based on net loss. On and after August
23, 2002, no claim for refund shall be allowed to the extent
the refund is the result of an amount of net loss incurred in
any taxable year ending prior to December 31, 2002 under
Section 207 of this Act that was not reported to the Department
within 3 years of the due date (including extensions) of the
return for the loss year on either the original return filed by
the taxpayer or on amended return or to the extent that the
refund is the result of an amount of net loss incurred in any
taxable year under Section 207 for which no return was filed
within 3 years of the due date (including extensions) of the
return for the loss year.
(Source: P.A. 94-836, eff. 6-6-06; 95-233, eff. 8-16-07.)
(35 ILCS 5/1002) (from Ch. 120, par. 10-1002)
Sec. 1002. Failure to Pay Tax.
(a) Negligence. If any part of a deficiency is due to
negligence or intentional disregard of rules and regulations
(but without intent to defraud) there shall be added to the tax
as a penalty the amount prescribed by Section 3-5 of the

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Uniform Penalty and Interest Act.
(b) Fraud. If any part of a deficiency is due to fraud,
there shall be added to the tax as a penalty the amount
prescribed by Section 3-6 of the Uniform Penalty and Interest
Act.
(c) Nonwillful failure to pay withholding tax. If any
employer, without intent to evade or defeat any tax imposed by
this Act or the payment thereof, shall fail to make a return
and pay a tax withheld by him at the time required by or under
the provisions of this Act, such employer shall be liable for
such taxes and shall pay the same together with the interest
and the penalty provided by Sections 3-2 and 3-3, respectively,
of the Uniform Penalty and Interest Act and such interest and
penalty shall not be charged to or collected from the employee
by the employer.
(d) Willful failure to collect and pay over tax. Any person
required to collect, truthfully account for, and pay over the
tax imposed by this Act who willfully fails to collect such tax
or truthfully account for and pay over such tax or willfully
attempts in any manner to evade or defeat the tax or the
payment thereof, shall, in addition to other penalties provided
by law, be liable for the penalty imposed by Section 3-7 of the
Uniform Penalty and Interest Act.
(e) Penalties assessable.
(1) In general. Except as otherwise provided in this
Act or the Uniform Penalty and Interest Act, the penalties

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provided by this Act or by the Uniform Penalty and Interest
Act shall be paid upon notice and demand and shall be
assessed, collected, and paid in the same manner as taxes
and any reference in this Act to the tax imposed by this
Act shall be deemed also to refer to penalties provided by
this Act or by the Uniform Penalty and Interest Act.
(2) Procedure for assessing certain penalties. For the
purposes of Article 9 any penalty under Section 804(a) or
Section 1001 shall be deemed assessed upon the filing of
the return for the taxable year.
(3) Procedure for assessing the penalty for failure to
file withholding returns or annual transmittal forms for
wage and tax statements. The penalty imposed by Section
1004 will be asserted by the Department's issuance of a
notice of deficiency. If taxpayer files a timely protest,
the procedures of Section 908 will be followed. If taxpayer
does not file a timely protest, the notice of deficiency
will constitute an assessment pursuant to subsection (c) of
Section 904.
(4) Assessment of penalty under Section 1005(a) 1005
(b). The penalty imposed under Section 1005(a) 1005(b)
shall be deemed assessed upon the assessment of the tax to
which such penalty relates and shall be collected and paid
on notice and demand in the same manner as the tax.
(f) Determination of deficiency. For purposes of
subsections (a) and (b), the amount shown as the tax by the

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taxpayer upon his return shall be taken into account in
determining the amount of the deficiency only if such return
was filed on or before the last day prescribed by law for the
filing of such return, including any extensions of the time for
such filing.
(Source: P.A. 93-840, eff. 7-30-04.)
(35 ILCS 5/1101) (from Ch. 120, par. 11-1101)
Sec. 1101. Lien for Tax.
(a) If any person liable to pay any tax neglects or refuses
to pay the same after demand, the amount (including any
interest, additional amount, addition to tax, or assessable
penalty, together with any costs that may accrue in addition
thereto) shall be a lien in favor of the State of Illinois upon
all property and rights to property, whether real or personal,
belonging to such person.
(b) Unless another date is specifically fixed by law, the
lien imposed by subsection (a) of this Section shall arise at
the time the assessment is made and shall continue until the
liability for the amount so assessed (or a judgment against the
taxpayer arising out of such liability) is satisfied or becomes
unenforceable by reason of lapse of time.
(c) Deficiency procedure. If the lien arises from an
assessment pursuant to a notice of deficiency, such lien shall
not attach and the notice referred to in this section shall not
be filed until all proceedings in court for review of such

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assessment have terminated or the time for the taking thereof
has expired without such proceedings being instituted.
(d) Notice of lien. The lien created by assessment shall
terminate unless a notice of lien is filed, as provided in
section 1103 hereof, within 3 years from the date all
proceedings in court for the review of such assessment have
terminated or the time for the taking thereof has expired
without such proceedings being instituted. Where the lien
results from the filing of a return without payment of the tax
or penalty shown therein to be due, the lien shall terminate
unless a notice of lien is filed within 3 years from the date
such return was filed with the Department. For the purposes of
this subsection (d) (c), a tax return filed before the last day
prescribed by law, including any extension thereof, shall be
deemed to have been filed on such last day. The time limitation
period on the Department's right to file a notice of lien shall
not run during any period of time in which the order of any
court has the effect of enjoining or restraining the Department
from filing such notice of lien.
(Source: P.A. 86-905.)
(35 ILCS 5/1405.4)
Sec. 1405.4. Tax refund inquiries; response. The
Department of Revenue shall establish procedures to inform
taxpayers of the status of their refunds and shall provide a
response to respond in writing to each inquiry concerning

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refunds under this Act within 10 days after receiving the
inquiry. The response shall include the date the inquiry was
received, the file number assigned to the inquiry, and the name
and telephone number of a person within the Department of
Revenue whom the taxpayer may contact with further inquiries.
(Source: P.A. 89-89, eff. 6-30-95.)
Section 23. The Cigarette Use Tax Act is amended by
changing Section 1 as follows:
(35 ILCS 135/1) (from Ch. 120, par. 453.31)
Sec. 1. For the purpose of this Act, unless otherwise
required by the context:
"Use" means the exercise by any person of any right or
power over cigarettes incident to the ownership or possession
thereof, other than the making of a sale thereof in the course
of engaging in a business of selling cigarettes and shall
include the keeping or retention of cigarettes for use, except
"use" shall not include the use of cigarettes by a
not-for-profit research institution conducting tests
concerning the health effects of tobacco products, provided the
cigarettes are not offered for resale.
"Cigarette" means any roll for smoking made wholly or in
part of tobacco irrespective of size or shape and whether or
not such tobacco is flavored, adulterated or mixed with any
other ingredient, and the wrapper or cover of which is made of

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paper or any other substance or material except tobacco.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint adventure, public or
private corporation, however formed, limited liability
company, or a receiver, executor, administrator, trustee,
guardian or other representative appointed by order of any
court.
"Department" means the Department of Revenue.
"Sale" means any transfer, exchange or barter in any manner
or by any means whatsoever for a consideration, and includes
and means all sales made by any person.
"Original Package" means the individual packet, box or
other container whatsoever used to contain and to convey
cigarettes to the consumer.
"Distributor" means any and each of the following:
a. Any person engaged in the business of selling
cigarettes in this State who brings or causes to be brought
into this State from without this State any original
packages of cigarettes, on which original packages there is
no authorized evidence underneath a sealed transparent
wrapper showing that the tax liability imposed by this Act
has been paid or assumed by the out-of-State seller of such
cigarettes, for sale in the course of such business.
b. Any person who makes, manufactures or fabricates
cigarettes in this State for sale, except a person who
makes, manufactures or fabricates cigarettes for sale to

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residents incarcerated in penal institutions or resident
patients or a State-operated mental health facility.
c. Any person who makes, manufactures or fabricates
cigarettes outside this State, which cigarettes are placed
in original packages contained in sealed transparent
wrappers, for delivery or shipment into this State, and who
elects to qualify and is accepted by the Department as a
distributor under Section 7 of this Act.
"Distributor" does not include any person who transfers
cigarettes to a not-for-profit research institution that
conducts tests concerning the health effects of tobacco
products and who does not offer the cigarettes for resale.
"Distributor maintaining a place of business in this
State", or any like term, means any distributor having or
maintaining within this State, directly or by a subsidiary, an
office, distribution house, sales house, warehouse or other
place of business, or any agent operating within this State
under the authority of the distributor or its subsidiary,
irrespective of whether such place of business or agent is
located here permanently or temporarily, or whether such
distributor or subsidiary is licensed to transact business
within this State.
"Business" means any trade, occupation, activity or
enterprise engaged in or conducted in this State for the
purpose of selling cigarettes.
"Prior Continuous Compliance Taxpayer" means any person

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who is licensed under this Act and who, having been a licensee
for a continuous period of 5 years, is determined by the
Department not to have been either delinquent or deficient in
the payment of tax liability during that period or otherwise in
violation of this Act. Also, any taxpayer who has, as verified
by the Department, continuously complied with the condition of
his bond or other security under provisions of this Act of a
period of 5 consecutive years shall be considered to be a
"prior continuous compliance taxpayer". In calculating the
consecutive period of time described herein for qualification
as a "prior continuous compliance taxpayer", a consecutive
period of time of qualifying compliance immediately prior to
the effective date of this amendatory Act of 1987 shall be
credited to any licensee who became licensed on or before the
effective date of this amendatory Act of 1987.
(Source: P.A. 95-462, eff. 8-27-07.)
Section 25. The Motor Fuel Tax Law is amended by changing
Sections 1.2, 1.14, 1.22, 3, 3a, 5, 5a, 8, 13, 13a.4, and 13a.5
and by adding Section 17a as follows:
(35 ILCS 505/1.2) (from Ch. 120, par. 417.2)
Sec. 1.2. Distributor. "Distributor" means a person who
either (i) produces, refines, blends, compounds or
manufactures motor fuel in this State, or (ii) transports motor
fuel into this State, or (iii) exports motor fuel out of this

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State; or (iv) engages in the distribution of motor fuel
primarily by tank car or tank truck, or both, and who operates
an Illinois bulk plant where he or she has active bulk storage
capacity of not less than 30,000 gallons for gasoline as
defined in item (A) of Section 5 of this Law.
"Distributor" does not, however, include a person who
receives or transports into this State and sells or uses motor
fuel under such circumstances as preclude the collection of the
tax herein imposed, by reason of the provisions of the
constitution and statutes of the United States. However, a
person operating a motor vehicle into the State, may transport
motor fuel in the ordinary fuel tank attached to the motor
vehicle for the operation of the motor vehicle, without being
considered a distributor. Any railroad licensed as a bulk user
and registered under Section 18c-7201 of the Illinois Vehicle
Code may deliver special fuel directly into the fuel supply
tank of a locomotive owned, operated, or controlled by any
other railroad registered under Section 18c-7201 of the
Illinois Vehicle Code without being considered a distributor.
(Source: P.A. 91-173, eff. 1-1-00; 91-198, eff. 7-20-99; 92-16,
eff. 6-28-01.)
(35 ILCS 505/1.14) (from Ch. 120, par. 417.14)
Sec. 1.14. Supplier. "Supplier" means any person other than
a licensed distributor who (i) transports special fuel into
this State; or (ii) exports special fuel out of this State; or

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(iii) engages in the distribution of special fuel primarily by
tank car or tank truck, or both, and who operates an Illinois
bulk plant where he has active bulk storage capacity of not
less than 30,000 gallons for special fuel as defined in Section
1.13 of this Law.
"Supplier" does not, however, include a person who receives
or transports into this State and sells or uses special fuel
under such circumstances as preclude the collection of the tax
herein imposed, by reason of the provisions of the Constitution
and laws of the United States. However, a person operating a
motor vehicle into the State, may transport special fuel in the
ordinary fuel tank attached to the motor vehicle for the
operation of the motor vehicle without being considered a
supplier. Any railroad licensed as a bulk user and registered
under Section 18c-7201 of the Illinois Vehicle Code may deliver
special fuel directly into the fuel supply tank of a locomotive
owned, operated, or controlled by any other railroad registered
under Section 18c-7201 of the Illinois Vehicle Code without
being considered a supplier.
(Source: P.A. 91-173, eff. 1-1-00; 91-198, eff. 7-20-99; 92-16,
eff. 6-28-01.)
(35 ILCS 505/1.22)
Sec. 1.22. "Jurisdiction" means a state of the United
States, the District of Columbia, a state of the United Mexican
States, or a province or Territory of Canada.

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(Source: P.A. 88-480.)
(35 ILCS 505/3) (from Ch. 120, par. 419)
Sec. 3. No person shall act as a distributor of motor fuel
within this State without first securing a license to act as a
distributor of motor fuel from the Department. Application for
such license shall be made to the Department upon blanks
furnished by it. The application shall be signed and verified,
and shall contain such information as the Department deems
necessary. A blender shall, in addition to securing a
distributor's license, make application to the Department for a
blender's permit, setting forth in the application such
information as the Department deems necessary. The applicant
for a distributor's license shall also file with the Department
a bond on a form to be approved by and with a surety or sureties
satisfactory to the Department conditioned upon such applicant
paying to the State of Illinois all monies becoming due by
reason of the sale, export, or use of motor fuel by the
applicant, together with all penalties and interest thereon.
The Department shall fix the penalty of such bond in each case
taking into consideration the amount of motor fuel expected to
be sold, distributed, exported, and used by such applicant and
the penalty fixed by the Department shall be such, as in its
opinion, will protect the State of Illinois against failure to
pay the amount hereinafter provided on motor fuel sold,
distributed, exported, and used, but the amount of the penalty

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fixed by the Department shall not exceed twice the monthly
amount that would be collectable as a tax in the event of a
sale on all the motor fuel sold, distributed, exported, and
used by the distributor inclusive of tax-free sales, exports,
use, or distribution. Upon receipt of the application and bond
in proper form, the Department shall issue to the applicant a
license to act as a distributor. No person who is in default to
the State for monies due under this Act for the sale,
distribution, export, or use of motor fuel shall receive a
license to act as a distributor.
A license shall not be granted to any person whose
principal place of business is in a state other than Illinois,
unless such person is licensed for motor fuel distribution or
export in the state in which the principal place of business is
located and that such person is not in default to that State
for any monies due for the sale, distribution, export, or use
of motor fuel.
(Source: P.A. 90-491, eff. 1-1-98; 91-173, eff. 1-1-00.)
(35 ILCS 505/3a) (from Ch. 120, par. 419a)
Sec. 3a. No person, other than a licensed distributor,
shall act as a supplier of special fuel within this State
without first securing a license to act as a supplier of
special fuel from the Department.
Application for such license shall be made to the
Department upon blanks furnished by it. The application shall

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be signed and verified and shall contain such information as
the Department deems necessary.
The applicant for a supplier's license shall also file,
with the Department, a bond on a form to be approved by and
with a surety or sureties satisfactory to the Department,
conditioned upon such applicant paying to the State of Illinois
all moneys becoming due by reason of the sale or use of special
fuel by the applicant, together with all penalties and interest
thereon. The Department shall fix the penalty of such bond in
each case, taking into consideration the amount of special fuel
expected to be sold, distributed, exported, and used by such
applicant, and the penalty fixed by the Department shall be
such, as in its opinion, will protect the State of Illinois
against failure to pay the amount hereinafter provided on
special fuel sold, distributed, exported, and used, but the
amount of the penalty fixed by the Department shall not exceed
twice the monthly amount of tax liability that would be
collectable as a tax in the event of a taxable sale on all the
special fuel sold, distributed, exported, and used by the
supplier inclusive of tax-free sales, use, exports, or
distribution.
Upon receipt of the application and bond in proper form,
the Department shall issue to the applicant a license to act as
a supplier. No person who is in default to the State for moneys
due under this Act for the sale, distribution, export, or use
of motor fuel shall receive a license to act as a supplier.

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A license shall not be granted to any person whose
principal place of business is in a state other than Illinois,
unless such person is licensed for motor fuel distribution or
export in the State in which the principal place of business is
located and that other State requires such license and that
such person is not in default to that State for any monies due
for the sale, distribution, export, or use of motor fuel.
(Source: P.A. 90-491, eff. 1-1-98; 91-173, eff. 1-1-00.)
(35 ILCS 505/5) (from Ch. 120, par. 421)
Sec. 5. Except as hereinafter provided, a person holding a
valid unrevoked license to act as a distributor of motor fuel
shall, between the 1st and 20th days of each calendar month,
make return to the Department, showing an itemized statement of
the number of invoiced gallons of motor fuel of the types
specified in this Section which were purchased, acquired, or
received, or exported during the preceding calendar month; the
amount of such motor fuel produced, refined, compounded,
manufactured, blended, sold, distributed, exported, and used
by the licensed distributor during the preceding calendar
month; the amount of such motor fuel lost or destroyed during
the preceding calendar month; the amount of such motor fuel on
hand at the close of business for such month; and such other
reasonable information as the Department may require. If a
distributor's only activities with respect to motor fuel are
either: (1) production of alcohol in quantities of less than

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10,000 proof gallons per year or (2) blending alcohol in
quantities of less than 10,000 proof gallons per year which
such distributor has produced, he shall file returns on an
annual basis with the return for a given year being due by
January 20 of the following year. Distributors whose total
production of alcohol (whether blended or not) exceeds 10,000
proof gallons per year, based on production during the
preceding (calendar) year or as reasonably projected by the
Department if one calendar year's record of production cannot
be established, shall file returns between the 1st and 20th
days of each calendar month as hereinabove provided.
The types of motor fuel referred to in the preceding
paragraph are: (A) All products commonly or commercially known
or sold as gasoline (including casing-head and absorption or
natural gasoline), gasohol, motor benzol or motor benzene
regardless of their classification or uses; and (B) all
combustible gases which exist in a gaseous state at 60 degrees
Fahrenheit and at 14.7 pounds per square inch absolute
including, but not limited to, liquefied petroleum gases used
for highway purposes; and (C) special fuel. Only those
quantities of combustible gases (example (B) above) which are
used or sold by the distributor to be used to propel motor
vehicles on the public highways, or which are delivered into a
storage tank that is located at a facility that has withdrawal
facilities which are readily accessible to and are capable of
dispensing combustible gases into the fuel supply tanks of

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motor vehicles, shall be subject to return. For the purposes of
this Act, liquefied petroleum gases shall mean and include any
material having a vapor pressure not exceeding that allowed for
commercial propane composed predominantly of the following
hydrocarbons, either by themselves or as mixtures: Propane,
Propylene, Butane (normal butane or iso-butane) and Butylene
(including isomers).
In case of a sale of special fuel to someone other than a
licensed distributor, or a licensed supplier, for a use other
than in motor vehicles, the distributor shall show in his
return the amount of invoiced gallons sold and the name and
address of the purchaser in addition to any other information
the Department may require.
All special fuel sold or used for non-highway purposes must
have a dye added in accordance with Section 4d of this Law.
In case of a tax-free sale, as provided in Section 6, of
motor fuel which the distributor is required by this Section to
include in his return to the Department, the distributor in his
return shall show: (1) If the sale is made to another licensed
distributor the amount sold and the name, address and license
number of the purchasing distributor; (2) if the sale is made
to a person where delivery is made outside of this State the
name and address of such purchaser and the point of delivery
together with the date and amount delivered; (3) if the sale is
made to the Federal Government or its instrumentalities the
amount sold; (4) if the sale is made to a municipal corporation

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owning and operating a local transportation system for public
service in this State the name and address of such purchaser,
and the amount sold, as evidenced by official forms of
exemption certificates properly executed and furnished by such
purchaser; (5) if the sale is made to a privately owned public
utility owning and operating 2-axle vehicles designed and used
for transporting more than 7 passengers, which vehicles are
used as common carriers in general transportation of
passengers, are not devoted to any specialized purpose and are
operated entirely within the territorial limits of a single
municipality or of any group of contiguous municipalities or in
a close radius thereof, and the operations of which are subject
to the regulations of the Illinois Commerce Commission, then
the name and address of such purchaser and the amount sold as
evidenced by official forms of exemption certificates properly
executed and furnished by the purchaser; (6) if the product
sold is special fuel and if the sale is made to a licensed
supplier under conditions which qualify the sale for tax
exemption under Section 6 of this Act, the amount sold and the
name, address and license number of the purchaser; and (7) if a
sale of special fuel is made to someone other than a licensed
distributor, or a licensed supplier, for a use other than in
motor vehicles, by making a specific notation thereof on the
invoice or sales slip covering such sales and obtaining such
supporting documentation as may be required by the Department.
All special fuel sold or used for non-highway purposes must

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have a dye added in accordance with Section 4d of this Law.
A person whose license to act as a distributor of motor
fuel has been revoked shall make a return to the Department
covering the period from the date of the last return to the
date of the revocation of the license, which return shall be
delivered to the Department not later than 10 days from the
date of the revocation or termination of the license of such
distributor; the return shall in all other respects be subject
to the same provisions and conditions as returns by
distributors licensed under the provisions of this Act.
The records, waybills and supporting documents kept by
railroads and other common carriers in the regular course of
business shall be prima facie evidence of the contents and
receipt of cars or tanks covered by those records, waybills or
supporting documents.
If the Department has reason to believe and does believe
that the amount shown on the return as purchased, acquired,
received, exported sold, used, lost or destroyed is incorrect,
or that an amount of motor fuel of the types required by the
second paragraph of this Section to be reported to the
Department has not been correctly reported the Department shall
fix an amount for such receipt, sales, export, use, loss or
destruction according to its best judgment and information,
which amount so fixed by the Department shall be prima facie
correct. All returns shall be made on forms prepared and
furnished by the Department, and shall contain such other

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information as the Department may reasonably require. The
return must be accompanied by appropriate computer-generated
magnetic media supporting schedule data in the format required
by the Department, unless, as provided by rule, the Department
grants an exception upon petition of a taxpayer. All licensed
distributors shall report all losses of motor fuel sustained on
account of fire, theft, spillage, spoilage, leakage, or any
other provable cause , but not including theft, when filing the
return for the period during which the loss occurred. The mere
making of the report does not assure the allowance of the loss
as a reduction in tax liability. Losses of motor fuel as the
result of evaporation or shrinkage due to temperature
variations may not exceed 1% of the total gallons in storage at
the beginning of the month, plus the receipts of gallonage
during the month, minus the gallonage remaining in storage at
the end of the month. Any loss reported that is in excess of 1%
shall be subject to the tax imposed by Section 2 of this Law.
On and after July 1, 2001, for each 6-month period January
through June, net losses of motor fuel (for each category of
motor fuel that is required to be reported on a return) as the
result of evaporation or shrinkage due to temperature
variations may not exceed 1% of the total gallons in storage at
the beginning of each January, plus the receipts of gallonage
each January through June, minus the gallonage remaining in
storage at the end of each June. On and after July 1, 2001, for
each 6-month period July through December, net losses of motor

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fuel (for each category of motor fuel that is required to be
reported on a return) as the result of evaporation or shrinkage
due to temperature variations may not exceed 1% of the total
gallons in storage at the beginning of each July, plus the
receipts of gallonage each July through December, minus the
gallonage remaining in storage at the end of each December. Any
net loss reported that is in excess of this amount shall be
subject to the tax imposed by Section 2 of this Law. For
purposes of this Section, "net loss" means the number of
gallons gained through temperature variations minus the number
of gallons lost through temperature variations or evaporation
for each of the respective 6-month periods.
(Source: P.A. 91-173, eff. 1-1-00; 92-30, eff. 7-1-01.)
(35 ILCS 505/5a) (from Ch. 120, par. 421a)
Sec. 5a. A person holding a valid unrevoked license to act
as a supplier of special fuel shall, between the 1st and 20th
days of each calendar month, make return to the Department
showing an itemized statement of the number of invoiced gallons
of special fuel acquired, received, purchased, sold, exported,
or used during the preceding calendar month; the amount of
special fuel sold, distributed, exported, and used by the
licensed supplier during the preceding calendar month; the
amount of special fuel lost or destroyed during the preceding
calendar month; the amount of special fuel on hand at the close
of business for the preceding calendar month; and such other

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reasonable information as the Department may require.
A person whose license to act as a supplier of special fuel
has been revoked shall make a return to the Department covering
the period from the date of the last return to the date of the
revocation of the license, which return shall be delivered to
the Department not later than 10 days from the date of the
revocation or termination of the license of such supplier. The
return shall in all other respects be subject to the same
provisions and conditions as returns by suppliers licensed
under this Act.
The records, waybills and supporting documents kept by
railroads and other common carriers in the regular course of
business shall be prima facie evidence of the contents and
receipt of cars or tanks covered by those records, waybills or
supporting documents.
If the Department has reason to believe and does believe
that the amount shown on the return as purchased, acquired,
received, sold, exported, used, or lost is incorrect, or that
an amount of special fuel of the type required by the 1st
paragraph of this Section to be reported to the Department by
suppliers has not been correctly reported as a purchase,
receipt, sale, use, export, or loss the Department shall fix an
amount for such purchase, receipt, sale, use, export, or loss
according to its best judgment and information, which amount so
fixed by the Department shall be prima facie correct. All
licensed suppliers shall report all losses of special fuel

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sustained on account of fire, theft, spillage, spoilage,
leakage, or any other provable cause, but not including theft,
when filing the return for the period during which the loss
occurred. The mere making of the report does not assure the
allowance of the loss as a reduction in tax liability. Losses
of special fuel as the result of evaporation or shrinkage due
to temperature variations may not exceed 1% of the total
gallons in storage at the beginning of the month, plus the
receipts of gallonage during the month, minus the gallonage
remaining in storage at the end of the month.
Any loss reported that is in excess of 1% shall be subject
to the tax imposed by Section 2 of this Law. On and after July
1, 2001, for each 6-month period January through June, net
losses of special fuel (for each category of special fuel that
is required to be reported on a return) as the result of
evaporation or shrinkage due to temperature variations may not
exceed 1% of the total gallons in storage at the beginning of
each January, plus the receipts of gallonage each January
through June, minus the gallonage remaining in storage at the
end of each June. On and after July 1, 2001, for each 6-month
period July through December, net losses of special fuel (for
each category of special fuel that is required to be reported
on a return) as the result of evaporation or shrinkage due to
temperature variations may not exceed 1% of the total gallons
in storage at the beginning of each July, plus the receipts of
gallonage each July through December, minus the gallonage

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remaining in storage at the end of each December. Any net loss
reported that is in excess of this amount shall be subject to
the tax imposed by Section 2 of this Law. For purposes of this
Section, "net loss" means the number of gallons gained through
temperature variations minus the number of gallons lost through
temperature variations or evaporation for each of the
respective 6-month periods.
In case of a sale of special fuel to someone other than a
licensed distributor or licensed supplier for a use other than
in motor vehicles, the supplier shall show in his return the
amount of invoiced gallons sold and the name and address of the
purchaser in addition to any other information the Department
may require.
All special fuel sold or used for non-highway purposes must
have a dye added in accordance with Section 4d of this Law.
All returns shall be made on forms prepared and furnished
by the Department and shall contain such other information as
the Department may reasonably require. The return must be
accompanied by appropriate computer-generated magnetic media
supporting schedule data in the format required by the
Department, unless, as provided by rule, the Department grants
an exception upon petition of a taxpayer.
In case of a tax-free sale, as provided in Section 6a, of
special fuel which the supplier is required by this Section to
include in his return to the Department, the supplier in his
return shall show: (1) If the sale of special fuel is made to

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the Federal Government or its instrumentalities; (2) if the
sale of special fuel is made to a municipal corporation owning
and operating a local transportation system for public service
in this State, the name and address of such purchaser and the
amount sold, as evidenced by official forms of exemption
certificates properly executed and furnished by such
purchaser; (3) if the sale of special fuel is made to a
privately owned public utility owning and operating 2-axle
vehicles designed and used for transporting more than 7
passengers, which vehicles are used as common carriers in
general transportation of passengers, are not devoted to any
specialized purpose and are operated entirely within the
territorial limits of a single municipality or of any group of
contiguous municipalities or in a close radius thereof, and the
operations of which are subject to the regulations of the
Illinois Commerce Commission, then the name and address of such
purchaser and the amount sold, as evidenced by official forms
of exemption certificates properly executed and furnished by
such purchaser; (4) if the product sold is special fuel and if
the sale is made to a licensed supplier or to a licensed
distributor under conditions which qualify the sale for tax
exemption under Section 6a of this Act, the amount sold and the
name, address and license number of such purchaser; (5) if a
sale of special fuel is made to a person where delivery is made
outside of this State, the name and address of such purchaser
and the point of delivery together with the date and amount of

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invoiced gallons delivered; and (6) if a sale of special fuel
is made to someone other than a licensed distributor or a
licensed supplier, for a use other than in motor vehicles, by
making a specific notation thereof on the invoice or sales slip
covering that sale and obtaining such supporting documentation
as may be required by the Department.
All special fuel sold or used for non-highway purposes must
have a dye added in accordance with Section 4d of this Law.
(Source: P.A. 91-173, eff. 1-1-00; 92-30, eff. 7-1-01.)
(35 ILCS 505/8) (from Ch. 120, par. 424)
Sec. 8. Except as provided in Section 8a, subdivision
(h)(1) of Section 12a, Section 13a.6, and items 13, 14, 15, and
16 of Section 15, all money received by the Department under
this Act, including payments made to the Department by member
jurisdictions participating in the International Fuel Tax
Agreement, shall be deposited in a special fund in the State
treasury, to be known as the "Motor Fuel Tax Fund", and shall
be used as follows:
(a) 2 1/2 cents per gallon of the tax collected on special
fuel under paragraph (b) of Section 2 and Section 13a of this
Act shall be transferred to the State Construction Account Fund
in the State Treasury;
(b) $420,000 shall be transferred each month to the State
Boating Act Fund to be used by the Department of Natural
Resources for the purposes specified in Article X of the Boat

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Registration and Safety Act;
(c) $2,250,000 shall be transferred each month to the Grade
Crossing Protection Fund to be used as follows: not less than
$6,000,000 each fiscal year shall be used for the construction
or reconstruction of rail highway grade separation structures;
$2,250,000 in fiscal year 2004 and each fiscal year thereafter
shall be transferred to the Transportation Regulatory Fund and
shall be accounted for as part of the rail carrier portion of
such funds and shall be used to pay the cost of administration
of the Illinois Commerce Commission's railroad safety program
in connection with its duties under subsection (3) of Section
18c-7401 of the Illinois Vehicle Code, with the remainder to be
used by the Department of Transportation upon order of the
Illinois Commerce Commission, to pay that part of the cost
apportioned by such Commission to the State to cover the
interest of the public in the use of highways, roads, streets,
or pedestrian walkways in the county highway system, township
and district road system, or municipal street system as defined
in the Illinois Highway Code, as the same may from time to time
be amended, for separation of grades, for installation,
construction or reconstruction of crossing protection or
reconstruction, alteration, relocation including construction
or improvement of any existing highway necessary for access to
property or improvement of any grade crossing including the
necessary highway approaches thereto of any railroad across the
highway or public road, or for the installation, construction,

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reconstruction, or maintenance of a pedestrian walkway over or
under a railroad right-of-way, as provided for in and in
accordance with Section 18c-7401 of the Illinois Vehicle Code.
The Commission shall not order more than $2,000,000 per year in
Grade Crossing Protection Fund moneys for pedestrian walkways.
In entering orders for projects for which payments from the
Grade Crossing Protection Fund will be made, the Commission
shall account for expenditures authorized by the orders on a
cash rather than an accrual basis. For purposes of this
requirement an "accrual basis" assumes that the total cost of
the project is expended in the fiscal year in which the order
is entered, while a "cash basis" allocates the cost of the
project among fiscal years as expenditures are actually made.
To meet the requirements of this subsection, the Illinois
Commerce Commission shall develop annual and 5-year project
plans of rail crossing capital improvements that will be paid
for with moneys from the Grade Crossing Protection Fund. The
annual project plan shall identify projects for the succeeding
fiscal year and the 5-year project plan shall identify projects
for the 5 directly succeeding fiscal years. The Commission
shall submit the annual and 5-year project plans for this Fund
to the Governor, the President of the Senate, the Senate
Minority Leader, the Speaker of the House of Representatives,
and the Minority Leader of the House of Representatives on the
first Wednesday in April of each year;
(d) of the amount remaining after allocations provided for

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in subsections (a), (b) and (c), a sufficient amount shall be
reserved to pay all of the following:
(1) the costs of the Department of Revenue in
administering this Act;
(2) the costs of the Department of Transportation in
performing its duties imposed by the Illinois Highway Code
for supervising the use of motor fuel tax funds apportioned
to municipalities, counties and road districts;
(3) refunds provided for in Section 13 of this Act, and
refunds for overpayment of decal fees paid under Section
13a.4 of this Act, and under the terms of the International
Fuel Tax Agreement referenced in Section 14a;
(4) from October 1, 1985 until June 30, 1994, the
administration of the Vehicle Emissions Inspection Law,
which amount shall be certified monthly by the
Environmental Protection Agency to the State Comptroller
and shall promptly be transferred by the State Comptroller
and Treasurer from the Motor Fuel Tax Fund to the Vehicle
Inspection Fund, and for the period July 1, 1994 through
June 30, 2000, one-twelfth of $25,000,000 each month, for
the period July 1, 2000 through June 30, 2003, one-twelfth
of $30,000,000 each month, and $15,000,000 on July 1, 2003,
and $15,000,000 on January 1, 2004, and $15,000,000 on each
July 1 and October 1, or as soon thereafter as may be
practical, during the period July 1, 2004 through June 30,
2009, for the administration of the Vehicle Emissions

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Inspection Law of 2005, to be transferred by the State
Comptroller and Treasurer from the Motor Fuel Tax Fund into
the Vehicle Inspection Fund;
(5) amounts ordered paid by the Court of Claims; and
(6) payment of motor fuel use taxes due to member
jurisdictions under the terms of the International Fuel Tax
Agreement. The Department shall certify these amounts to
the Comptroller by the 15th day of each month; the
Comptroller shall cause orders to be drawn for such
amounts, and the Treasurer shall administer those amounts
on or before the last day of each month;
(e) after allocations for the purposes set forth in
subsections (a), (b), (c) and (d), the remaining amount shall
be apportioned as follows:
(1) Until January 1, 2000, 58.4%, and beginning January
1, 2000, 45.6% shall be deposited as follows:
(A) 37% into the State Construction Account Fund,
and
(B) 63% into the Road Fund, $1,250,000 of which
shall be reserved each month for the Department of
Transportation to be used in accordance with the
provisions of Sections 6-901 through 6-906 of the
Illinois Highway Code;
(2) Until January 1, 2000, 41.6%, and beginning January
1, 2000, 54.4% shall be transferred to the Department of
Transportation to be distributed as follows:

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(A) 49.10% to the municipalities of the State,
(B) 16.74% to the counties of the State having
1,000,000 or more inhabitants,
(C) 18.27% to the counties of the State having less
than 1,000,000 inhabitants,
(D) 15.89% to the road districts of the State.
As soon as may be after the first day of each month the
Department of Transportation shall allot to each municipality
its share of the amount apportioned to the several
municipalities which shall be in proportion to the population
of such municipalities as determined by the last preceding
municipal census if conducted by the Federal Government or
Federal census. If territory is annexed to any municipality
subsequent to the time of the last preceding census the
corporate authorities of such municipality may cause a census
to be taken of such annexed territory and the population so
ascertained for such territory shall be added to the population
of the municipality as determined by the last preceding census
for the purpose of determining the allotment for that
municipality. If the population of any municipality was not
determined by the last Federal census preceding any
apportionment, the apportionment to such municipality shall be
in accordance with any census taken by such municipality. Any
municipal census used in accordance with this Section shall be
certified to the Department of Transportation by the clerk of
such municipality, and the accuracy thereof shall be subject to

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approval of the Department which may make such corrections as
it ascertains to be necessary.
As soon as may be after the first day of each month the
Department of Transportation shall allot to each county its
share of the amount apportioned to the several counties of the
State as herein provided. Each allotment to the several
counties having less than 1,000,000 inhabitants shall be in
proportion to the amount of motor vehicle license fees received
from the residents of such counties, respectively, during the
preceding calendar year. The Secretary of State shall, on or
before April 15 of each year, transmit to the Department of
Transportation a full and complete report showing the amount of
motor vehicle license fees received from the residents of each
county, respectively, during the preceding calendar year. The
Department of Transportation shall, each month, use for
allotment purposes the last such report received from the
Secretary of State.
As soon as may be after the first day of each month, the
Department of Transportation shall allot to the several
counties their share of the amount apportioned for the use of
road districts. The allotment shall be apportioned among the
several counties in the State in the proportion which the total
mileage of township or district roads in the respective
counties bears to the total mileage of all township and
district roads in the State. Funds allotted to the respective
counties for the use of road districts therein shall be

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allocated to the several road districts in the county in the
proportion which the total mileage of such township or district
roads in the respective road districts bears to the total
mileage of all such township or district roads in the county.
After July 1 of any year, no allocation shall be made for any
road district unless it levied a tax for road and bridge
purposes in an amount which will require the extension of such
tax against the taxable property in any such road district at a
rate of not less than either .08% of the value thereof, based
upon the assessment for the year immediately prior to the year
in which such tax was levied and as equalized by the Department
of Revenue or, in DuPage County, an amount equal to or greater
than $12,000 per mile of road under the jurisdiction of the
road district, whichever is less. If any road district has
levied a special tax for road purposes pursuant to Sections
6-601, 6-602 and 6-603 of the Illinois Highway Code, and such
tax was levied in an amount which would require extension at a
rate of not less than .08% of the value of the taxable property
thereof, as equalized or assessed by the Department of Revenue,
or, in DuPage County, an amount equal to or greater than
$12,000 per mile of road under the jurisdiction of the road
district, whichever is less, such levy shall, however, be
deemed a proper compliance with this Section and shall qualify
such road district for an allotment under this Section. If a
township has transferred to the road and bridge fund money
which, when added to the amount of any tax levy of the road

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district would be the equivalent of a tax levy requiring
extension at a rate of at least .08%, or, in DuPage County, an
amount equal to or greater than $12,000 per mile of road under
the jurisdiction of the road district, whichever is less, such
transfer, together with any such tax levy, shall be deemed a
proper compliance with this Section and shall qualify the road
district for an allotment under this Section.
In counties in which a property tax extension limitation is
imposed under the Property Tax Extension Limitation Law, road
districts may retain their entitlement to a motor fuel tax
allotment if, at the time the property tax extension limitation
was imposed, the road district was levying a road and bridge
tax at a rate sufficient to entitle it to a motor fuel tax
allotment and continues to levy the maximum allowable amount
after the imposition of the property tax extension limitation.
Any road district may in all circumstances retain its
entitlement to a motor fuel tax allotment if it levied a road
and bridge tax in an amount that will require the extension of
the tax against the taxable property in the road district at a
rate of not less than 0.08% of the assessed value of the
property, based upon the assessment for the year immediately
preceding the year in which the tax was levied and as equalized
by the Department of Revenue or, in DuPage County, an amount
equal to or greater than $12,000 per mile of road under the
jurisdiction of the road district, whichever is less.
As used in this Section the term "road district" means any

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road district, including a county unit road district, provided
for by the Illinois Highway Code; and the term "township or
district road" means any road in the township and district road
system as defined in the Illinois Highway Code. For the
purposes of this Section, "road district" also includes park
districts, forest preserve districts and conservation
districts organized under Illinois law and "township or
district road" also includes such roads as are maintained by
park districts, forest preserve districts and conservation
districts. The Department of Transportation shall determine
the mileage of all township and district roads for the purposes
of making allotments and allocations of motor fuel tax funds
for use in road districts.
Payment of motor fuel tax moneys to municipalities and
counties shall be made as soon as possible after the allotment
is made. The treasurer of the municipality or county may invest
these funds until their use is required and the interest earned
by these investments shall be limited to the same uses as the
principal funds.
(Source: P.A. 94-839, eff. 6-6-06; 95-744, eff. 7-18-08.)
(35 ILCS 505/13) (from Ch. 120, par. 429)
Sec. 13. Refund of tax paid. Any person other than a
distributor or supplier, who loses motor fuel through any cause
or uses motor fuel (upon which he has paid the amount required
to be collected under Section 2 of this Act) for any purpose

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other than operating a motor vehicle upon the public highways
or waters, shall be reimbursed and repaid the amount so paid.
Any person who purchases motor fuel in Illinois and uses
that motor fuel in another state and that other state imposes a
tax on the use of such motor fuel shall be reimbursed and
repaid the amount of Illinois tax paid under Section 2 of this
Act on the motor fuel used in such other state. Reimbursement
and repayment shall be made by the Department upon receipt of
adequate proof of taxes directly paid to another state and the
amount of motor fuel used in that state.
Evidence supporting the claim shall include (i) a certified
copy of the tax return filed with such other state by the
claimant; (ii) a copy of either the cancelled check paying the
tax due on such return, or a receipt acknowledging payment of
the tax due on such tax return; and (iii) such other
information as the Department may reasonably require. Any
person who purchases motor fuel use tax decals as required by
Section 13a.4 and pays an amount of fees for such decals that
exceeds the amount due shall be reimbursed and repaid the
amount of the decal fees that are deemed by the department to
be in excess of the amount due.
Claims for such reimbursement must be made to the
Department of Revenue, duly verified by the claimant (or by the
claimant's legal representative if the claimant has died or
become a person under legal disability), upon forms prescribed
by the Department. The claim must state such facts relating to

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the purchase, importation, manufacture or production of the
motor fuel by the claimant as the Department may deem
necessary, and the time when, and the circumstances of its loss
or the specific purpose for which it was used (as the case may
be), together with such other information as the Department may
reasonably require. No claim based upon idle time shall be
allowed. Claims for reimbursement for overpayment of decal fees
shall be made to the Department of Revenue, duly verified by
the claimant (or by the claimant's legal representative if the
claimant has died or become a person under legal disability),
upon forms prescribed by the Department. The claim shall state
facts relating to the overpayment of decal fees, together with
such other information as the Department may reasonably
require. Claims for reimbursement of overpayment of decal fees
paid on or after January 1, 2009 must be filed not later than 1
year after the date on which the fees were paid by the
claimant. If it is determined that the Department should
reimburse a claimant for overpayment of decal fees, the
Department shall shall first apply the amount of such refund
against against any tax or penalty or interest due by the
claimant under Section 13a of this Act.
Claims for full reimbursement for taxes paid on or before
December 31, 1999 must be filed not later than one year after
the date on which the tax was paid by the claimant. If,
however, a claim for such reimbursement otherwise meeting the
requirements of this Section is filed more than one year but

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less than 2 years after that date, the claimant shall be
reimbursed at the rate of 80% of the amount to which he would
have been entitled if his claim had been timely filed.
Claims for full reimbursement for taxes paid on or after
January 1, 2000 must be filed not later than 2 years after the
date on which the tax was paid by the claimant.
The Department may make such investigation of the
correctness of the facts stated in such claims as it deems
necessary. When the Department has approved any such claim, it
shall pay to the claimant (or to the claimant's legal
representative, as such if the claimant has died or become a
person under legal disability) the reimbursement provided in
this Section, out of any moneys appropriated to it for that
purpose.
Any distributor or supplier who has paid the tax imposed by
Section 2 of this Act upon motor fuel lost or used by such
distributor or supplier for any purpose other than operating a
motor vehicle upon the public highways or waters may file a
claim for credit or refund to recover the amount so paid. Such
claims shall be filed on forms prescribed by the Department.
Such claims shall be made to the Department, duly verified by
the claimant (or by the claimant's legal representative if the
claimant has died or become a person under legal disability),
upon forms prescribed by the Department. The claim shall state
such facts relating to the purchase, importation, manufacture
or production of the motor fuel by the claimant as the

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Department may deem necessary and the time when the loss or
nontaxable use occurred, and the circumstances of its loss or
the specific purpose for which it was used (as the case may
be), together with such other information as the Department may
reasonably require. Claims must be filed not later than one
year after the date on which the tax was paid by the claimant.
The Department may make such investigation of the
correctness of the facts stated in such claims as it deems
necessary. When the Department approves a claim, the Department
shall issue a refund or credit memorandum as requested by the
taxpayer, to the distributor or supplier who made the payment
for which the refund or credit is being given or, if the
distributor or supplier has died or become incompetent, to such
distributor's or supplier's legal representative, as such. The
amount of such credit memorandum shall be credited against any
tax due or to become due under this Act from the distributor or
supplier who made the payment for which credit has been given.
Any credit or refund that is allowed under this Section
shall bear interest at the rate and in the manner specified in
the Uniform Penalty and Interest Act.
In case the distributor or supplier requests and the
Department determines that the claimant is entitled to a
refund, such refund shall be made only from such appropriation
as may be available for that purpose. If it appears unlikely
that the amount appropriated would permit everyone having a
claim allowed during the period covered by such appropriation

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to elect to receive a cash refund, the Department, by rule or
regulation, shall provide for the payment of refunds in
hardship cases and shall define what types of cases qualify as
hardship cases.
In any case in which there has been an erroneous refund of
tax or fees payable under this Section, a notice of tax
liability may be issued at any time within 3 years from the
making of that refund, or within 5 years from the making of
that refund if it appears that any part of the refund was
induced by fraud or the misrepresentation of material fact. The
amount of any proposed assessment set forth by the Department
shall be limited to the amount of the erroneous refund.
If no tax is due and no proceeding is pending to determine
whether such distributor or supplier is indebted to the
Department for tax, the credit memorandum so issued may be
assigned and set over by the lawful holder thereof, subject to
reasonable rules of the Department, to any other licensed
distributor or supplier who is subject to this Act, and the
amount thereof applied by the Department against any tax due or
to become due under this Act from such assignee.
If the payment for which the distributor's or supplier's
claim is filed is held in the protest fund of the State
Treasury during the pendency of the claim for credit
proceedings pursuant to the order of the court in accordance
with Section 2a of the State Officers and Employees Money
Disposition Act and if it is determined by the Department or by

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the final order of a reviewing court under the Administrative
Review Law that the claimant is entitled to all or a part of
the credit claimed, the claimant, instead of receiving a credit
memorandum from the Department, shall receive a cash refund
from the protest fund as provided for in Section 2a of the
State Officers and Employees Money Disposition Act.
If any person ceases to be licensed as a distributor or
supplier while still holding an unused credit memorandum issued
under this Act, such person may, at his election (instead of
assigning the credit memorandum to a licensed distributor or
licensed supplier under this Act), surrender such unused credit
memorandum to the Department and receive a refund of the amount
to which such person is entitled.
For claims based upon taxes paid on or before December 31,
2000, a claim based upon the use of undyed diesel fuel shall
not be allowed except (i) if allowed under the following
paragraph or (ii) for undyed diesel fuel used by a commercial
vehicle, as that term is defined in Section 1-111.8 of the
Illinois Vehicle Code, for any purpose other than operating the
commercial vehicle upon the public highways and unlicensed
commercial vehicles operating on private property. Claims
shall be limited to commercial vehicles that are operated for
both highway purposes and any purposes other than operating
such vehicles upon the public highways.
For claims based upon taxes paid on or after January 1,
2000, a claim based upon the use of undyed diesel fuel shall

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not be allowed except (i) if allowed under the preceding
paragraph or (ii) for claims for the following:
(1) Undyed diesel fuel used (i) in a manufacturing
process, as defined in Section 2-45 of the Retailers'
Occupation Tax Act, wherein the undyed diesel fuel becomes
a component part of a product or by-product, other than
fuel or motor fuel, when the use of dyed diesel fuel in
that manufacturing process results in a product that is
unsuitable for its intended use or (ii) for testing
machinery and equipment in a manufacturing process, as
defined in Section 2-45 of the Retailers' Occupation Tax
Act, wherein the testing takes place on private property.
(2) Undyed diesel fuel used by a manufacturer on
private property in the research and development, as
defined in Section 1.29, of machinery or equipment intended
for manufacture.
(3) Undyed diesel fuel used by a single unit
self-propelled agricultural fertilizer implement, designed
for on and off road use, equipped with flotation tires and
specially adapted for the application of plant food
materials or agricultural chemicals.
(4) Undyed diesel fuel used by a commercial motor
vehicle for any purpose other than operating the commercial
motor vehicle upon the public highways. Claims shall be
limited to commercial motor vehicles that are operated for
both highway purposes and any purposes other than operating

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such vehicles upon the public highways.
(5) Undyed diesel fuel used by a unit of local
government in its operation of an airport if the undyed
diesel fuel is used directly in airport operations on
airport property.
(6) Undyed diesel fuel used by refrigeration units that
are permanently mounted to a semitrailer, as defined in
Section 1.28 of this Law, wherein the refrigeration units
have a fuel supply system dedicated solely for the
operation of the refrigeration units.
(7) Undyed diesel fuel used by power take-off equipment
as defined in Section 1.27 of this Law.
(8) Beginning on the effective date of this amendatory
Act of the 94th General Assembly, undyed diesel fuel used
by tugs and spotter equipment to shift vehicles or parcels
on both private and airport property. Any claim under this
item (8) may be made only by a claimant that owns tugs and
spotter equipment and operates that equipment on both
private and airport property. The aggregate of all credits
or refunds resulting from claims filed under this item (8)
by a claimant in any calendar year may not exceed $100,000.
A claim may not be made under this item (8) by the same
claimant more often than once each quarter. For the
purposes of this item (8), "tug" means a vehicle designed
for use on airport property that shifts custom-designed
containers of parcels from loading docks to aircraft, and

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"spotter equipment" means a vehicle designed for use on
both private and airport property that shifts trailers
containing parcels between staging areas and loading
docks.
Any person who has paid the tax imposed by Section 2 of
this Law upon undyed diesel fuel that is unintentionally mixed
with dyed diesel fuel and who owns or controls the mixture of
undyed diesel fuel and dyed diesel fuel may file a claim for
refund to recover the amount paid. The amount of undyed diesel
fuel unintentionally mixed must equal 500 gallons or more. Any
claim for refund of unintentionally mixed undyed diesel fuel
and dyed diesel fuel shall be supported by documentation
showing the date and location of the unintentional mixing, the
number of gallons involved, the disposition of the mixed diesel
fuel, and any other information that the Department may
reasonably require. Any unintentional mixture of undyed diesel
fuel and dyed diesel fuel shall be sold or used only for
non-highway purposes.
The Department shall promulgate regulations establishing
specific limits on the amount of undyed diesel fuel that may be
claimed for refund.
For purposes of claims for refund, "loss" means the
reduction of motor fuel resulting from fire, theft, spillage,
spoilage, leakage, or any other provable cause, but does not
include a reduction resulting from evaporation or shrinkage due
to temperature variations.

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(Source: P.A. 94-654, eff. 8-22-05.)
(35 ILCS 505/13a.4) (from Ch. 120, par. 429a4)
Sec. 13a.4. Except as provided in Section 13a.5 of this
Act, no motor carrier shall operate in Illinois without first
securing a motor fuel use tax license and decals from the
Department or a motor fuel use tax license and decals issued
under the International Fuel Tax Agreement by any member
jurisdiction. Notwithstanding any other provision of this
Section to the contrary, however, the Director of the
Department of Revenue or his designee may, upon determining
that a disaster exists in Illinois or in any other state,
temporarily waive the licensing requirements of this Section
for commercial motor vehicles that travel through Illinois, or
return to Illinois from a point outside Illinois, for the
purpose of assisting in disaster relief efforts. Temporary
waiver of the licensing requirements of this Section shall not
exceed a period of 30 days from the date the Director
temporarily waives the licensing requirements of this Section.
For purposes of this Section, a disaster includes flood,
tornado, hurricane, fire, earthquake, or any other disaster
that causes or threatens loss of life or destruction or damage
to property of such a magnitude as to endanger the public
health, safety, and welfare. The licensing requirements of this
Section shall be temporarily waived only if the operator of the
commercial motor vehicle can provide proof by manifest that the

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commercial motor vehicle is traveling through Illinois or
returning to Illinois from a point outside Illinois for
purposes of assisting in disaster relief efforts. Application
for such license and decals shall be made annually to the
Department on forms prescribed by the Department. The
application shall be under oath, and shall contain such
information as the Department deems necessary. The Department,
for cause, may require an applicant to post a bond on a form to
be approved by and with a surety or sureties satisfactory to
the Department conditioned upon such applicant paying to the
State of Illinois all monies becoming due by reason of the sale
or use of motor fuel by the applicant, together with all
penalties and interest thereon. If a bond is required, it shall
be equal to at least twice the estimated average tax liability
of a quarterly return. The Department shall fix the penalty of
such bond in each case taking into consideration the amount of
motor fuel expected to be used by such applicant and the
penalty fixed by the Department shall be such as, in its
opinion, will protect the State of Illinois against failure to
pay the amount hereinafter provided on motor fuel used. No
person who is in default to the State for monies due under this
Act for the sale, distribution or use of motor fuel shall
receive such a license or decal.
Upon receipt of the application for license in proper form,
and upon payment of any required $100 reinstatement fee, and
upon approval by the Department of the bond furnished by the

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applicant, the Department may issue to such applicant a license
which allows the operation of commercial motor vehicles in
Illinois, and decals for each commercial motor vehicle
operating in Illinois. Prior to January 1, 1985, motor fuel use
tax licenses shall be conspicuously displayed in the cab of
each commercial motor vehicle operating in Illinois. After
January 1, 1986, motor fuel use tax licenses shall be carried
in the cab of each commercial motor vehicle operating in
Illinois.
The Department shall, by regulation, provide for the use of
reproductions of original motor fuel use tax licenses in lieu
of issuing multiple original motor fuel use tax licenses to
licensees.
On and after January 1, 1985, external motor fuel tax
decals shall be conspicuously displayed on the passenger side
of each commercial motor vehicle propelled by motor fuel
operating in Illinois, except buses, which may display such
devices on the driver's side of the vehicle. Beginning with the
effective date of this amendatory Act of 1993 or the membership
of the State of Illinois in the International Fuel Tax
Agreement, whichever is later, the decals issued to the
licensee shall be placed on both exterior sides of the cab. In
the case of transporters, manufacturers, dealers, or driveway
operations, the decals need not be permanently affixed but may
be temporarily displayed in a visible manner on the exterior
sides of the cab. Failure to display the decals in the required

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locations may subject the vehicle operator to the purchase of a
trip permit and a citation. Such motor fuel tax decals shall be
issued by the Department and remain valid for a period of 2
calendar years, beginning January 1, 1985. The decals shall
expire at the end of the regular 2 year issuance period, with
new decals required to be displayed at that time. Beginning
January 1, 1993, the motor fuel decals shall be issued by the
Department and remain valid for a period of one calendar year.
The decals shall expire at the end of the regular one year
issuance period, with new decals required to be displayed at
that time. Decals shall be no larger than 3 inches by 3 inches.
Prior to January 1, 1993, a fee of $7.50 shall be charged by
the Department for each decal issued prior to and during the 2
calendar years such decal is valid. Beginning January 1, 1993,
a fee of $3.75 shall be charged by the Department for each
decal issued prior to and during the calendar year such decal
is valid. Beginning January 1, 1994, $3.75 shall be charged for
a set of 2 decals. The Department may also prescribe procedures
for the issuance of replacement decals, with a maximum fee of
$2 for each set of replacement decals issued. The transfer of
decals from one vehicle to another vehicle or from one motor
carrier to another motor carrier is prohibited. The fees paid
for the decals issued under this Section shall be deposited in
the Motor Fuel Tax Fund, and may be appropriated to the
Department for administration of this Section and enforcement
of the tax imposed by Section 13a of this Act.

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To avoid duplicate reporting of mileage and payment of any
tax arising therefrom under Section 13a.3 of this Act, the
Department shall, by regulation, provide for the allocation
between lessors and lessees of the same commercial motor
vehicle or vehicles of the responsibility as a motor carrier
for the reporting of mileage and the liability for tax arising
under Section 13a.3 of this Act, and for registration,
furnishing of bond, carrying of motor fuel use tax licenses,
and display of decals under this Section, and for all other
duties imposed upon motor carriers by this Act.
(Source: P.A. 94-1074, eff. 12-26-06.)
(35 ILCS 505/13a.5) (from Ch. 120, par. 429a5)
Sec. 13a.5. As to a commercial motor vehicle operated in
Illinois in the course of interstate traffic by a motor carrier
not holding a motor fuel use tax license issued under this Act,
a single trip permit authorizing operation of such commercial
motor vehicle for a single trip into the state of Illinois,
through the State of Illinois, or from a point on the border of
this State to a point within and return to the border may be
issued by the Department or its agents after proper
application. The fee for each single trip permit shall be $20
and such single trip permit shall be valid for a period of 72
hours. This fee shall be in lieu of the tax required by Section
13a of this Act, all reports required by Section 13a.3 of this
Act, and the registration, decal display and furnishing of bond

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required by Section 13a.4 of this Act. Notwithstanding any
other provision of this Section to the contrary, however, the
Director of the Department of Revenue or his designee may, upon
determining that a disaster exists in Illinois or in any other
state, temporarily waive the permit provisions of this Section
for commercial motor vehicles that travel through Illinois, or
return to Illinois from a point outside Illinois, for the
purpose of assisting in disaster relief efforts. Temporary
waiver of the permit provisions of this Section shall not
exceed a period of 30 days from the date the Director waives
the permit provisions of this Section. For purposes of this
Section, a disaster includes flood, tornado, hurricane, fire,
earthquake, or any other disaster that causes or threatens loss
of life or destruction or damage to property of such a
magnitude as to endanger the public health, safety, and
welfare. The permit provisions of this Section shall be
temporarily waived only if the operator of the commercial motor
vehicle can provide proof by manifest that the commercial motor
vehicle is traveling through Illinois or returning to Illinois
from a point outside Illinois for purposes of assisting in
disaster relief efforts. Rules or regulations promulgated by
the Department under this Section shall provide for reasonable
and proper limitations and restrictions governing application
for and issuance and use of, single trip permits, so as to
preclude evasion of the license requirement in Section 13a.4.
(Source: P.A. 94-1074, eff. 12-26-06.)

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(35 ILCS 505/17a new)
Sec. 17a. All returns, applications, and other forms
required by this Act must be in the form required by the
Department. The Department is authorized to adopt rules to
require the electronic payment of tax or fees under this Act,
and the electronic filing of returns, applications or other
forms required by this Act.
Section 30. The Uniform Penalty and Interest Act is amended
by changing Section 3-3 as follows:
(35 ILCS 735/3-3) (from Ch. 120, par. 2603-3)
Sec. 3-3. Penalty for failure to file or pay.
(a) This subsection (a) is applicable before January 1,
1996. A penalty of 5% of the tax required to be shown due on a
return shall be imposed for failure to file the tax return on
or before the due date prescribed for filing determined with
regard for any extension of time for filing (penalty for late
filing or nonfiling). If any unprocessable return is corrected
and filed within 21 days after notice by the Department, the
late filing or nonfiling penalty shall not apply. If a penalty
for late filing or nonfiling is imposed in addition to a
penalty for late payment, the total penalty due shall be the
sum of the late filing penalty and the applicable late payment
penalty. Beginning on the effective date of this amendatory Act

HB3876 - 272 - LRB096 11650 HLH 22225 b
of 1995, in the case of any type of tax return required to be
filed more frequently than annually, when the failure to file
the tax return on or before the date prescribed for filing
(including any extensions) is shown to be nonfraudulent and has
not occurred in the 2 years immediately preceding the failure
to file on the prescribed due date, the penalty imposed by
Section 3-3(a) shall be abated.
(a-5) This subsection (a-5) is applicable to returns due on
and after January 1, 1996 and on or before December 31, 2000. A
penalty equal to 2% of the tax required to be shown due on a
return, up to a maximum amount of $250, determined without
regard to any part of the tax that is paid on time or by any
credit that was properly allowable on the date the return was
required to be filed, shall be imposed for failure to file the
tax return on or before the due date prescribed for filing
determined with regard for any extension of time for filing.
However, if any return is not filed within 30 days after notice
of nonfiling mailed by the Department to the last known address
of the taxpayer contained in Department records, an additional
penalty amount shall be imposed equal to the greater of $250 or
2% of the tax shown on the return. However, the additional
penalty amount may not exceed $5,000 and is determined without
regard to any part of the tax that is paid on time or by any
credit that was properly allowable on the date the return was
required to be filed (penalty for late filing or nonfiling). If
any unprocessable return is corrected and filed within 30 days

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after notice by the Department, the late filing or nonfiling
penalty shall not apply. If a penalty for late filing or
nonfiling is imposed in addition to a penalty for late payment,
the total penalty due shall be the sum of the late filing
penalty and the applicable late payment penalty. In the case of
any type of tax return required to be filed more frequently
than annually, when the failure to file the tax return on or
before the date prescribed for filing (including any
extensions) is shown to be nonfraudulent and has not occurred
in the 2 years immediately preceding the failure to file on the
prescribed due date, the penalty imposed by Section 3-3(a-5)
shall be abated.
(a-10) This subsection (a-10) is applicable to returns due
on and after January 1, 2001. A penalty equal to 2% of the tax
required to be shown due on a return, up to a maximum amount of
$250, reduced by any tax that is paid on time or by any credit
that was properly allowable on the date the return was required
to be filed, shall be imposed for failure to file the tax
return on or before the due date prescribed for filing
determined with regard for any extension of time for filing.
However, if any return is not filed within 30 days after notice
of nonfiling mailed by the Department to the last known address
of the taxpayer contained in Department records, an additional
penalty amount shall be imposed equal to the greater of $250 or
2% of the tax shown on the return. However, the additional
penalty amount may not exceed $5,000 and is determined without

HB3876 - 274 - LRB096 11650 HLH 22225 b
regard to any part of the tax that is paid on time or by any
credit that was properly allowable on the date the return was
required to be filed (penalty for late filing or nonfiling). If
any unprocessable return is corrected and filed within 30 days
after notice by the Department, the late filing or nonfiling
penalty shall not apply. If a penalty for late filing or
nonfiling is imposed in addition to a penalty for late payment,
the total penalty due shall be the sum of the late filing
penalty and the applicable late payment penalty. In the case of
any type of tax return required to be filed more frequently
than annually, when the failure to file the tax return on or
before the date prescribed for filing (including any
extensions) is shown to be nonfraudulent and has not occurred
in the 2 years immediately preceding the failure to file on the
prescribed due date, the penalty imposed by Section 3-3(a-10)
shall be abated.
(b) This subsection is applicable before January 1, 1998. A
penalty of 15% of the tax shown on the return or the tax
required to be shown due on the return shall be imposed for
failure to pay:
(1) the tax shown due on the return on or before the
due date prescribed for payment of that tax, an amount of
underpayment of estimated tax, or an amount that is
reported in an amended return other than an amended return
timely filed as required by subsection (b) of Section 506
of the Illinois Income Tax Act (penalty for late payment or

HB3876 - 275 - LRB096 11650 HLH 22225 b
nonpayment of admitted liability); or
(2) the full amount of any tax required to be shown due
on a return and which is not shown (penalty for late
payment or nonpayment of additional liability), within 30
days after a notice of arithmetic error, notice and demand,
or a final assessment is issued by the Department. In the
case of a final assessment arising following a protest and
hearing, the 30-day period shall not begin until all
proceedings in court for review of the final assessment
have terminated or the period for obtaining a review has
expired without proceedings for a review having been
instituted. In the case of a notice of tax liability that
becomes a final assessment without a protest and hearing,
the penalty provided in this paragraph (2) shall be imposed
at the expiration of the period provided for the filing of
a protest.
(b-5) This subsection is applicable to returns due on and
after January 1, 1998 and on or before December 31, 2000. A
penalty of 20% of the tax shown on the return or the tax
required to be shown due on the return shall be imposed for
failure to pay:
(1) the tax shown due on the return on or before the
due date prescribed for payment of that tax, an amount of
underpayment of estimated tax, or an amount that is
reported in an amended return other than an amended return
timely filed as required by subsection (b) of Section 506

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of the Illinois Income Tax Act (penalty for late payment or
nonpayment of admitted liability); or
(2) the full amount of any tax required to be shown due
on a return and which is not shown (penalty for late
payment or nonpayment of additional liability), within 30
days after a notice of arithmetic error, notice and demand,
or a final assessment is issued by the Department. In the
case of a final assessment arising following a protest and
hearing, the 30-day period shall not begin until all
proceedings in court for review of the final assessment
have terminated or the period for obtaining a review has
expired without proceedings for a review having been
instituted. In the case of a notice of tax liability that
becomes a final assessment without a protest and hearing,
the penalty provided in this paragraph (2) shall be imposed
at the expiration of the period provided for the filing of
a protest.
(b-10) This subsection (b-10) is applicable to returns due
on and after January 1, 2001 and on or before December 31,
2003. A penalty shall be imposed for failure to pay:
(1) the tax shown due on a return on or before the due
date prescribed for payment of that tax, an amount of
underpayment of estimated tax, or an amount that is
reported in an amended return other than an amended return
timely filed as required by subsection (b) of Section 506
of the Illinois Income Tax Act (penalty for late payment or

HB3876 - 277 - LRB096 11650 HLH 22225 b
nonpayment of admitted liability). The amount of penalty
imposed under this subsection (b-10)(1) shall be 2% of any
amount that is paid no later than 30 days after the due
date, 5% of any amount that is paid later than 30 days
after the due date and not later than 90 days after the due
date, 10% of any amount that is paid later than 90 days
after the due date and not later than 180 days after the
due date, and 15% of any amount that is paid later than 180
days after the due date. If notice and demand is made for
the payment of any amount of tax due and if the amount due
is paid within 30 days after the date of the notice and
demand, then the penalty for late payment or nonpayment of
admitted liability under this subsection (b-10)(1) on the
amount so paid shall not accrue for the period after the
date of the notice and demand.
(2) the full amount of any tax required to be shown due
on a return and that is not shown (penalty for late payment
or nonpayment of additional liability), within 30 days
after a notice of arithmetic error, notice and demand, or a
final assessment is issued by the Department. In the case
of a final assessment arising following a protest and
hearing, the 30-day period shall not begin until all
proceedings in court for review of the final assessment
have terminated or the period for obtaining a review has
expired without proceedings for a review having been
instituted. The amount of penalty imposed under this

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subsection (b-10)(2) shall be 20% of any amount that is not
paid within the 30-day period. In the case of a notice of
tax liability that becomes a final assessment without a
protest and hearing, the penalty provided in this
subsection (b-10)(2) shall be imposed at the expiration of
the period provided for the filing of a protest.
(b-15) This subsection (b-15) is applicable to returns due
on and after January 1, 2004 and on or before December 31,
2004. A penalty shall be imposed for failure to pay the tax
shown due or required to be shown due on a return on or before
the due date prescribed for payment of that tax, an amount of
underpayment of estimated tax, or an amount that is reported in
an amended return other than an amended return timely filed as
required by subsection (b) of Section 506 of the Illinois
Income Tax Act (penalty for late payment or nonpayment of
admitted liability). The amount of penalty imposed under this
subsection (b-15) (b-15)(1) shall be 2% of any amount that is
paid no later than 30 days after the due date, 10% of any
amount that is paid later than 30 days after the due date and
not later than 90 days after the due date, 15% of any amount
that is paid later than 90 days after the due date and not
later than 180 days after the due date, and 20% of any amount
that is paid later than 180 days after the due date. If notice
and demand is made for the payment of any amount of tax due and
if the amount due is paid within 30 days after the date of this
notice and demand, then the penalty for late payment or

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nonpayment of admitted liability under this subsection (b-15)
(b-15)(1) on the amount so paid shall not accrue for the period
after the date of the notice and demand.
(b-20) This subsection (b-20) is applicable to returns due
on and after January 1, 2005.
(1) A penalty shall be imposed for failure to pay,
prior to the due date for payment, any amount of tax the
payment of which is required to be made prior to the filing
of a return or without a return (penalty for late payment
or nonpayment of estimated or accelerated tax). The amount
of penalty imposed under this paragraph (1) shall be 2% of
any amount that is paid no later than 30 days after the due
date and 10% of any amount that is paid later than 30 days
after the due date.
(2) A penalty shall be imposed for failure to pay the
tax shown due or required to be shown due on a return on or
before the due date prescribed for payment of that tax or
an amount that is reported in an amended return other than
an amended return timely filed as required by subsection
(b) of Section 506 of the Illinois Income Tax Act (penalty
for late payment or nonpayment of tax). The amount of
penalty imposed under this paragraph (2) shall be 2% of any
amount that is paid no later than 30 days after the due
date, 10% of any amount that is paid later than 30 days
after the due date and prior to the date the Department has
initiated an audit or investigation of the taxpayer, and

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20% of any amount that is paid after the date the
Department has initiated an audit or investigation of the
taxpayer; provided that the penalty shall be reduced to 15%
if the entire amount due is paid not later than 30 days
after the Department has provided the taxpayer with an
amended return (following completion of an occupation,
use, or excise tax audit) or a form for waiver of
restrictions on assessment (following completion of an
income tax audit); provided further that the reduction to
15% shall be rescinded if the taxpayer makes any claim for
refund or credit of the tax, penalties, or interest
determined to be due upon audit, except in the case of a
claim filed pursuant to subsection (b) of Section 506 of
the Illinois Income Tax Act or to claim a carryover of a
loss or credit, the availability of which was not
determined in the audit. For purposes of this paragraph
(2), any overpayment reported on an original return that
has been allowed as a refund or credit to the taxpayer
shall be deemed to have not been paid on or before the due
date for payment and any amount paid under protest pursuant
to the provisions of the State Officers and Employees Money
Disposition Act shall be deemed to have been paid after the
Department has initiated an audit and more than 30 days
after the Department has provided the taxpayer with an
amended return (following completion of an occupation,
use, or excise tax audit) or a form for waiver of

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restrictions on assessment (following completion of an
income tax audit).
(3) The penalty imposed under this subsection (b-20)
shall be deemed assessed at the time the tax upon which the
penalty is computed is assessed, except that, if the
reduction of the penalty imposed under paragraph (2) of
this subsection (b-20) to 15% is rescinded because a claim
for refund or credit has been filed, the increase in
penalty shall be deemed assessed at the time the claim for
refund or credit is filed.
(c) For purposes of the late payment penalties, the basis
of the penalty shall be the tax shown or required to be shown
on a return, whichever is applicable, reduced by any part of
the tax which is paid on time and by any credit which was
properly allowable on the date the return was required to be
filed.
(d) A penalty shall be applied to the tax required to be
shown even if that amount is less than the tax shown on the
return.
(e) This subsection (e) is applicable to returns due before
January 1, 2001. If both a subsection (b)(1) or (b-5)(1)
penalty and a subsection (b)(2) or (b-5)(2) penalty are
assessed against the same return, the subsection (b)(2) or
(b-5)(2) penalty shall be assessed against only the additional
tax found to be due.
(e-5) This subsection (e-5) is applicable to returns due on

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and after January 1, 2001. If both a subsection (b-10)(1)
penalty and a subsection (b-10)(2) penalty are assessed against
the same return, the subsection (b-10)(2) penalty shall be
assessed against only the additional tax found to be due.
(f) If the taxpayer has failed to file the return, the
Department shall determine the correct tax according to its
best judgment and information, which amount shall be prima
facie evidence of the correctness of the tax due.
(g) The time within which to file a return or pay an amount
of tax due without imposition of a penalty does not extend the
time within which to file a protest to a notice of tax
liability or a notice of deficiency.
(h) No return shall be determined to be unprocessable
because of the omission of any information requested on the
return pursuant to Section 2505-575 of the Department of
Revenue Law (20 ILCS 2505/2505-575).
(i) If a taxpayer has a tax liability that is eligible for
amnesty under the Tax Delinquency Amnesty Act and the taxpayer
fails to satisfy the tax liability during the amnesty period
provided for in that Act, then the penalty imposed by the
Department under this Section shall be imposed in an amount
that is 200% of the amount that would otherwise be imposed
under this Section.
(Source: P.A. 92-742, eff. 7-25-02; 93-26, eff. 6-20-03; 93-32,
eff. 6-20-03; 93-1068, eff. 1-15-05.)

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Section 35. The Counties Code is amended by changing
Sections 5-1006, 5-1006.5, 5-1006.7, and 5-1007 as follows:
(55 ILCS 5/5-1006) (from Ch. 34, par. 5-1006)
Sec. 5-1006. Home Rule County Retailers' Occupation Tax
Law. Any county that is a home rule unit may impose a tax upon
all persons engaged in the business of selling tangible
personal property, other than an item of tangible personal
property titled or registered with an agency of this State's
government, at retail in the county on the gross receipts from
such sales made in the course of their business. If imposed,
this tax shall only be imposed in 1/4% increments. On and after
September 1, 1991, this additional tax may not be imposed on
the sales of food for human consumption which is to be consumed
off the premises where it is sold (other than alcoholic
beverages, soft drinks and food which has been prepared for
immediate consumption) and prescription and nonprescription
medicines, drugs, medical appliances, modifications to a motor
vehicle for the purpose of rendering it usable by a disabled
person, and insulin, urine testing materials, syringes and
needles used by diabetics. The tax imposed by a home rule
county pursuant to this Section and all civil penalties that
may be assessed as an incident thereof shall be collected and
enforced by the State Department of Revenue. The certificate of
registration that is issued by the Department to a retailer
under the Retailers' Occupation Tax Act shall permit the

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retailer to engage in a business that is taxable under any
ordinance or resolution enacted pursuant to this Section
without registering separately with the Department under such
ordinance or resolution or under this Section. The Department
shall have full power to administer and enforce this Section;
to collect all taxes and penalties due hereunder; to dispose of
taxes and penalties so collected in the manner hereinafter
provided; and to determine all rights to credit memoranda
arising on account of the erroneous payment of tax or penalty
hereunder. In the administration of, and compliance with, this
Section, the Department and persons who are subject to this
Section shall have the same rights, remedies, privileges,
immunities, powers and duties, and be subject to the same
conditions, restrictions, limitations, penalties and
definitions of terms, and employ the same modes of procedure,
as are prescribed in Sections 1, 1a, 1a-1, 1d, 1e, 1f, 1i, 1j,
1k, 1m, 1n, 2 through 2-65 (in respect to all provisions
therein other than the State rate of tax), 4, 5, 5a, 5b, 5c,
5d, 5e, 5f, 5g, 5h, 5i, 5j, 5k, 5l, 6, 6a, 6b, 6c, 7, 8, 9, 10,
11, 12 and 13 of the Retailers' Occupation Tax Act and Section
3-7 of the Uniform Penalty and Interest Act, as fully as if
those provisions were set forth herein.
No tax may be imposed by a home rule county pursuant to
this Section unless the county also imposes a tax at the same
rate pursuant to Section 5-1007.
Persons subject to any tax imposed pursuant to the

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authority granted in this Section may reimburse themselves for
their seller's tax liability hereunder by separately stating
such tax as an additional charge, which charge may be stated in
combination, in a single amount, with State tax which sellers
are required to collect under the Use Tax Act, pursuant to such
bracket schedules as the Department may prescribe.
Whenever the Department determines that a refund should be
made under this Section to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the order to be drawn for the
amount specified and to the person named in the notification
from the Department. The refund shall be paid by the State
Treasurer out of the home rule county retailers' occupation tax
fund.
The Department shall forthwith pay over to the State
Treasurer, ex officio, as trustee, all taxes and penalties
collected hereunder. On or before the 25th day of each calendar
month, the Department shall prepare and certify to the
Comptroller the disbursement of stated sums of money to named
counties, the counties to be those from which retailers have
paid taxes or penalties hereunder to the Department during the
second preceding calendar month. The amount to be paid to each
county shall be the amount (not including credit memoranda)
collected hereunder during the second preceding calendar month
by the Department plus an amount the Department determines is
necessary to offset any amounts that were erroneously paid to a

HB3876 - 286 - LRB096 11650 HLH 22225 b
different taxing body, and not including an amount equal to the
amount of refunds made during the second preceding calendar
month by the Department on behalf of such county, and not
including any amount which the Department determines is
necessary to offset any amounts which were payable to a
different taxing body but were erroneously paid to the county.
Within 10 days after receipt, by the Comptroller, of the
disbursement certification to the counties provided for in this
Section to be given to the Comptroller by the Department, the
Comptroller shall cause the orders to be drawn for the
respective amounts in accordance with the directions contained
in the certification.
In addition to the disbursement required by the preceding
paragraph, an allocation shall be made in March of each year to
each county that received more than $500,000 in disbursements
under the preceding paragraph in the preceding calendar year.
The allocation shall be in an amount equal to the average
monthly distribution made to each such county under the
preceding paragraph during the preceding calendar year
(excluding the 2 months of highest receipts). The distribution
made in March of each year subsequent to the year in which an
allocation was made pursuant to this paragraph and the
preceding paragraph shall be reduced by the amount allocated
and disbursed under this paragraph in the preceding calendar
year. The Department shall prepare and certify to the
Comptroller for disbursement the allocations made in

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accordance with this paragraph.
For the purpose of determining the local governmental unit
whose tax is applicable, a retail sale by a producer of coal or
other mineral mined in Illinois is a sale at retail at the
place where the coal or other mineral mined in Illinois is
extracted from the earth. This paragraph does not apply to coal
or other mineral when it is delivered or shipped by the seller
to the purchaser at a point outside Illinois so that the sale
is exempt under the United States Constitution as a sale in
interstate or foreign commerce.
Nothing in this Section shall be construed to authorize a
county to impose a tax upon the privilege of engaging in any
business which under the Constitution of the United States may
not be made the subject of taxation by this State.
An ordinance or resolution imposing or discontinuing a tax
hereunder or effecting a change in the rate thereof shall be
adopted and a certified copy thereof filed with the Department
on or before the first day of June, whereupon the Department
shall proceed to administer and enforce this Section as of the
first day of September next following such adoption and filing.
Beginning January 1, 1992, an ordinance or resolution imposing
or discontinuing the tax hereunder or effecting a change in the
rate thereof shall be adopted and a certified copy thereof
filed with the Department on or before the first day of July,
whereupon the Department shall proceed to administer and
enforce this Section as of the first day of October next

HB3876 - 288 - LRB096 11650 HLH 22225 b
following such adoption and filing. Beginning January 1, 1993,
an ordinance or resolution imposing or discontinuing the tax
hereunder or effecting a change in the rate thereof shall be
adopted and a certified copy thereof filed with the Department
on or before the first day of October, whereupon the Department
shall proceed to administer and enforce this Section as of the
first day of January next following such adoption and filing.
Beginning April 1, 1998, an ordinance or resolution imposing or
discontinuing the tax hereunder or effecting a change in the
rate thereof shall either (i) be adopted and a certified copy
thereof filed with the Department on or before the first day of
April, whereupon the Department shall proceed to administer and
enforce this Section as of the first day of July next following
the adoption and filing; or (ii) be adopted and a certified
copy thereof filed with the Department on or before the first
day of October, whereupon the Department shall proceed to
administer and enforce this Section as of the first day of
January next following the adoption and filing.
When certifying the amount of a monthly disbursement to a
county under this Section, the Department shall increase or
decrease such amount by an amount necessary to offset any
misallocation of previous disbursements. The offset amount
shall be the amount erroneously disbursed within the previous 6
months from the time a misallocation is discovered.
This Section shall be known and may be cited as the Home
Rule County Retailers' Occupation Tax Law.

HB3876 - 289 - LRB096 11650 HLH 22225 b
(Source: P.A. 90-689, eff. 7-31-98; 91-51, eff. 6-30-99.)
(55 ILCS 5/5-1006.5)
Sec. 5-1006.5. Special County Retailers' Occupation Tax
For Public Safety, Public Facilities, or Transportation.
(a) The county board of any county may impose a tax upon
all persons engaged in the business of selling tangible
personal property, other than personal property titled or
registered with an agency of this State's government, at retail
in the county on the gross receipts from the sales made in the
course of business to provide revenue to be used exclusively
for public safety, public facility, or transportation purposes
in that county, if a proposition for the tax has been submitted
to the electors of that county and approved by a majority of
those voting on the question. If imposed, this tax shall be
imposed only in one-quarter percent increments. By resolution,
the county board may order the proposition to be submitted at
any election. If the tax is imposed for transportation purposes
for expenditures for public highways or as authorized under the
Illinois Highway Code, the county board must publish notice of
the existence of its long-range highway transportation plan as
required or described in Section 5-301 of the Illinois Highway
Code and must make the plan publicly available prior to
approval of the ordinance or resolution imposing the tax. If
the tax is imposed for transportation purposes for expenditures
for passenger rail transportation, the county board must

HB3876 - 290 - LRB096 11650 HLH 22225 b
publish notice of the existence of its long-range passenger
rail transportation plan and must make the plan publicly
available prior to approval of the ordinance or resolution
imposing the tax. The county clerk shall certify the question
to the proper election authority, who shall submit the
proposition at an election in accordance with the general
election law.
(1) The proposition for public safety purposes shall be
in substantially the following form:
"To pay for public safety purposes, shall (name of
county) be authorized to impose an increase on its share of
local sales taxes by (insert rate)?"
As additional information on the ballot below the
question shall appear the following:
"This would mean that a consumer would pay an
additional (insert amount) in sales tax for every $100 of
tangible personal property bought at retail."
The county board may also opt to establish a sunset
provision at which time the additional sales tax would
cease being collected, if not terminated earlier by a vote
of the county board. If the county board votes to include a
sunset provision, the proposition for public safety
purposes shall be in substantially the following form:
"To pay for public safety purposes, shall (name of
county) be authorized to impose an increase on its share of
local sales taxes by (insert rate) for a period not to

HB3876 - 291 - LRB096 11650 HLH 22225 b
exceed (insert number of years)?"
As additional information on the ballot below the
question shall appear the following:
"This would mean that a consumer would pay an
additional (insert amount) in sales tax for every $100 of
tangible personal property bought at retail. If imposed,
the additional tax would cease being collected at the end
of (insert number of years), if not terminated earlier by a
vote of the county board."
For the purposes of the paragraph, "public safety
purposes" means crime prevention, detention, fire
fighting, police, medical, ambulance, or other emergency
services.
Votes shall be recorded as "Yes" or "No".
(2) The proposition for transportation purposes shall
be in substantially the following form:
"To pay for improvements to roads and other
transportation purposes, shall (name of county) be
authorized to impose an increase on its share of local
sales taxes by (insert rate)?"
As additional information on the ballot below the
question shall appear the following:
"This would mean that a consumer would pay an
additional (insert amount) in sales tax for every $100 of
tangible personal property bought at retail."
The county board may also opt to establish a sunset

HB3876 - 292 - LRB096 11650 HLH 22225 b
provision at which time the additional sales tax would
cease being collected, if not terminated earlier by a vote
of the county board. If the county board votes to include a
sunset provision, the proposition for transportation
purposes shall be in substantially the following form:
"To pay for road improvements and other transportation
purposes, shall (name of county) be authorized to impose an
increase on its share of local sales taxes by (insert rate)
for a period not to exceed (insert number of years)?"
As additional information on the ballot below the
question shall appear the following:
"This would mean that a consumer would pay an
additional (insert amount) in sales tax for every $100 of
tangible personal property bought at retail. If imposed,
the additional tax would cease being collected at the end
of (insert number of years), if not terminated earlier by a
vote of the county board."
For the purposes of this paragraph, transportation
purposes means construction, maintenance, operation, and
improvement of public highways, any other purpose for which
a county may expend funds under the Illinois Highway Code,
and passenger rail transportation.
The votes shall be recorded as "Yes" or "No".
(3) The proposition for public facility purposes shall
be in substantially the following form:
"To pay for public facility purposes, shall (name of

HB3876 - 293 - LRB096 11650 HLH 22225 b
county) be authorized to impose an increase on its share of
local sales taxes by (insert rate)?"
As additional information on the ballot below the
question shall appear the following:
"This would mean that a consumer would pay an
additional (insert amount) in sales tax for every $100 of
tangible personal property bought at retail."
The county board may also opt to establish a sunset
provision at which time the additional sales tax would
cease being collected, if not terminated earlier by a vote
of the county board. If the county board votes to include a
sunset provision, the proposition for public facility
purposes shall be in substantially the following form:
"To pay for public facility purposes, shall (name of
county) be authorized to impose an increase on its share of
local sales taxes by (insert rate) for a period not to
exceed (insert number of years)?"
As additional information on the ballot below the
question shall appear the following:
"This would mean that a consumer would pay an
additional (insert amount) in sales tax for every $100 of
tangible personal property bought at retail. If imposed,
the additional tax would cease being collected at the end
of (insert number of years), if not terminated earlier by a
vote of the county board."
For purposes of this Section, "public facilities

HB3876 - 294 - LRB096 11650 HLH 22225 b
purposes" means the acquisition, development,
construction, reconstruction, rehabilitation, improvement,
financing, architectural planning, and installation of
capital facilities consisting of buildings, structures,
and durable equipment and for the acquisition and
improvement of real property and interest in real property
required, or expected to be required, in connection with
the public facilities, for use by the county for the
furnishing of governmental services to its citizens,
including but not limited to museums and nursing homes.
The votes shall be recorded as "Yes" or "No".
If a majority of the electors voting on the proposition
vote in favor of it, the county may impose the tax. A county
may not submit more than one proposition authorized by this
Section to the electors at any one time.
This additional tax may not be imposed on the sales of food
for human consumption that is to be consumed off the premises
where it is sold (other than alcoholic beverages, soft drinks,
and food which has been prepared for immediate consumption) and
prescription and non-prescription medicines, drugs, medical
appliances, modifications to a motor vehicle for the purpose of
rendering it usable by a disabled person, and insulin, urine
testing materials, syringes, and needles used by diabetics. The
tax imposed by a county under this Section and all civil
penalties that may be assessed as an incident of the tax shall
be collected and enforced by the Illinois Department of Revenue

HB3876 - 295 - LRB096 11650 HLH 22225 b
and deposited into a special fund created for that purpose. The
certificate of registration that is issued by the Department to
a retailer under the Retailers' Occupation Tax Act shall permit
the retailer to engage in a business that is taxable without
registering separately with the Department under an ordinance
or resolution under this Section. The Department has full power
to administer and enforce this Section, to collect all taxes
and penalties due under this Section, to dispose of taxes and
penalties so collected in the manner provided in this Section,
and to determine all rights to credit memoranda arising on
account of the erroneous payment of a tax or penalty under this
Section. In the administration of and compliance with this
Section, the Department and persons who are subject to this
Section shall (i) have the same rights, remedies, privileges,
immunities, powers, and duties, (ii) be subject to the same
conditions, restrictions, limitations, penalties, and
definitions of terms, and (iii) employ the same modes of
procedure as are prescribed in Sections 1, 1a, 1a-1, 1d, 1e,
1f, 1i, 1j, 1k, 1m, 1n, 2 through 2-70 (in respect to all
provisions contained in those Sections other than the State
rate of tax), 2a, 2b, 2c, 3 (except provisions relating to
transaction returns and quarter monthly payments), 4, 5, 5a,
5b, 5c, 5d, 5e, 5f, 5g, 5h, 5i, 5j, 5k, 5l, 6, 6a, 6b, 6c, 7, 8,
9, 10, 11, 11a, 12, and 13 of the Retailers' Occupation Tax Act
and Section 3-7 of the Uniform Penalty and Interest Act as if
those provisions were set forth in this Section.

HB3876 - 296 - LRB096 11650 HLH 22225 b
Persons subject to any tax imposed under the authority
granted in this Section may reimburse themselves for their
sellers' tax liability by separately stating the tax as an
additional charge, which charge may be stated in combination,
in a single amount, with State tax which sellers are required
to collect under the Use Tax Act, pursuant to such bracketed
schedules as the Department may prescribe.
Whenever the Department determines that a refund should be
made under this Section to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the order to be drawn for the
amount specified and to the person named in the notification
from the Department. The refund shall be paid by the State
Treasurer out of the County Public Safety or Transportation
Retailers' Occupation Tax Fund.
(b) If a tax has been imposed under subsection (a), a
service occupation tax shall also be imposed at the same rate
upon all persons engaged, in the county, in the business of
making sales of service, who, as an incident to making those
sales of service, transfer tangible personal property within
the county as an incident to a sale of service. This tax may
not be imposed on sales of food for human consumption that is
to be consumed off the premises where it is sold (other than
alcoholic beverages, soft drinks, and food prepared for
immediate consumption) and prescription and non-prescription
medicines, drugs, medical appliances, modifications to a motor

HB3876 - 297 - LRB096 11650 HLH 22225 b
vehicle for the purpose of rendering it usable by a disabled
person, and insulin, urine testing materials, syringes, and
needles used by diabetics. The tax imposed under this
subsection and all civil penalties that may be assessed as an
incident thereof shall be collected and enforced by the
Department of Revenue. The Department has full power to
administer and enforce this subsection; to collect all taxes
and penalties due hereunder; to dispose of taxes and penalties
so collected in the manner hereinafter provided; and to
determine all rights to credit memoranda arising on account of
the erroneous payment of tax or penalty hereunder. In the
administration of, and compliance with this subsection, the
Department and persons who are subject to this paragraph shall
(i) have the same rights, remedies, privileges, immunities,
powers, and duties, (ii) be subject to the same conditions,
restrictions, limitations, penalties, exclusions, exemptions,
and definitions of terms, and (iii) employ the same modes of
procedure as are prescribed in Sections 2 (except that the
reference to State in the definition of supplier maintaining a
place of business in this State shall mean the county), 2a, 2b,
2c, 3 through 3-50 (in respect to all provisions therein other
than the State rate of tax), 4 (except that the reference to
the State shall be to the county), 5, 7, 8 (except that the
jurisdiction to which the tax shall be a debt to the extent
indicated in that Section 8 shall be the county), 9 (except as
to the disposition of taxes and penalties collected), 10, 11,

HB3876 - 298 - LRB096 11650 HLH 22225 b
12 (except the reference therein to Section 2b of the
Retailers' Occupation Tax Act), 13 (except that any reference
to the State shall mean the county), Section 15, 16, 17, 18, 19
and 20 of the Service Occupation Tax Act and Section 3-7 of the
Uniform Penalty and Interest Act, as fully as if those
provisions were set forth herein.
Persons subject to any tax imposed under the authority
granted in this subsection may reimburse themselves for their
serviceman's tax liability by separately stating the tax as an
additional charge, which charge may be stated in combination,
in a single amount, with State tax that servicemen are
authorized to collect under the Service Use Tax Act, in
accordance with such bracket schedules as the Department may
prescribe.
Whenever the Department determines that a refund should be
made under this subsection to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the warrant to be drawn for the
amount specified, and to the person named, in the notification
from the Department. The refund shall be paid by the State
Treasurer out of the County Public Safety or Transportation
Retailers' Occupation Fund.
Nothing in this subsection shall be construed to authorize
the county to impose a tax upon the privilege of engaging in
any business which under the Constitution of the United States
may not be made the subject of taxation by the State.

HB3876 - 299 - LRB096 11650 HLH 22225 b
(c) The Department shall immediately pay over to the State
Treasurer, ex officio, as trustee, all taxes and penalties
collected under this Section to be deposited into the County
Public Safety or Transportation Retailers' Occupation Tax
Fund, which shall be an unappropriated trust fund held outside
of the State treasury. On or before the 25th day of each
calendar month, the Department shall prepare and certify to the
Comptroller the disbursement of stated sums of money to the
counties from which retailers have paid taxes or penalties to
the Department during the second preceding calendar month. The
amount to be paid to each county, and deposited by the county
into its special fund created for the purposes of this Section,
shall be the amount (not including credit memoranda) collected
under this Section during the second preceding calendar month
by the Department plus an amount the Department determines is
necessary to offset any amounts that were erroneously paid to a
different taxing body, and not including (i) an amount equal to
the amount of refunds made during the second preceding calendar
month by the Department on behalf of the county and (ii) any
amount that the Department determines is necessary to offset
any amounts that were payable to a different taxing body but
were erroneously paid to the county. Within 10 days after
receipt by the Comptroller of the disbursement certification to
the counties provided for in this Section to be given to the
Comptroller by the Department, the Comptroller shall cause the
orders to be drawn for the respective amounts in accordance

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with directions contained in the certification.
In addition to the disbursement required by the preceding
paragraph, an allocation shall be made in March of each year to
each county that received more than $500,000 in disbursements
under the preceding paragraph in the preceding calendar year.
The allocation shall be in an amount equal to the average
monthly distribution made to each such county under the
preceding paragraph during the preceding calendar year
(excluding the 2 months of highest receipts). The distribution
made in March of each year subsequent to the year in which an
allocation was made pursuant to this paragraph and the
preceding paragraph shall be reduced by the amount allocated
and disbursed under this paragraph in the preceding calendar
year. The Department shall prepare and certify to the
Comptroller for disbursement the allocations made in
accordance with this paragraph.
(d) For the purpose of determining the local governmental
unit whose tax is applicable, a retail sale by a producer of
coal or another mineral mined in Illinois is a sale at retail
at the place where the coal or other mineral mined in Illinois
is extracted from the earth. This paragraph does not apply to
coal or another mineral when it is delivered or shipped by the
seller to the purchaser at a point outside Illinois so that the
sale is exempt under the United States Constitution as a sale
in interstate or foreign commerce.
(e) Nothing in this Section shall be construed to authorize

HB3876 - 301 - LRB096 11650 HLH 22225 b
a county to impose a tax upon the privilege of engaging in any
business that under the Constitution of the United States may
not be made the subject of taxation by this State.
(e-5) If a county imposes a tax under this Section, the
county board may, by ordinance, discontinue or lower the rate
of the tax. If the county board lowers the tax rate or
discontinues the tax, a referendum must be held in accordance
with subsection (a) of this Section in order to increase the
rate of the tax or to reimpose the discontinued tax.
(f) Beginning April 1, 1998, the results of any election
authorizing a proposition to impose a tax under this Section or
effecting a change in the rate of tax, or any ordinance
lowering the rate or discontinuing the tax, shall be certified
by the county clerk and filed with the Illinois Department of
Revenue either (i) on or before the first day of April,
whereupon the Department shall proceed to administer and
enforce the tax as of the first day of July next following the
filing; or (ii) on or before the first day of October,
whereupon the Department shall proceed to administer and
enforce the tax as of the first day of January next following
the filing.
(g) When certifying the amount of a monthly disbursement to
a county under this Section, the Department shall increase or
decrease the amounts by an amount necessary to offset any
miscalculation of previous disbursements. The offset amount
shall be the amount erroneously disbursed within the previous 6

HB3876 - 302 - LRB096 11650 HLH 22225 b
months from the time a miscalculation is discovered.
(h) This Section may be cited as the "Special County
Occupation Tax For Public Safety, Public Facilities, or
Transportation Law".
(i) For purposes of this Section, "public safety" includes,
but is not limited to, crime prevention, detention, fire
fighting, police, medical, ambulance, or other emergency
services. For the purposes of this Section, "transportation"
includes, but is not limited to, the construction, maintenance,
operation, and improvement of public highways, any other
purpose for which a county may expend funds under the Illinois
Highway Code, and passenger rail transportation. For the
purposes of this Section, "public facilities purposes"
includes, but is not limited to, the acquisition, development,
construction, reconstruction, rehabilitation, improvement,
financing, architectural planning, and installation of capital
facilities consisting of buildings, structures, and durable
equipment and for the acquisition and improvement of real
property and interest in real property required, or expected to
be required, in connection with the public facilities, for use
by the county for the furnishing of governmental services to
its citizens, including but not limited to museums and nursing
homes.
(j) The Department may promulgate rules to implement this
amendatory Act of the 95th General Assembly only to the extent
necessary to apply the existing rules for the Special County

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Retailers' Occupation Tax for Public Safety to this new purpose
for public facilities.
(Source: P.A. 94-781, eff. 5-19-06; 95-474, eff. 1-1-08;
95-1002, eff. 11-20-08.)
(55 ILCS 5/5-1006.7)
Sec. 5-1006.7. School facility occupation taxes.
(a) The county board of any county may impose a tax upon
all persons engaged in the business of selling tangible
personal property, other than personal property titled or
registered with an agency of this State's government, at retail
in the county on the gross receipts from the sales made in the
course of business to provide revenue to be used exclusively
for school facility purposes if a proposition for the tax has
been submitted to the electors of that county and approved by a
majority of those voting on the question as provided in
subsection (c). The tax under this Section may be imposed only
in one-quarter percent increments and may not exceed 1%.
This additional tax may not be imposed on the sale of food
for human consumption that is to be consumed off the premises
where it is sold (other than alcoholic beverages, soft drinks,
and food that has been prepared for immediate consumption) and
prescription and non-prescription medicines, drugs, medical
appliances, modifications to a motor vehicle for the purpose of
rendering it usable by a disabled person, and insulin, urine
testing materials, syringes and needles used by diabetics. The

HB3876 - 304 - LRB096 11650 HLH 22225 b
Department of Revenue has full power to administer and enforce
this subsection, to collect all taxes and penalties due under
this subsection, to dispose of taxes and penalties so collected
in the manner provided in this subsection, and to determine all
rights to credit memoranda arising on account of the erroneous
payment of a tax or penalty under this subsection. The
Department shall deposit all taxes and penalties collected
under this subsection into a special fund created for that
purpose.
In the administration of and compliance with this
subsection, the Department and persons who are subject to this
subsection (i) have the same rights, remedies, privileges,
immunities, powers, and duties, (ii) are subject to the same
conditions, restrictions, limitations, penalties, and
definitions of terms, and (iii) shall employ the same modes of
procedure as are set forth in Sections 1 through 1o, 2 through
2-70 (in respect to all provisions contained in those Sections
other than the State rate of tax), 2a through 2h, 3 (except as
to the disposition of taxes and penalties collected), 4, 5, 5a,
5b, 5c, 5d, 5e, 5f, 5g, 5h, 5i, 5j, 5k, 5l, 6, 6a, 6b, 6c, 7, 8,
9, 10, 11, 11a, 12, and 13 of the Retailers' Occupation Tax Act
and all provisions of the Uniform Penalty and Interest Act as
if those provisions were set forth in this subsection.
The certificate of registration that is issued by the
Department to a retailer under the Retailers' Occupation Tax
Act permits the retailer to engage in a business that is

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taxable without registering separately with the Department
under an ordinance or resolution under this subsection.
Persons subject to any tax imposed under the authority
granted in this subsection may reimburse themselves for their
seller's tax liability by separately stating that tax as an
additional charge, which may be stated in combination, in a
single amount, with State tax that sellers are required to
collect under the Use Tax Act, pursuant to any bracketed
schedules set forth by the Department.
(b) If a tax has been imposed under subsection (a), then a
service occupation tax must also be imposed at the same rate
upon all persons engaged, in the county, in the business of
making sales of service, who, as an incident to making those
sales of service, transfer tangible personal property within
the county as an incident to a sale of service.
This tax may not be imposed on sales of food for human
consumption that is to be consumed off the premises where it is
sold (other than alcoholic beverages, soft drinks, and food
prepared for immediate consumption) and prescription and
non-prescription medicines, drugs, medical appliances,
modifications to a motor vehicle for the purpose of rendering
it usable by a disabled person, and insulin, urine testing
materials, syringes, and needles used by diabetics.
The tax imposed under this subsection and all civil
penalties that may be assessed as an incident thereof shall be
collected and enforced by the Department and deposited into a

HB3876 - 306 - LRB096 11650 HLH 22225 b
special fund created for that purpose. The Department has full
power to administer and enforce this subsection, to collect all
taxes and penalties due under this subsection, to dispose of
taxes and penalties so collected in the manner provided in this
subsection, and to determine all rights to credit memoranda
arising on account of the erroneous payment of a tax or penalty
under this subsection.
In the administration of and compliance with this
subsection, the Department and persons who are subject to this
subsection shall (i) have the same rights, remedies,
privileges, immunities, powers and duties, (ii) be subject to
the same conditions, restrictions, limitations, penalties and
definition of terms, and (iii) employ the same modes of
procedure as are set forth in Sections 2 (except that that
reference to State in the definition of supplier maintaining a
place of business in this State means the county), 2a through
2d, 3 through 3-50 (in respect to all provisions contained in
those Sections other than the State rate of tax), 4 (except
that the reference to the State shall be to the county), 5, 7,
8 (except that the jurisdiction to which the tax is a debt to
the extent indicated in that Section 8 is the county), 9
(except as to the disposition of taxes and penalties
collected), 10, 11, 12 (except the reference therein to Section
2b of the Retailers' Occupation Tax Act), 13 (except that any
reference to the State means the county), Section 15, 16, 17,
18, 19, and 20 of the Service Occupation Tax Act and all

HB3876 - 307 - LRB096 11650 HLH 22225 b
provisions of the Uniform Penalty and Interest Act, as fully as
if those provisions were set forth herein.
Persons subject to any tax imposed under the authority
granted in this subsection may reimburse themselves for their
serviceman's tax liability by separately stating the tax as an
additional charge, which may be stated in combination, in a
single amount, with State tax that servicemen are authorized to
collect under the Service Use Tax Act, pursuant to any
bracketed schedules set forth by the Department.
(c) The tax under this Section may not be imposed until, by
ordinance or resolution of the county board, the question of
imposing the tax has been submitted to the electors of the
county at a regular election and approved by a majority of the
electors voting on the question. Upon a resolution by the
county board or a resolution by school district boards that
represent at least 51% of the student enrollment within the
county, the county board must certify the question to the
proper election authority in accordance with the Election Code.
The election authority must submit the question in
substantially the following form:
Shall (name of county) be authorized to impose a
retailers' occupation tax and a service occupation tax
(commonly referred to as a "sales tax") at a rate of
(insert rate) to be used exclusively for school facility
purposes?
The election authority must record the votes as "Yes" or "No".

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If a majority of the electors voting on the question vote
in the affirmative, then the county may, thereafter, impose the
tax.
For the purposes of this subsection (c), "enrollment" means
the head count of the students residing in the county on the
last school day of September of each year, which must be
reported on the Illinois State Board of Education Public School
Fall Enrollment/Housing Report.
(d) The Department shall immediately pay over to the State
Treasurer, ex officio, as trustee, all taxes and penalties
collected under this Section to be deposited into the School
Facility Occupation Tax Fund, which shall be an unappropriated
trust fund held outside the State treasury.
On or before the 25th day of each calendar month, the
Department shall prepare and certify to the Comptroller the
disbursement of stated sums of money to the regional
superintendents of schools in counties from which retailers or
servicemen have paid taxes or penalties to the Department
during the second preceding calendar month. The amount to be
paid to each regional superintendent of schools and disbursed
to him or her in accordance with 3-14.31 of the School Code, is
equal to the amount (not including credit memoranda) collected
from the county under this Section during the second preceding
calendar month by the Department, (i) less 2% of that amount,
which shall be deposited into the Tax Compliance and
Administration Fund and shall be used by the Department,

HB3876 - 309 - LRB096 11650 HLH 22225 b
subject to appropriation, to cover the costs of the Department
in administering and enforcing the provisions of this Section,
on behalf of the county, (ii) plus an amount that the
Department determines is necessary to offset any amounts that
were erroneously paid to a different taxing body; (iii) less an
amount equal to the amount of refunds made during the second
preceding calendar month by the Department on behalf of the
county; and (iv) less any amount that the Department determines
is necessary to offset any amounts that were payable to a
different taxing body but were erroneously paid to the county.
When certifying the amount of a monthly disbursement to a
regional superintendent of schools under this Section, the
Department shall increase or decrease the amounts by an amount
necessary to offset any miscalculation of previous
disbursements within the previous 6 months from the time a
miscalculation is discovered.
Within 10 days after receipt by the Comptroller from the
Department of the disbursement certification to the regional
superintendents of the schools provided for in this Section,
the Comptroller shall cause the orders to be drawn for the
respective amounts in accordance with directions contained in
the certification.
If the Department determines that a refund should be made
under this Section to a claimant instead of issuing a credit
memorandum, then the Department shall notify the Comptroller,
who shall cause the order to be drawn for the amount specified

HB3876 - 310 - LRB096 11650 HLH 22225 b
and to the person named in the notification from the
Department. The refund shall be paid by the Treasurer out of
the School Facility Occupation Tax Fund.
(e) For the purposes of determining the local governmental
unit whose tax is applicable, a retail sale by a producer of
coal or another mineral mined in Illinois is a sale at retail
at the place where the coal or other mineral mined in Illinois
is extracted from the earth. This subsection does not apply to
coal or another mineral when it is delivered or shipped by the
seller to the purchaser at a point outside Illinois so that the
sale is exempt under the United States Constitution as a sale
in interstate or foreign commerce.
(f) Nothing in this Section may be construed to authorize a
county board to impose a tax upon the privilege of engaging in
any business that under the Constitution of the United States
may not be made the subject of taxation by this State.
(g) If a county board imposes a tax under this Section,
then the board may, by ordinance, discontinue or reduce the
rate of the tax. If, however, a school board issues bonds that
are backed by the proceeds of the tax under this Section, then
the county board may not reduce the tax rate or discontinue the
tax if that rate reduction or discontinuance would inhibit the
school board's ability to pay the principal and interest on
those bonds as they become due. If the county board reduces the
tax rate or discontinues the tax, then a referendum must be
held in accordance with subsection (c) of this Section in order

HB3876 - 311 - LRB096 11650 HLH 22225 b
to increase the rate of the tax or to reimpose the discontinued
tax.
The results of any election that authorizes a proposition
to impose a tax under this Section or to change the rate of the
tax along with an ordinance imposing the tax, or any ordinance
that lowers the rate or discontinues the tax, must be certified
by the county clerk and filed with the Illinois Department of
Revenue either (i) on or before the first day of April,
whereupon the Department shall proceed to administer and
enforce the tax or change in the rate as of the first day of
July next following the filing; or (ii) on or before the first
day of October, whereupon the Department shall proceed to
administer and enforce the tax or change in the rate as of the
first day of January next following the filing.
(h) For purposes of this Section, "school facility
purposes" means the acquisition, development, construction,
reconstruction, rehabilitation, improvement, financing,
architectural planning, and installation of capital facilities
consisting of buildings, structures, and durable equipment and
for the acquisition and improvement of real property and
interest in real property required, or expected to be required,
in connection with the capital facilities. "School-facility
purposes" also includes fire prevention, safety, energy
conservation, disabled accessibility, school security, and
specified repair purposes set forth under Section 17-2.11 of
the School Code.

HB3876 - 312 - LRB096 11650 HLH 22225 b
(i) This Section does not apply to Cook County.
(j) This Section may be cited as the County School Facility
Occupation Tax Law.
(Source: P.A. 95-675, eff. 10-11-07.)
(55 ILCS 5/5-1007) (from Ch. 34, par. 5-1007)
Sec. 5-1007. Home Rule County Service Occupation Tax Law.
The corporate authorities of a home rule county may impose a
tax upon all persons engaged, in such county, in the business
of making sales of service at the same rate of tax imposed
pursuant to Section 5-1006 of the selling price of all tangible
personal property transferred by such servicemen either in the
form of tangible personal property or in the form of real
estate as an incident to a sale of service. If imposed, such
tax shall only be imposed in 1/4% increments. On and after
September 1, 1991, this additional tax may not be imposed on
the sales of food for human consumption which is to be consumed
off the premises where it is sold (other than alcoholic
beverages, soft drinks and food which has been prepared for
immediate consumption) and prescription and nonprescription
medicines, drugs, medical appliances, modifications to a motor
vehicle for the purpose of rendering it usable by a disabled
person, and insulin, urine testing materials, syringes and
needles used by diabetics. The tax imposed by a home rule
county pursuant to this Section and all civil penalties that
may be assessed as an incident thereof shall be collected and

HB3876 - 313 - LRB096 11650 HLH 22225 b
enforced by the State Department of Revenue. The certificate of
registration which is issued by the Department to a retailer
under the Retailers' Occupation Tax Act or under the Service
Occupation Tax Act shall permit such registrant to engage in a
business which is taxable under any ordinance or resolution
enacted pursuant to this Section without registering
separately with the Department under such ordinance or
resolution or under this Section. The Department shall have
full power to administer and enforce this Section; to collect
all taxes and penalties due hereunder; to dispose of taxes and
penalties so collected in the manner hereinafter provided; and
to determine all rights to credit memoranda arising on account
of the erroneous payment of tax or penalty hereunder. In the
administration of, and compliance with, this Section the
Department and persons who are subject to this Section shall
have the same rights, remedies, privileges, immunities, powers
and duties, and be subject to the same conditions,
restrictions, limitations, penalties and definitions of terms,
and employ the same modes of procedure, as are prescribed in
Sections 1a-1, 2, 2a, 3 through 3-50 (in respect to all
provisions therein other than the State rate of tax), 4 (except
that the reference to the State shall be to the taxing county),
5, 7, 8 (except that the jurisdiction to which the tax shall be
a debt to the extent indicated in that Section 8 shall be the
taxing county), 9 (except as to the disposition of taxes and
penalties collected, and except that the returned merchandise

HB3876 - 314 - LRB096 11650 HLH 22225 b
credit for this county tax may not be taken against any State
tax), 10, 11, 12 (except the reference therein to Section 2b of
the Retailers' Occupation Tax Act), 13 (except that any
reference to the State shall mean the taxing county), the first
paragraph of Section 15, 16, 17, 18, 19 and 20 of the Service
Occupation Tax Act and Section 3-7 of the Uniform Penalty and
Interest Act, as fully as if those provisions were set forth
herein.
No tax may be imposed by a home rule county pursuant to
this Section unless such county also imposes a tax at the same
rate pursuant to Section 5-1006.
Persons subject to any tax imposed pursuant to the
authority granted in this Section may reimburse themselves for
their serviceman's tax liability hereunder by separately
stating such tax as an additional charge, which charge may be
stated in combination, in a single amount, with State tax which
servicemen are authorized to collect under the Service Use Tax
Act, pursuant to such bracket schedules as the Department may
prescribe.
Whenever the Department determines that a refund should be
made under this Section to a claimant instead of issuing credit
memorandum, the Department shall notify the State Comptroller,
who shall cause the order to be drawn for the amount specified,
and to the person named, in such notification from the
Department. Such refund shall be paid by the State Treasurer
out of the home rule county retailers' occupation tax fund.

HB3876 - 315 - LRB096 11650 HLH 22225 b
The Department shall forthwith pay over to the State
Treasurer, ex-officio, as trustee, all taxes and penalties
collected hereunder. On or before the 25th day of each calendar
month, the Department shall prepare and certify to the
Comptroller the disbursement of stated sums of money to named
counties, the counties to be those from which suppliers and
servicemen have paid taxes or penalties hereunder to the
Department during the second preceding calendar month. The
amount to be paid to each county shall be the amount (not
including credit memoranda) collected hereunder during the
second preceding calendar month by the Department, and not
including an amount equal to the amount of refunds made during
the second preceding calendar month by the Department on behalf
of such county. Within 10 days after receipt, by the
Comptroller, of the disbursement certification to the counties
provided for in this Section to be given to the Comptroller by
the Department, the Comptroller shall cause the orders to be
drawn for the respective amounts in accordance with the
directions contained in such certification.
In addition to the disbursement required by the preceding
paragraph, an allocation shall be made in each year to each
county which received more than $500,000 in disbursements under
the preceding paragraph in the preceding calendar year. The
allocation shall be in an amount equal to the average monthly
distribution made to each such county under the preceding
paragraph during the preceding calendar year (excluding the 2

HB3876 - 316 - LRB096 11650 HLH 22225 b
months of highest receipts). The distribution made in March of
each year subsequent to the year in which an allocation was
made pursuant to this paragraph and the preceding paragraph
shall be reduced by the amount allocated and disbursed under
this paragraph in the preceding calendar year. The Department
shall prepare and certify to the Comptroller for disbursement
the allocations made in accordance with this paragraph.
Nothing in this Section shall be construed to authorize a
county to impose a tax upon the privilege of engaging in any
business which under the Constitution of the United States may
not be made the subject of taxation by this State.
An ordinance or resolution imposing or discontinuing a tax
hereunder or effecting a change in the rate thereof shall be
adopted and a certified copy thereof filed with the Department
on or before the first day of June, whereupon the Department
shall proceed to administer and enforce this Section as of the
first day of September next following such adoption and filing.
Beginning January 1, 1992, an ordinance or resolution imposing
or discontinuing the tax hereunder or effecting a change in the
rate thereof shall be adopted and a certified copy thereof
filed with the Department on or before the first day of July,
whereupon the Department shall proceed to administer and
enforce this Section as of the first day of October next
following such adoption and filing. Beginning January 1, 1993,
an ordinance or resolution imposing or discontinuing the tax
hereunder or effecting a change in the rate thereof shall be

HB3876 - 317 - LRB096 11650 HLH 22225 b
adopted and a certified copy thereof filed with the Department
on or before the first day of October, whereupon the Department
shall proceed to administer and enforce this Section as of the
first day of January next following such adoption and filing.
Beginning April 1, 1998, an ordinance or resolution imposing or
discontinuing the tax hereunder or effecting a change in the
rate thereof shall either (i) be adopted and a certified copy
thereof filed with the Department on or before the first day of
April, whereupon the Department shall proceed to administer and
enforce this Section as of the first day of July next following
the adoption and filing; or (ii) be adopted and a certified
copy thereof filed with the Department on or before the first
day of October, whereupon the Department shall proceed to
administer and enforce this Section as of the first day of
January next following the adoption and filing.
This Section shall be known and may be cited as the Home
Rule County Service Occupation Tax Law.
(Source: P.A. 90-689, eff. 7-31-98; 91-51, eff. 6-30-99.)
(55 ILCS 5/5-1035 rep.)
Section 40. The Counties Code is amended by repealing
Section 5-1035.
Section 45. The Illinois Municipal Code is amended by
changing Sections 8-11-1, 8-11-1.1, 8-11-1.3, 8-11-1.4,
8-11-5, and 11-74.3-6 as follows:

HB3876 - 318 - LRB096 11650 HLH 22225 b
(65 ILCS 5/8-11-1) (from Ch. 24, par. 8-11-1)
Sec. 8-11-1. Home Rule Municipal Retailers' Occupation Tax
Act. The corporate authorities of a home rule municipality may
impose a tax upon all persons engaged in the business of
selling tangible personal property, other than an item of
tangible personal property titled or registered with an agency
of this State's government, at retail in the municipality on
the gross receipts from these sales made in the course of such
business. If imposed, the tax shall only be imposed in 1/4%
increments. On and after September 1, 1991, this additional tax
may not be imposed on the sales of food for human consumption
that is to be consumed off the premises where it is sold (other
than alcoholic beverages, soft drinks and food that has been
prepared for immediate consumption) and prescription and
nonprescription medicines, drugs, medical appliances,
modifications to a motor vehicle for the purpose of rendering
it usable by a disabled person, and insulin, urine testing
materials, syringes and needles used by diabetics. The tax
imposed by a home rule municipality under this Section and all
civil penalties that may be assessed as an incident of the tax
shall be collected and enforced by the State Department of
Revenue. The certificate of registration that is issued by the
Department to a retailer under the Retailers' Occupation Tax
Act shall permit the retailer to engage in a business that is
taxable under any ordinance or resolution enacted pursuant to

HB3876 - 319 - LRB096 11650 HLH 22225 b
this Section without registering separately with the
Department under such ordinance or resolution or under this
Section. The Department shall have full power to administer and
enforce this Section; to collect all taxes and penalties due
hereunder; to dispose of taxes and penalties so collected in
the manner hereinafter provided; and to determine all rights to
credit memoranda arising on account of the erroneous payment of
tax or penalty hereunder. In the administration of, and
compliance with, this Section the Department and persons who
are subject to this Section shall have the same rights,
remedies, privileges, immunities, powers and duties, and be
subject to the same conditions, restrictions, limitations,
penalties and definitions of terms, and employ the same modes
of procedure, as are prescribed in Sections 1, 1a, 1d, 1e, 1f,
1i, 1j, 1k, 1m, 1n, 2 through 2-65 (in respect to all
provisions therein other than the State rate of tax), 2c, 3
(except as to the disposition of taxes and penalties
collected), 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5h, 5i, 5j, 5k,
5l, 6, 6a, 6b, 6c, 7, 8, 9, 10, 11, 12 and 13 of the Retailers'
Occupation Tax Act and Section 3-7 of the Uniform Penalty and
Interest Act, as fully as if those provisions were set forth
herein.
No tax may be imposed by a home rule municipality under
this Section unless the municipality also imposes a tax at the
same rate under Section 8-11-5 of this Act.
Persons subject to any tax imposed under the authority

HB3876 - 320 - LRB096 11650 HLH 22225 b
granted in this Section may reimburse themselves for their
seller's tax liability hereunder by separately stating that tax
as an additional charge, which charge may be stated in
combination, in a single amount, with State tax which sellers
are required to collect under the Use Tax Act, pursuant to such
bracket schedules as the Department may prescribe.
Whenever the Department determines that a refund should be
made under this Section to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the order to be drawn for the
amount specified and to the person named in the notification
from the Department. The refund shall be paid by the State
Treasurer out of the home rule municipal retailers' occupation
tax fund.
The Department shall immediately pay over to the State
Treasurer, ex officio, as trustee, all taxes and penalties
collected hereunder. On or before the 25th day of each calendar
month, the Department shall prepare and certify to the
Comptroller the disbursement of stated sums of money to named
municipalities, the municipalities to be those from which
retailers have paid taxes or penalties hereunder to the
Department during the second preceding calendar month. The
amount to be paid to each municipality shall be the amount (not
including credit memoranda) collected hereunder during the
second preceding calendar month by the Department plus an
amount the Department determines is necessary to offset any

HB3876 - 321 - LRB096 11650 HLH 22225 b
amounts that were erroneously paid to a different taxing body,
and not including an amount equal to the amount of refunds made
during the second preceding calendar month by the Department on
behalf of such municipality, and not including any amount that
the Department determines is necessary to offset any amounts
that were payable to a different taxing body but were
erroneously paid to the municipality. Within 10 days after
receipt by the Comptroller of the disbursement certification to
the municipalities provided for in this Section to be given to
the Comptroller by the Department, the Comptroller shall cause
the orders to be drawn for the respective amounts in accordance
with the directions contained in the certification.
In addition to the disbursement required by the preceding
paragraph and in order to mitigate delays caused by
distribution procedures, an allocation shall, if requested, be
made within 10 days after January 14, 1991, and in November of
1991 and each year thereafter, to each municipality that
received more than $500,000 during the preceding fiscal year,
(July 1 through June 30) whether collected by the municipality
or disbursed by the Department as required by this Section.
Within 10 days after January 14, 1991, participating
municipalities shall notify the Department in writing of their
intent to participate. In addition, for the initial
distribution, participating municipalities shall certify to
the Department the amounts collected by the municipality for
each month under its home rule occupation and service

HB3876 - 322 - LRB096 11650 HLH 22225 b
occupation tax during the period July 1, 1989 through June 30,
1990. The allocation within 10 days after January 14, 1991,
shall be in an amount equal to the monthly average of these
amounts, excluding the 2 months of highest receipts. The
monthly average for the period of July 1, 1990 through June 30,
1991 will be determined as follows: the amounts collected by
the municipality under its home rule occupation and service
occupation tax during the period of July 1, 1990 through
September 30, 1990, plus amounts collected by the Department
and paid to such municipality through June 30, 1991, excluding
the 2 months of highest receipts. The monthly average for each
subsequent period of July 1 through June 30 shall be an amount
equal to the monthly distribution made to each such
municipality under the preceding paragraph during this period,
excluding the 2 months of highest receipts. The distribution
made in November 1991 and each year thereafter under this
paragraph and the preceding paragraph shall be reduced by the
amount allocated and disbursed under this paragraph in the
preceding period of July 1 through June 30. The Department
shall prepare and certify to the Comptroller for disbursement
the allocations made in accordance with this paragraph.
For the purpose of determining the local governmental unit
whose tax is applicable, a retail sale by a producer of coal or
other mineral mined in Illinois is a sale at retail at the
place where the coal or other mineral mined in Illinois is
extracted from the earth. This paragraph does not apply to coal

HB3876 - 323 - LRB096 11650 HLH 22225 b
or other mineral when it is delivered or shipped by the seller
to the purchaser at a point outside Illinois so that the sale
is exempt under the United States Constitution as a sale in
interstate or foreign commerce.
Nothing in this Section shall be construed to authorize a
municipality to impose a tax upon the privilege of engaging in
any business which under the Constitution of the United States
may not be made the subject of taxation by this State.
An ordinance or resolution imposing or discontinuing a tax
hereunder or effecting a change in the rate thereof shall be
adopted and a certified copy thereof filed with the Department
on or before the first day of June, whereupon the Department
shall proceed to administer and enforce this Section as of the
first day of September next following the adoption and filing.
Beginning January 1, 1992, an ordinance or resolution imposing
or discontinuing the tax hereunder or effecting a change in the
rate thereof shall be adopted and a certified copy thereof
filed with the Department on or before the first day of July,
whereupon the Department shall proceed to administer and
enforce this Section as of the first day of October next
following such adoption and filing. Beginning January 1, 1993,
an ordinance or resolution imposing or discontinuing the tax
hereunder or effecting a change in the rate thereof shall be
adopted and a certified copy thereof filed with the Department
on or before the first day of October, whereupon the Department
shall proceed to administer and enforce this Section as of the

HB3876 - 324 - LRB096 11650 HLH 22225 b
first day of January next following the adoption and filing.
However, a municipality located in a county with a population
in excess of 3,000,000 that elected to become a home rule unit
at the general primary election in 1994 may adopt an ordinance
or resolution imposing the tax under this Section and file a
certified copy of the ordinance or resolution with the
Department on or before July 1, 1994. The Department shall then
proceed to administer and enforce this Section as of October 1,
1994. Beginning April 1, 1998, an ordinance or resolution
imposing or discontinuing the tax hereunder or effecting a
change in the rate thereof shall either (i) be adopted and a
certified copy thereof filed with the Department on or before
the first day of April, whereupon the Department shall proceed
to administer and enforce this Section as of the first day of
July next following the adoption and filing; or (ii) be adopted
and a certified copy thereof filed with the Department on or
before the first day of October, whereupon the Department shall
proceed to administer and enforce this Section as of the first
day of January next following the adoption and filing.
When certifying the amount of a monthly disbursement to a
municipality under this Section, the Department shall increase
or decrease the amount by an amount necessary to offset any
misallocation of previous disbursements. The offset amount
shall be the amount erroneously disbursed within the previous 6
months from the time a misallocation is discovered.
Any unobligated balance remaining in the Municipal

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Retailers' Occupation Tax Fund on December 31, 1989, which fund
was abolished by Public Act 85-1135, and all receipts of
municipal tax as a result of audits of liability periods prior
to January 1, 1990, shall be paid into the Local Government Tax
Fund for distribution as provided by this Section prior to the
enactment of Public Act 85-1135. All receipts of municipal tax
as a result of an assessment not arising from an audit, for
liability periods prior to January 1, 1990, shall be paid into
the Local Government Tax Fund for distribution before July 1,
1990, as provided by this Section prior to the enactment of
Public Act 85-1135; and on and after July 1, 1990, all such
receipts shall be distributed as provided in Section 6z-18 of
the State Finance Act.
As used in this Section, "municipal" and "municipality"
means a city, village or incorporated town, including an
incorporated town that has superseded a civil township.
This Section shall be known and may be cited as the Home
Rule Municipal Retailers' Occupation Tax Act.
(Source: P.A. 90-689, eff. 7-31-98; 91-51, eff. 6-30-99.)
(65 ILCS 5/8-11-1.1) (from Ch. 24, par. 8-11-1.1)
Sec. 8-11-1.1. Non-home rule municipalities; imposition of
taxes.
(a) The corporate authorities of a non-home rule
municipality may, upon approval of the electors of the
municipality pursuant to subsection (b) of this Section, impose

HB3876 - 326 - LRB096 11650 HLH 22225 b
by ordinance or resolution the tax authorized in Sections
8-11-1.3, 8-11-1.4 and 8-11-1.5 of this Act.
(b) The corporate authorities of the municipality may by
ordinance or resolution call for the submission to the electors
of the municipality the question of whether the municipality
shall impose such tax. Such question shall be certified by the
municipal clerk to the election authority in accordance with
Section 28-5 of the Election Code and shall be in a form in
accordance with Section 16-7 of the Election Code.
The proposition for the imposition of the non-home rule
municipal retailers' occupation tax and non-home rule
municipal service occupation tax shall be in substantially the
following form:
"Shall (insert name of municipality) impose a Non-Home
Rule Municipal Retailers' Occupation Tax and Non-Home Rule
Municipal Service Occupation Tax at the rate of (insert
rate) to be used by the municipality (choose one: [for
expenditure on public infrastructure] [for property tax
relief] [for expenditure on public infrastructure and for
property tax relief]) as provided in Sections 8-11-1.1,
8-11-1.2, 8-11-1.3, and 8-11-1.4 of the Illinois Municipal
Code?"
The votes shall be recorded as "Yes" or "No".
If, in addition to the non-home rule municipal retailers'
occupation tax and non-home rule municipal service occupation
tax, a municipality opts to impose a non-home rule municipal

HB3876 - 327 - LRB096 11650 HLH 22225 b
use tax on titled or registered vehicles as provided in Section
8-11-1.5, which tax must be administered and collected by the
municipality itself, the proposition above shall also include a
reference to the Non-Home Rule Municipal Use Tax and a
reference to Section 8-11-1.5 of the Illinois Municipal Code.
If a majority of the electors in the municipality voting
upon the question vote in the affirmative, such tax shall be
imposed.
An ordinance or resolution imposing the tax of not more
than 1% hereunder or discontinuing the same shall be adopted
and a certified copy thereof, together with a certification
that the ordinance or resolution received referendum approval
in the case of the imposition of such tax, filed with the
Department of Revenue, on or before the first day of June,
whereupon the Department shall proceed to administer and
enforce the additional tax or to discontinue the tax, as the
case may be, as of the first day of September next following
such adoption and filing. Beginning January 1, 1992, an
ordinance or resolution imposing or discontinuing the tax
hereunder shall be adopted and a certified copy thereof filed
with the Department on or before the first day of July,
whereupon the Department shall proceed to administer and
enforce this Section as of the first day of October next
following such adoption and filing. Beginning January 1, 1993,
an ordinance or resolution imposing or discontinuing the tax
hereunder shall be adopted and a certified copy thereof filed

HB3876 - 328 - LRB096 11650 HLH 22225 b
with the Department on or before the first day of October,
whereupon the Department shall proceed to administer and
enforce this Section as of the first day of January next
following such adoption and filing. Beginning October 1, 2002,
an ordinance or resolution imposing or discontinuing the tax
under this Section or effecting a change in the rate of tax
must either (i) be adopted and a certified copy of the
ordinance or resolution filed with the Department on or before
the first day of April, whereupon the Department shall proceed
to administer and enforce this Section as of the first day of
July next following the adoption and filing; or (ii) be adopted
and a certified copy of the ordinance or resolution filed with
the Department on or before the first day of October, whereupon
the Department shall proceed to administer and enforce this
Section as of the first day of January next following the
adoption and filing.
Notwithstanding any provision in this Section to the
contrary, if, in a non-home rule municipality with more than
150,000 but fewer than 200,000 inhabitants, as determined by
the last preceding federal decennial census, an ordinance or
resolution under this Section imposes or discontinues a tax or
changes the tax rate as of July 1, 2007, then that ordinance or
resolution, together with a certification that the ordinance or
resolution received referendum approval in the case of the
imposition of the tax, must be adopted and a certified copy of
that ordinance or resolution must be filed with the Department

HB3876 - 329 - LRB096 11650 HLH 22225 b
on or before May 15, 2007, whereupon the Department shall
proceed to administer and enforce this Section as of July 1,
2007.
A non-home rule municipality may file a certified copy of
an ordinance or resolution, with a certification that the
ordinance or resolution received referendum approval in the
case of the imposition of the tax, with the Department of
Revenue, as required under this Section, only after October 2,
2000.
The tax authorized by this Section may not be more than 1%
and may be imposed only in 1/4% increments.
(Source: P.A. 94-679, eff. 1-1-06; 95-8, eff. 6-29-07.)
(65 ILCS 5/8-11-1.3) (from Ch. 24, par. 8-11-1.3)
Sec. 8-11-1.3. Non-Home Rule Municipal Retailers'
Occupation Tax Act. The corporate authorities of a non-home
rule municipality may impose a tax upon all persons engaged in
the business of selling tangible personal property, other than
on an item of tangible personal property which is titled and
registered by an agency of this State's Government, at retail
in the municipality for expenditure on public infrastructure or
for property tax relief or both as defined in Section 8-11-1.2
if approved by referendum as provided in Section 8-11-1.1, of
the gross receipts from such sales made in the course of such
business. The tax imposed may not be more than 1% and may be
imposed only in 1/4% increments. The tax may not be imposed on

HB3876 - 330 - LRB096 11650 HLH 22225 b
the sale of food for human consumption that is to be consumed
off the premises where it is sold (other than alcoholic
beverages, soft drinks, and food that has been prepared for
immediate consumption) and prescription and nonprescription
medicines, drugs, medical appliances, modifications to a motor
vehicle for the purpose of rendering it usable by a disabled
person, and insulin, urine testing materials, syringes, and
needles used by diabetics. The tax imposed by a municipality
pursuant to this Section and all civil penalties that may be
assessed as an incident thereof shall be collected and enforced
by the State Department of Revenue. The certificate of
registration which is issued by the Department to a retailer
under the Retailers' Occupation Tax Act shall permit such
retailer to engage in a business which is taxable under any
ordinance or resolution enacted pursuant to this Section
without registering separately with the Department under such
ordinance or resolution or under this Section. The Department
shall have full power to administer and enforce this Section;
to collect all taxes and penalties due hereunder; to dispose of
taxes and penalties so collected in the manner hereinafter
provided, and to determine all rights to credit memoranda,
arising on account of the erroneous payment of tax or penalty
hereunder. In the administration of, and compliance with, this
Section, the Department and persons who are subject to this
Section shall have the same rights, remedies, privileges,
immunities, powers and duties, and be subject to the same

HB3876 - 331 - LRB096 11650 HLH 22225 b
conditions, restrictions, limitations, penalties and
definitions of terms, and employ the same modes of procedure,
as are prescribed in Sections 1, 1a, 1a-1, 1d, 1e, 1f, 1i, 1j,
2 through 2-65 (in respect to all provisions therein other than
the State rate of tax), 2c, 3 (except as to the disposition of
taxes and penalties collected), 4, 5, 5a, 5b, 5c, 5d, 5e, 5f,
5g, 5h, 5i, 5j, 5k, 5l, 6, 6a, 6b, 6c, 7, 8, 9, 10, 11, 12 and
13 of the Retailers' Occupation Tax Act and Section 3-7 of the
Uniform Penalty and Interest Act as fully as if those
provisions were set forth herein.
No municipality may impose a tax under this Section unless
the municipality also imposes a tax at the same rate under
Section 8-11-1.4 of this Code.
Persons subject to any tax imposed pursuant to the
authority granted in this Section may reimburse themselves for
their seller's tax liability hereunder by separately stating
such tax as an additional charge, which charge may be stated in
combination, in a single amount, with State tax which sellers
are required to collect under the Use Tax Act, pursuant to such
bracket schedules as the Department may prescribe.
Whenever the Department determines that a refund should be
made under this Section to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the order to be drawn for the
amount specified, and to the person named, in such notification
from the Department. Such refund shall be paid by the State

HB3876 - 332 - LRB096 11650 HLH 22225 b
Treasurer out of the non-home rule municipal retailers'
occupation tax fund.
The Department shall forthwith pay over to the State
Treasurer, ex officio, as trustee, all taxes and penalties
collected hereunder. On or before the 25th day of each calendar
month, the Department shall prepare and certify to the
Comptroller the disbursement of stated sums of money to named
municipalities, the municipalities to be those from which
retailers have paid taxes or penalties hereunder to the
Department during the second preceding calendar month. The
amount to be paid to each municipality shall be the amount (not
including credit memoranda) collected hereunder during the
second preceding calendar month by the Department plus an
amount the Department determines is necessary to offset any
amounts which were erroneously paid to a different taxing body,
and not including an amount equal to the amount of refunds made
during the second preceding calendar month by the Department on
behalf of such municipality, and not including any amount which
the Department determines is necessary to offset any amounts
which were payable to a different taxing body but were
erroneously paid to the municipality. Within 10 days after
receipt, by the Comptroller, of the disbursement certification
to the municipalities, provided for in this Section to be given
to the Comptroller by the Department, the Comptroller shall
cause the orders to be drawn for the respective amounts in
accordance with the directions contained in such

HB3876 - 333 - LRB096 11650 HLH 22225 b
certification.
For the purpose of determining the local governmental unit
whose tax is applicable, a retail sale, by a producer of coal
or other mineral mined in Illinois, is a sale at retail at the
place where the coal or other mineral mined in Illinois is
extracted from the earth. This paragraph does not apply to coal
or other mineral when it is delivered or shipped by the seller
to the purchaser at a point outside Illinois so that the sale
is exempt under the Federal Constitution as a sale in
interstate or foreign commerce.
Nothing in this Section shall be construed to authorize a
municipality to impose a tax upon the privilege of engaging in
any business which under the constitution of the United States
may not be made the subject of taxation by this State.
When certifying the amount of a monthly disbursement to a
municipality under this Section, the Department shall increase
or decrease such amount by an amount necessary to offset any
misallocation of previous disbursements. The offset amount
shall be the amount erroneously disbursed within the previous 6
months from the time a misallocation is discovered.
The Department of Revenue shall implement this amendatory
Act of the 91st General Assembly so as to collect the tax on
and after January 1, 2002.
As used in this Section, "municipal" and "municipality"
means a city, village or incorporated town, including an
incorporated town which has superseded a civil township.

HB3876 - 334 - LRB096 11650 HLH 22225 b
This Section shall be known and may be cited as the
"Non-Home Rule Municipal Retailers' Occupation Tax Act".
(Source: P.A. 94-679, eff. 1-1-06.)
(65 ILCS 5/8-11-1.4) (from Ch. 24, par. 8-11-1.4)
Sec. 8-11-1.4. Non-Home Rule Municipal Service Occupation
Tax Act. The corporate authorities of a non-home rule
municipality may impose a tax upon all persons engaged, in such
municipality, in the business of making sales of service for
expenditure on public infrastructure or for property tax relief
or both as defined in Section 8-11-1.2 if approved by
referendum as provided in Section 8-11-1.1, of the selling
price of all tangible personal property transferred by such
servicemen either in the form of tangible personal property or
in the form of real estate as an incident to a sale of service.
The tax imposed may not be more than 1% and may be imposed only
in 1/4% increments. The tax may not be imposed on the sale of
food for human consumption that is to be consumed off the
premises where it is sold (other than alcoholic beverages, soft
drinks, and food that has been prepared for immediate
consumption) and prescription and nonprescription medicines,
drugs, medical appliances, modifications to a motor vehicle for
the purpose of rendering it usable by a disabled person, and
insulin, urine testing materials, syringes, and needles used by
diabetics. The tax imposed by a municipality pursuant to this
Section and all civil penalties that may be assessed as an

HB3876 - 335 - LRB096 11650 HLH 22225 b
incident thereof shall be collected and enforced by the State
Department of Revenue. The certificate of registration which is
issued by the Department to a retailer under the Retailers'
Occupation Tax Act or under the Service Occupation Tax Act
shall permit such registrant to engage in a business which is
taxable under any ordinance or resolution enacted pursuant to
this Section without registering separately with the
Department under such ordinance or resolution or under this
Section. The Department shall have full power to administer and
enforce this Section; to collect all taxes and penalties due
hereunder; to dispose of taxes and penalties so collected in
the manner hereinafter provided, and to determine all rights to
credit memoranda arising on account of the erroneous payment of
tax or penalty hereunder. In the administration of, and
compliance with, this Section the Department and persons who
are subject to this Section shall have the same rights,
remedies, privileges, immunities, powers and duties, and be
subject to the same conditions, restrictions, limitations,
penalties and definitions of terms, and employ the same modes
of procedure, as are prescribed in Sections 1a-1, 2, 2a, 3
through 3-50 (in respect to all provisions therein other than
the State rate of tax), 4 (except that the reference to the
State shall be to the taxing municipality), 5, 7, 8 (except
that the jurisdiction to which the tax shall be a debt to the
extent indicated in that Section 8 shall be the taxing
municipality), 9 (except as to the disposition of taxes and

HB3876 - 336 - LRB096 11650 HLH 22225 b
penalties collected, and except that the returned merchandise
credit for this municipal tax may not be taken against any
State tax), 10, 11, 12 (except the reference therein to Section
2b of the Retailers' Occupation Tax Act), 13 (except that any
reference to the State shall mean the taxing municipality), the
first paragraph of Section 15, 16, 17, 18, 19 and 20 of the
Service Occupation Tax Act and Section 3-7 of the Uniform
Penalty and Interest Act, as fully as if those provisions were
set forth herein.
No municipality may impose a tax under this Section unless
the municipality also imposes a tax at the same rate under
Section 8-11-1.3 of this Code.
Persons subject to any tax imposed pursuant to the
authority granted in this Section may reimburse themselves for
their serviceman's tax liability hereunder by separately
stating such tax as an additional charge, which charge may be
stated in combination, in a single amount, with State tax which
servicemen are authorized to collect under the Service Use Tax
Act, pursuant to such bracket schedules as the Department may
prescribe.
Whenever the Department determines that a refund should be
made under this Section to a claimant instead of issuing credit
memorandum, the Department shall notify the State Comptroller,
who shall cause the order to be drawn for the amount specified,
and to the person named, in such notification from the
Department. Such refund shall be paid by the State Treasurer

HB3876 - 337 - LRB096 11650 HLH 22225 b
out of the municipal retailers' occupation tax fund.
The Department shall forthwith pay over to the State
Treasurer, ex officio, as trustee, all taxes and penalties
collected hereunder. On or before the 25th day of each calendar
month, the Department shall prepare and certify to the
Comptroller the disbursement of stated sums of money to named
municipalities, the municipalities to be those from which
suppliers and servicemen have paid taxes or penalties hereunder
to the Department during the second preceding calendar month.
The amount to be paid to each municipality shall be the amount
(not including credit memoranda) collected hereunder during
the second preceding calendar month by the Department, and not
including an amount equal to the amount of refunds made during
the second preceding calendar month by the Department on behalf
of such municipality. Within 10 days after receipt, by the
Comptroller, of the disbursement certification to the
municipalities and the General Revenue Fund, provided for in
this Section to be given to the Comptroller by the Department,
the Comptroller shall cause the orders to be drawn for the
respective amounts in accordance with the directions contained
in such certification.
The Department of Revenue shall implement this amendatory
Act of the 91st General Assembly so as to collect the tax on
and after January 1, 2002.
Nothing in this Section shall be construed to authorize a
municipality to impose a tax upon the privilege of engaging in

HB3876 - 338 - LRB096 11650 HLH 22225 b
any business which under the constitution of the United States
may not be made the subject of taxation by this State.
As used in this Section, "municipal" or "municipality"
means or refers to a city, village or incorporated town,
including an incorporated town which has superseded a civil
township.
This Section shall be known and may be cited as the
"Non-Home Rule Municipal Service Occupation Tax Act".
(Source: P.A. 94-679, eff. 1-1-06.)
(65 ILCS 5/8-11-5) (from Ch. 24, par. 8-11-5)
Sec. 8-11-5. Home Rule Municipal Service Occupation Tax
Act. The corporate authorities of a home rule municipality may
impose a tax upon all persons engaged, in such municipality, in
the business of making sales of service at the same rate of tax
imposed pursuant to Section 8-11-1, of the selling price of all
tangible personal property transferred by such servicemen
either in the form of tangible personal property or in the form
of real estate as an incident to a sale of service. If imposed,
such tax shall only be imposed in 1/4% increments. On and after
September 1, 1991, this additional tax may not be imposed on
the sales of food for human consumption which is to be consumed
off the premises where it is sold (other than alcoholic
beverages, soft drinks and food which has been prepared for
immediate consumption) and prescription and nonprescription
medicines, drugs, medical appliances, modifications to a motor

HB3876 - 339 - LRB096 11650 HLH 22225 b
vehicle for the purpose of rendering it usable by a disabled
person, and insulin, urine testing materials, syringes and
needles used by diabetics. The tax imposed by a home rule
municipality pursuant to this Section and all civil penalties
that may be assessed as an incident thereof shall be collected
and enforced by the State Department of Revenue. The
certificate of registration which is issued by the Department
to a retailer under the Retailers' Occupation Tax Act or under
the Service Occupation Tax Act shall permit such registrant to
engage in a business which is taxable under any ordinance or
resolution enacted pursuant to this Section without
registering separately with the Department under such
ordinance or resolution or under this Section. The Department
shall have full power to administer and enforce this Section;
to collect all taxes and penalties due hereunder; to dispose of
taxes and penalties so collected in the manner hereinafter
provided, and to determine all rights to credit memoranda
arising on account of the erroneous payment of tax or penalty
hereunder. In the administration of, and compliance with, this
Section the Department and persons who are subject to this
Section shall have the same rights, remedies, privileges,
immunities, powers and duties, and be subject to the same
conditions, restrictions, limitations, penalties and
definitions of terms, and employ the same modes of procedure,
as are prescribed in Sections 1a-1, 2, 2a, 3 through 3-50 (in
respect to all provisions therein other than the State rate of

HB3876 - 340 - LRB096 11650 HLH 22225 b
tax), 4 (except that the reference to the State shall be to the
taxing municipality), 5, 7, 8 (except that the jurisdiction to
which the tax shall be a debt to the extent indicated in that
Section 8 shall be the taxing municipality), 9 (except as to
the disposition of taxes and penalties collected, and except
that the returned merchandise credit for this municipal tax may
not be taken against any State tax), 10, 11, 12 (except the
reference therein to Section 2b of the Retailers' Occupation
Tax Act), 13 (except that any reference to the State shall mean
the taxing municipality), the first paragraph of Section 15,
16, 17 (except that credit memoranda issued hereunder may not
be used to discharge any State tax liability), 18, 19 and 20 of
the Service Occupation Tax Act and Section 3-7 of the Uniform
Penalty and Interest Act, as fully as if those provisions were
set forth herein.
No tax may be imposed by a home rule municipality pursuant
to this Section unless such municipality also imposes a tax at
the same rate pursuant to Section 8-11-1 of this Act.
Persons subject to any tax imposed pursuant to the
authority granted in this Section may reimburse themselves for
their serviceman's tax liability hereunder by separately
stating such tax as an additional charge, which charge may be
stated in combination, in a single amount, with State tax which
servicemen are authorized to collect under the Service Use Tax
Act, pursuant to such bracket schedules as the Department may
prescribe.

HB3876 - 341 - LRB096 11650 HLH 22225 b
Whenever the Department determines that a refund should be
made under this Section to a claimant instead of issuing credit
memorandum, the Department shall notify the State Comptroller,
who shall cause the order to be drawn for the amount specified,
and to the person named, in such notification from the
Department. Such refund shall be paid by the State Treasurer
out of the home rule municipal retailers' occupation tax fund.
The Department shall forthwith pay over to the State
Treasurer, ex-officio, as trustee, all taxes and penalties
collected hereunder. On or before the 25th day of each calendar
month, the Department shall prepare and certify to the
Comptroller the disbursement of stated sums of money to named
municipalities, the municipalities to be those from which
suppliers and servicemen have paid taxes or penalties hereunder
to the Department during the second preceding calendar month.
The amount to be paid to each municipality shall be the amount
(not including credit memoranda) collected hereunder during
the second preceding calendar month by the Department, and not
including an amount equal to the amount of refunds made during
the second preceding calendar month by the Department on behalf
of such municipality. Within 10 days after receipt, by the
Comptroller, of the disbursement certification to the
municipalities, provided for in this Section to be given to the
Comptroller by the Department, the Comptroller shall cause the
orders to be drawn for the respective amounts in accordance
with the directions contained in such certification.

HB3876 - 342 - LRB096 11650 HLH 22225 b
In addition to the disbursement required by the preceding
paragraph and in order to mitigate delays caused by
distribution procedures, an allocation shall, if requested, be
made within 10 days after January 14, 1991, and in November of
1991 and each year thereafter, to each municipality that
received more than $500,000 during the preceding fiscal year,
(July 1 through June 30) whether collected by the municipality
or disbursed by the Department as required by this Section.
Within 10 days after January 14, 1991, participating
municipalities shall notify the Department in writing of their
intent to participate. In addition, for the initial
distribution, participating municipalities shall certify to
the Department the amounts collected by the municipality for
each month under its home rule occupation and service
occupation tax during the period July 1, 1989 through June 30,
1990. The allocation within 10 days after January 14, 1991,
shall be in an amount equal to the monthly average of these
amounts, excluding the 2 months of highest receipts. Monthly
average for the period of July 1, 1990 through June 30, 1991
will be determined as follows: the amounts collected by the
municipality under its home rule occupation and service
occupation tax during the period of July 1, 1990 through
September 30, 1990, plus amounts collected by the Department
and paid to such municipality through June 30, 1991, excluding
the 2 months of highest receipts. The monthly average for each
subsequent period of July 1 through June 30 shall be an amount

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equal to the monthly distribution made to each such
municipality under the preceding paragraph during this period,
excluding the 2 months of highest receipts. The distribution
made in November 1991 and each year thereafter under this
paragraph and the preceding paragraph shall be reduced by the
amount allocated and disbursed under this paragraph in the
preceding period of July 1 through June 30. The Department
shall prepare and certify to the Comptroller for disbursement
the allocations made in accordance with this paragraph.
Nothing in this Section shall be construed to authorize a
municipality to impose a tax upon the privilege of engaging in
any business which under the constitution of the United States
may not be made the subject of taxation by this State.
An ordinance or resolution imposing or discontinuing a tax
hereunder or effecting a change in the rate thereof shall be
adopted and a certified copy thereof filed with the Department
on or before the first day of June, whereupon the Department
shall proceed to administer and enforce this Section as of the
first day of September next following such adoption and filing.
Beginning January 1, 1992, an ordinance or resolution imposing
or discontinuing the tax hereunder or effecting a change in the
rate thereof shall be adopted and a certified copy thereof
filed with the Department on or before the first day of July,
whereupon the Department shall proceed to administer and
enforce this Section as of the first day of October next
following such adoption and filing. Beginning January 1, 1993,

HB3876 - 344 - LRB096 11650 HLH 22225 b
an ordinance or resolution imposing or discontinuing the tax
hereunder or effecting a change in the rate thereof shall be
adopted and a certified copy thereof filed with the Department
on or before the first day of October, whereupon the Department
shall proceed to administer and enforce this Section as of the
first day of January next following such adoption and filing.
However, a municipality located in a county with a population
in excess of 3,000,000 that elected to become a home rule unit
at the general primary election in 1994 may adopt an ordinance
or resolution imposing the tax under this Section and file a
certified copy of the ordinance or resolution with the
Department on or before July 1, 1994. The Department shall then
proceed to administer and enforce this Section as of October 1,
1994. Beginning April 1, 1998, an ordinance or resolution
imposing or discontinuing the tax hereunder or effecting a
change in the rate thereof shall either (i) be adopted and a
certified copy thereof filed with the Department on or before
the first day of April, whereupon the Department shall proceed
to administer and enforce this Section as of the first day of
July next following the adoption and filing; or (ii) be adopted
and a certified copy thereof filed with the Department on or
before the first day of October, whereupon the Department shall
proceed to administer and enforce this Section as of the first
day of January next following the adoption and filing.
Any unobligated balance remaining in the Municipal
Retailers' Occupation Tax Fund on December 31, 1989, which fund

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was abolished by Public Act 85-1135, and all receipts of
municipal tax as a result of audits of liability periods prior
to January 1, 1990, shall be paid into the Local Government Tax
Fund, for distribution as provided by this Section prior to the
enactment of Public Act 85-1135. All receipts of municipal tax
as a result of an assessment not arising from an audit, for
liability periods prior to January 1, 1990, shall be paid into
the Local Government Tax Fund for distribution before July 1,
1990, as provided by this Section prior to the enactment of
Public Act 85-1135, and on and after July 1, 1990, all such
receipts shall be distributed as provided in Section 6z-18 of
the State Finance Act.
As used in this Section, "municipal" and "municipality"
means a city, village or incorporated town, including an
incorporated town which has superseded a civil township.
This Section shall be known and may be cited as the Home
Rule Municipal Service Occupation Tax Act.
(Source: P.A. 90-689, eff. 7-31-98; 91-51, eff. 6-30-99.)
(65 ILCS 5/11-74.3-6)
Sec. 11-74.3-6. Business district revenue and obligations.
(a) If the corporate authorities of a municipality have
approved a business district development or redevelopment plan
and have elected to impose a tax by ordinance pursuant to
subsections (b), (c), or (d) of this Section, each year after
the date of the approval of the ordinance and until all

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business district project costs and all municipal obligations
financing the business district project costs, if any, have
been paid in accordance with the business district development
or redevelopment plan, but in no event longer than 23 years
after the date of adoption of the ordinance approving the
business district development or redevelopment plan, all
amounts generated by the retailers' occupation tax and service
occupation tax shall be collected and the tax shall be enforced
by the Department of Revenue in the same manner as all
retailers' occupation taxes and service occupation taxes
imposed in the municipality imposing the tax and all amounts
generated by the hotel operators' occupation tax shall be
collected and the tax shall be enforced by the municipality in
the same manner as all hotel operators' occupation taxes
imposed in the municipality imposing the tax. The corporate
authorities of the municipality shall deposit the proceeds of
the taxes imposed under subsections (b), (c), and (d) into a
special fund held by the corporate authorities of the
municipality called the Business District Tax Allocation Fund
for the purpose of paying business district project costs and
obligations incurred in the payment of those costs.
(b) The corporate authorities of a municipality that has
established a business district under this Division 74.3 may,
by ordinance or resolution, impose a Business District
Retailers' Occupation Tax upon all persons engaged in the
business of selling tangible personal property, other than an

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item of tangible personal property titled or registered with an
agency of this State's government, at retail in the business
district at a rate not to exceed 1% of the gross receipts from
the sales made in the course of such business, to be imposed
only in 0.25% increments. The tax may not be imposed on food
for human consumption that is to be consumed off the premises
where it is sold (other than alcoholic beverages, soft drinks,
and food that has been prepared for immediate consumption),
prescription and nonprescription medicines, drugs, medical
appliances, modifications to a motor vehicle for the purpose of
rendering it usable by a disabled person, and insulin, urine
testing materials, syringes, and needles used by diabetics, for
human use.
The tax imposed under this subsection and all civil
penalties that may be assessed as an incident thereof shall be
collected and enforced by the Department of Revenue. The
certificate of registration that is issued by the Department to
a retailer under the Retailers' Occupation Tax Act shall permit
the retailer to engage in a business that is taxable under any
ordinance or resolution enacted pursuant to this subsection
without registering separately with the Department under such
ordinance or resolution or under this subsection. The
Department of Revenue shall have full power to administer and
enforce this subsection; to collect all taxes and penalties due
under this subsection in the manner hereinafter provided; and
to determine all rights to credit memoranda arising on account

HB3876 - 348 - LRB096 11650 HLH 22225 b
of the erroneous payment of tax or penalty under this
subsection. In the administration of, and compliance with, this
subsection, the Department and persons who are subject to this
subsection shall have the same rights, remedies, privileges,
immunities, powers and duties, and be subject to the same
conditions, restrictions, limitations, penalties, exclusions,
exemptions, and definitions of terms and employ the same modes
of procedure, as are prescribed in Sections 1, 1a through 1o, 2
through 2-65 (in respect to all provisions therein other than
the State rate of tax), 2c through 2h, 3 (except as to the
disposition of taxes and penalties collected), 4, 5, 5a, 5c,
5d, 5e, 5f, 5g, 5i, 5j, 5k, 5l, 6, 6a, 6b, 6c, 7, 8, 9, 10, 11,
12, 13, and 14 of the Retailers' Occupation Tax Act and all
provisions of the Uniform Penalty and Interest Act, as fully as
if those provisions were set forth herein.
Persons subject to any tax imposed under this subsection
may reimburse themselves for their seller's tax liability under
this subsection by separately stating the tax as an additional
charge, which charge may be stated in combination, in a single
amount, with State taxes that sellers are required to collect
under the Use Tax Act, in accordance with such bracket
schedules as the Department may prescribe.
Whenever the Department determines that a refund should be
made under this subsection to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the order to be drawn for the

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amount specified and to the person named in the notification
from the Department. The refund shall be paid by the State
Treasurer out of the business district retailers' occupation
tax fund.
The Department shall immediately pay over to the State
Treasurer, ex officio, as trustee, all taxes, penalties, and
interest collected under this subsection for deposit into the
business district retailers' occupation tax fund. On or before
the 25th day of each calendar month, the Department shall
prepare and certify to the Comptroller the disbursement of
stated sums of money to named municipalities from the business
district retailers' occupation tax fund, the municipalities to
be those from which retailers have paid taxes or penalties
under this subsection to the Department during the second
preceding calendar month. The amount to be paid to each
municipality shall be the amount (not including credit
memoranda) collected under this subsection during the second
preceding calendar month by the Department plus an amount the
Department determines is necessary to offset any amounts that
were erroneously paid to a different taxing body, and not
including an amount equal to the amount of refunds made during
the second preceding calendar month by the Department, less 2%
of that amount, which shall be deposited into the Tax
Compliance and Administration Fund and shall be used by the
Department, subject to appropriation, to cover the costs of the
Department in administering and enforcing the provisions of

HB3876 - 350 - LRB096 11650 HLH 22225 b
this subsection, on behalf of such municipality, and not
including any amount that the Department determines is
necessary to offset any amounts that were payable to a
different taxing body but were erroneously paid to the
municipality. Within 10 days after receipt by the Comptroller
of the disbursement certification to the municipalities
provided for in this subsection to be given to the Comptroller
by the Department, the Comptroller shall cause the orders to be
drawn for the respective amounts in accordance with the
directions contained in the certification. The proceeds of the
tax paid to municipalities under this subsection shall be
deposited into the Business District Tax Allocation Fund by the
municipality.
An ordinance or resolution imposing or discontinuing the
tax under this subsection or effecting a change in the rate
thereof shall either (i) be adopted and a certified copy
thereof filed with the Department on or before the first day of
April, whereupon the Department, if all other requirements of
this subsection are met, shall proceed to administer and
enforce this subsection as of the first day of July next
following the adoption and filing; or (ii) be adopted and a
certified copy thereof filed with the Department on or before
the first day of October, whereupon, if all other requirements
of this subsection are met, the Department shall proceed to
administer and enforce this subsection as of the first day of
January next following the adoption and filing.

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The Department of Revenue shall not administer or enforce
an ordinance imposing, discontinuing, or changing the rate of
the tax under this subsection, until the municipality also
provides, in the manner prescribed by the Department, the
boundaries of the business district and each address in the
business district in such a way that the Department can
determine by its address whether a business is located in the
business district. The municipality must provide this boundary
and address information to the Department on or before April 1
for administration and enforcement of the tax under this
subsection by the Department beginning on the following July 1
and on or before October 1 for administration and enforcement
of the tax under this subsection by the Department beginning on
the following January 1. The Department of Revenue shall not
administer or enforce any change made to the boundaries of a
business district or any address change, addition, or deletion
until the municipality reports the boundary change or address
change, addition, or deletion to the Department in the manner
prescribed by the Department. The municipality must provide
this boundary change information or address change, addition,
or deletion to the Department on or before April 1 for
administration and enforcement by the Department of the change
beginning on the following July 1 and on or before October 1
for administration and enforcement by the Department of the
change beginning on the following January 1. The retailers in
the business district shall be responsible for charging the tax

HB3876 - 352 - LRB096 11650 HLH 22225 b
imposed under this subsection. If a retailer is incorrectly
included or excluded from the list of those required to collect
the tax under this subsection, both the Department of Revenue
and the retailer shall be held harmless if they reasonably
relied on information provided by the municipality.
A municipality that imposes the tax under this subsection
must submit to the Department of Revenue any other information
as the Department may require for the administration and
enforcement of the tax.
When certifying the amount of a monthly disbursement to a
municipality under this subsection, the Department shall
increase or decrease the amount by an amount necessary to
offset any misallocation of previous disbursements. The offset
amount shall be the amount erroneously disbursed within the
previous 6 months from the time a misallocation is discovered.
Nothing in this subsection shall be construed to authorize
the municipality to impose a tax upon the privilege of engaging
in any business which under the Constitution of the United
States may not be made the subject of taxation by this State.
If a tax is imposed under this subsection (b), a tax shall
also be imposed under subsection (c) of this Section.
(c) If a tax has been imposed under subsection (b), a
Business District Service Occupation Tax shall also be imposed
upon all persons engaged, in the business district, in the
business of making sales of service, who, as an incident to
making those sales of service, transfer tangible personal

HB3876 - 353 - LRB096 11650 HLH 22225 b
property within the business district, either in the form of
tangible personal property or in the form of real estate as an
incident to a sale of service. The tax shall be imposed at the
same rate as the tax imposed in subsection (b) and shall not
exceed 1% of the selling price of tangible personal property so
transferred within the business district, to be imposed only in
0.25% increments. The tax may not be imposed on food for human
consumption that is to be consumed off the premises where it is
sold (other than alcoholic beverages, soft drinks, and food
that has been prepared for immediate consumption),
prescription and nonprescription medicines, drugs, medical
appliances, modifications to a motor vehicle for the purpose of
rendering it usable by a disabled person, and insulin, urine
testing materials, syringes, and needles used by diabetics, for
human use.
The tax imposed under this subsection and all civil
penalties that may be assessed as an incident thereof shall be
collected and enforced by the Department of Revenue. The
certificate of registration which is issued by the Department
to a retailer under the Retailers' Occupation Tax Act or under
the Service Occupation Tax Act shall permit such registrant to
engage in a business which is taxable under any ordinance or
resolution enacted pursuant to this subsection without
registering separately with the Department under such
ordinance or resolution or under this subsection. The
Department of Revenue shall have full power to administer and

HB3876 - 354 - LRB096 11650 HLH 22225 b
enforce this subsection; to collect all taxes and penalties due
under this subsection; to dispose of taxes and penalties so
collected in the manner hereinafter provided; and to determine
all rights to credit memoranda arising on account of the
erroneous payment of tax or penalty under this subsection. In
the administration of, and compliance with this subsection, the
Department and persons who are subject to this subsection shall
have the same rights, remedies, privileges, immunities, powers
and duties, and be subject to the same conditions,
restrictions, limitations, penalties, exclusions, exemptions,
and definitions of terms and employ the same modes of procedure
as are prescribed in Sections 2, 2a through 2d, 3 through 3-50
(in respect to all provisions therein other than the State rate
of tax), 4 (except that the reference to the State shall be to
the business district), 5, 7, 8 (except that the jurisdiction
to which the tax shall be a debt to the extent indicated in
that Section 8 shall be the municipality), 9 (except as to the
disposition of taxes and penalties collected, and except that
the returned merchandise credit for this tax may not be taken
against any State tax), 10, 11, 12 (except the reference
therein to Section 2b of the Retailers' Occupation Tax Act), 13
(except that any reference to the State shall mean the
municipality), the first paragraph of Section 15, and Sections
16, 17, 18, 19 and 20 of the Service Occupation Tax Act and all
provisions of the Uniform Penalty and Interest Act, as fully as
if those provisions were set forth herein.

HB3876 - 355 - LRB096 11650 HLH 22225 b
Persons subject to any tax imposed under the authority
granted in this subsection may reimburse themselves for their
serviceman's tax liability hereunder by separately stating the
tax as an additional charge, which charge may be stated in
combination, in a single amount, with State tax that servicemen
are authorized to collect under the Service Use Tax Act, in
accordance with such bracket schedules as the Department may
prescribe.
Whenever the Department determines that a refund should be
made under this subsection to a claimant instead of issuing
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the order to be drawn for the
amount specified, and to the person named, in such notification
from the Department. Such refund shall be paid by the State
Treasurer out of the business district retailers' occupation
tax fund.
The Department shall forthwith pay over to the State
Treasurer, ex-officio, as trustee, all taxes, penalties, and
interest collected under this subsection for deposit into the
business district retailers' occupation tax fund. On or before
the 25th day of each calendar month, the Department shall
prepare and certify to the Comptroller the disbursement of
stated sums of money to named municipalities from the business
district retailers' occupation tax fund, the municipalities to
be those from which suppliers and servicemen have paid taxes or
penalties under this subsection to the Department during the

HB3876 - 356 - LRB096 11650 HLH 22225 b
second preceding calendar month. The amount to be paid to each
municipality shall be the amount (not including credit
memoranda) collected under this subsection during the second
preceding calendar month by the Department, less 2% of that
amount, which shall be deposited into the Tax Compliance and
Administration Fund and shall be used by the Department,
subject to appropriation, to cover the costs of the Department
in administering and enforcing the provisions of this
subsection, and not including an amount equal to the amount of
refunds made during the second preceding calendar month by the
Department on behalf of such municipality. Within 10 days after
receipt, by the Comptroller, of the disbursement certification
to the municipalities, provided for in this subsection to be
given to the Comptroller by the Department, the Comptroller
shall cause the orders to be drawn for the respective amounts
in accordance with the directions contained in such
certification. The proceeds of the tax paid to municipalities
under this subsection shall be deposited into the Business
District Tax Allocation Fund by the municipality.
An ordinance or resolution imposing or discontinuing the
tax under this subsection or effecting a change in the rate
thereof shall either (i) be adopted and a certified copy
thereof filed with the Department on or before the first day of
April, whereupon the Department, if all other requirements of
this subsection are met, shall proceed to administer and
enforce this subsection as of the first day of July next

HB3876 - 357 - LRB096 11650 HLH 22225 b
following the adoption and filing; or (ii) be adopted and a
certified copy thereof filed with the Department on or before
the first day of October, whereupon, if all other conditions of
this subsection are met, the Department shall proceed to
administer and enforce this subsection as of the first day of
January next following the adoption and filing.
The Department of Revenue shall not administer or enforce
an ordinance imposing, discontinuing, or changing the rate of
the tax under this subsection, until the municipality also
provides, in the manner prescribed by the Department, the
boundaries of the business district and each address in the
business district in such a way that the Department can
determine by its address whether a business is located in the
business district. The municipality must provide this boundary
and address information to the Department on or before April 1
for administration and enforcement of the tax under this
subsection by the Department beginning on the following July 1
and on or before October 1 for administration and enforcement
of the tax under this subsection by the Department beginning on
the following January 1. The Department of Revenue shall not
administer or enforce any change made to the boundaries of a
business district or any address change, addition, or deletion
until the municipality reports the boundary change or address
change, addition, or deletion to the Department in the manner
prescribed by the Department. The municipality must provide
this boundary change information or address change, addition,

HB3876 - 358 - LRB096 11650 HLH 22225 b
or deletion to the Department on or before April 1 for
administration and enforcement by the Department of the change
beginning on the following July 1 and on or before October 1
for administration and enforcement by the Department of the
change beginning on the following January 1. The retailers in
the business district shall be responsible for charging the tax
imposed under this subsection. If a retailer is incorrectly
included or excluded from the list of those required to collect
the tax under this subsection, both the Department of Revenue
and the retailer shall be held harmless if they reasonably
relied on information provided by the municipality.
A municipality that imposes the tax under this subsection
must submit to the Department of Revenue any other information
as the Department may require for the administration and
enforcement of the tax.
Nothing in this subsection shall be construed to authorize
the municipality to impose a tax upon the privilege of engaging
in any business which under the Constitution of the United
States may not be made the subject of taxation by the State.
If a tax is imposed under this subsection (c), a tax shall
also be imposed under subsection (b) of this Section.
(d) By ordinance, a municipality that has established a
business district under this Division 74.3 may impose an
occupation tax upon all persons engaged in the business
district in the business of renting, leasing, or letting rooms
in a hotel, as defined in the Hotel Operators' Occupation Tax

HB3876 - 359 - LRB096 11650 HLH 22225 b
Act, at a rate not to exceed 1% of the gross rental receipts
from the renting, leasing, or letting of hotel rooms within the
business district, to be imposed only in 0.25% increments,
excluding, however, from gross rental receipts the proceeds of
renting, leasing, or letting to permanent residents of a hotel,
as defined in the Hotel Operators' Occupation Tax Act, and
proceeds from the tax imposed under subsection (c) of Section
13 of the Metropolitan Pier and Exposition Authority Act.
The tax imposed by the municipality under this subsection
and all civil penalties that may be assessed as an incident to
that tax shall be collected and enforced by the municipality
imposing the tax. The municipality shall have full power to
administer and enforce this subsection, to collect all taxes
and penalties due under this subsection, to dispose of taxes
and penalties so collected in the manner provided in this
subsection, and to determine all rights to credit memoranda
arising on account of the erroneous payment of tax or penalty
under this subsection. In the administration of and compliance
with this subsection, the municipality and persons who are
subject to this subsection shall have the same rights,
remedies, privileges, immunities, powers, and duties, shall be
subject to the same conditions, restrictions, limitations,
penalties, and definitions of terms, and shall employ the same
modes of procedure as are employed with respect to a tax
adopted by the municipality under Section 8-3-14 of this Code.
Persons subject to any tax imposed under the authority

HB3876 - 360 - LRB096 11650 HLH 22225 b
granted in this subsection may reimburse themselves for their
tax liability for that tax by separately stating that tax as an
additional charge, which charge may be stated in combination,
in a single amount, with State taxes imposed under the Hotel
Operators' Occupation Tax Act, and with any other tax.
Nothing in this subsection shall be construed to authorize
a municipality to impose a tax upon the privilege of engaging
in any business which under the Constitution of the United
States may not be made the subject of taxation by this State.
The proceeds of the tax imposed under this subsection shall
be deposited into the Business District Tax Allocation Fund.
(e) Obligations issued pursuant to subsection (14) of
Section 11-74.3-3 shall be retired in the manner provided in
the ordinance authorizing the issuance of those obligations by
the receipts of taxes levied as authorized in subsections (12)
and (13) of Section 11-74.3-3. The ordinance shall pledge all
of the amounts in and to be deposited in the Business District
Tax Allocation Fund to the payment of business district project
costs and obligations. Obligations issued pursuant to
subsection (14) of Section 11-74.3-3 may be sold at public or
private sale at a price determined by the corporate authorities
of the municipality and no referendum approval of the electors
shall be required as a condition to the issuance of those
obligations. The ordinance authorizing the obligations may
require that the obligations contain a recital that they are
issued pursuant to subsection (14) of Section 11-74.3-3 and

HB3876 - 361 - LRB096 11650 HLH 22225 b
this recital shall be conclusive evidence of their validity and
of the regularity of their issuance. The corporate authorities
of the municipality may also issue its obligations to refund,
in whole or in part, obligations previously issued by the
municipality under the authority of this Code, whether at or
prior to maturity. All obligations issued pursuant to
subsection (14) of Section 11-74.3-3 shall not be regarded as
indebtedness of the municipality issuing the obligations for
the purpose of any limitation imposed by law.
(f) When business district costs, including, without
limitation, all municipal obligations financing business
district project costs incurred under Section 11-74.3-3 have
been paid, any surplus funds then remaining in the Business
District Tax Allocation Fund shall be distributed to the
municipal treasurer for deposit into the municipal general
corporate fund. Upon payment of all business district project
costs and retirement of obligations, but in no event more than
23 years after the date of adoption of the ordinance approving
the business district development or redevelopment plan, the
municipality shall adopt an ordinance immediately rescinding
the taxes imposed pursuant to subsections (12) and (13) of
Section 11-74.3-3.
(Source: P.A. 93-1053, eff. 1-1-05; 93-1089, eff. 3-7-05.)
(65 ILCS 5/8-11-9 rep.)
Section 50. The Illinois Municipal Code is amended by

HB3876 - 362 - LRB096 11650 HLH 22225 b
repealing Section 8-11-9.
Section 55. The Metro-East Park and Recreation District Act
is amended by changing Section 30 as follows:
(70 ILCS 1605/30)
Sec. 30. Taxes.
(a) The board shall impose a tax upon all persons engaged
in the business of selling tangible personal property, other
than personal property titled or registered with an agency of
this State's government, at retail in the District on the gross
receipts from the sales made in the course of business. This
tax shall be imposed only at the rate of one-tenth of one per
cent.
This additional tax may not be imposed on the sales of food
for human consumption that is to be consumed off the premises
where it is sold (other than alcoholic beverages, soft drinks,
and food which has been prepared for immediate consumption) and
prescription and non-prescription medicines, drugs, medical
appliances, modifications to a motor vehicle for the purpose of
rendering it usable by a disabled person, and insulin, urine
testing materials, syringes, and needles used by diabetics. The
tax imposed by the Board under this Section and all civil
penalties that may be assessed as an incident of the tax shall
be collected and enforced by the Department of Revenue. The
certificate of registration that is issued by the Department to

HB3876 - 363 - LRB096 11650 HLH 22225 b
a retailer under the Retailers' Occupation Tax Act shall permit
the retailer to engage in a business that is taxable without
registering separately with the Department under an ordinance
or resolution under this Section. The Department has full power
to administer and enforce this Section, to collect all taxes
and penalties due under this Section, to dispose of taxes and
penalties so collected in the manner provided in this Section,
and to determine all rights to credit memoranda arising on
account of the erroneous payment of a tax or penalty under this
Section. In the administration of and compliance with this
Section, the Department and persons who are subject to this
Section shall (i) have the same rights, remedies, privileges,
immunities, powers, and duties, (ii) be subject to the same
conditions, restrictions, limitations, penalties, and
definitions of terms, and (iii) employ the same modes of
procedure as are prescribed in Sections 1, 1a, 1a-1, 1d, 1e,
1f, 1i, 1j, 1k, 1m, 1n, 2, 2-5, 2-5.5, 2-10 (in respect to all
provisions contained in those Sections other than the State
rate of tax), 2-15 through 2-70, 2a, 2b, 2c, 3 (except
provisions relating to transaction returns and quarter monthly
payments), 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5h, 5i, 5j, 5k, 5l,
6, 6a, 6b, 6c, 7, 8, 9, 10, 11, 11a, 12, and 13 of the
Retailers' Occupation Tax Act and the Uniform Penalty and
Interest Act as if those provisions were set forth in this
Section.
Persons subject to any tax imposed under the authority

HB3876 - 364 - LRB096 11650 HLH 22225 b
granted in this Section may reimburse themselves for their
sellers' tax liability by separately stating the tax as an
additional charge, which charge may be stated in combination,
in a single amount, with State tax which sellers are required
to collect under the Use Tax Act, pursuant to such bracketed
schedules as the Department may prescribe.
Whenever the Department determines that a refund should be
made under this Section to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the order to be drawn for the
amount specified and to the person named in the notification
from the Department. The refund shall be paid by the State
Treasurer out of the State Metro-East Park and Recreation
District Fund.
(b) If a tax has been imposed under subsection (a), a
service occupation tax shall also be imposed at the same rate
upon all persons engaged, in the District, in the business of
making sales of service, who, as an incident to making those
sales of service, transfer tangible personal property within
the District as an incident to a sale of service. This tax may
not be imposed on sales of food for human consumption that is
to be consumed off the premises where it is sold (other than
alcoholic beverages, soft drinks, and food prepared for
immediate consumption) and prescription and non-prescription
medicines, drugs, medical appliances, modifications to a motor
vehicle for the purpose of rendering it usable by a disabled

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person, and insulin, urine testing materials, syringes, and
needles used by diabetics. The tax imposed under this
subsection and all civil penalties that may be assessed as an
incident thereof shall be collected and enforced by the
Department of Revenue. The Department has full power to
administer and enforce this subsection; to collect all taxes
and penalties due hereunder; to dispose of taxes and penalties
so collected in the manner hereinafter provided; and to
determine all rights to credit memoranda arising on account of
the erroneous payment of tax or penalty hereunder. In the
administration of, and compliance with this subsection, the
Department and persons who are subject to this paragraph shall
(i) have the same rights, remedies, privileges, immunities,
powers, and duties, (ii) be subject to the same conditions,
restrictions, limitations, penalties, exclusions, exemptions,
and definitions of terms, and (iii) employ the same modes of
procedure as are prescribed in Sections 2 (except that the
reference to State in the definition of supplier maintaining a
place of business in this State shall mean the District), 2a,
2b, 2c, 3 through 3-50 (in respect to all provisions therein
other than the State rate of tax), 4 (except that the reference
to the State shall be to the District), 5, 7, 8 (except that
the jurisdiction to which the tax shall be a debt to the extent
indicated in that Section 8 shall be the District), 9 (except
as to the disposition of taxes and penalties collected), 10,
11, 12 (except the reference therein to Section 2b of the

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Retailers' Occupation Tax Act), 13 (except that any reference
to the State shall mean the District), Sections 15, 16, 17, 18,
19 and 20 of the Service Occupation Tax Act and the Uniform
Penalty and Interest Act, as fully as if those provisions were
set forth herein.
Persons subject to any tax imposed under the authority
granted in this subsection may reimburse themselves for their
serviceman's tax liability by separately stating the tax as an
additional charge, which charge may be stated in combination,
in a single amount, with State tax that servicemen are
authorized to collect under the Service Use Tax Act, in
accordance with such bracket schedules as the Department may
prescribe.
Whenever the Department determines that a refund should be
made under this subsection to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the warrant to be drawn for the
amount specified, and to the person named, in the notification
from the Department. The refund shall be paid by the State
Treasurer out of the State Metro-East Park and Recreation
District Fund.
Nothing in this subsection shall be construed to authorize
the board to impose a tax upon the privilege of engaging in any
business which under the Constitution of the United States may
not be made the subject of taxation by the State.
(c) The Department shall immediately pay over to the State

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Treasurer, ex officio, as trustee, all taxes and penalties
collected under this Section to be deposited into the State
Metro-East Park and Recreation District Fund, which shall be an
unappropriated trust fund held outside of the State treasury.
On or before the 25th day of each calendar month, the
Department shall prepare and certify to the Comptroller the
disbursement of stated sums of money pursuant to Section 35 of
this Act to the District from which retailers have paid taxes
or penalties to the Department during the second preceding
calendar month. The amount to be paid to the District shall be
the amount (not including credit memoranda) collected under
this Section during the second preceding calendar month by the
Department plus an amount the Department determines is
necessary to offset any amounts that were erroneously paid to a
different taxing body, and not including (i) an amount equal to
the amount of refunds made during the second preceding calendar
month by the Department on behalf of the District and (ii) any
amount that the Department determines is necessary to offset
any amounts that were payable to a different taxing body but
were erroneously paid to the District. Within 10 days after
receipt by the Comptroller of the disbursement certification to
the District provided for in this Section to be given to the
Comptroller by the Department, the Comptroller shall cause the
orders to be drawn for the respective amounts in accordance
with directions contained in the certification.
(d) For the purpose of determining whether a tax authorized

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under this Section is applicable, a retail sale by a producer
of coal or another mineral mined in Illinois is a sale at
retail at the place where the coal or other mineral mined in
Illinois is extracted from the earth. This paragraph does not
apply to coal or another mineral when it is delivered or
shipped by the seller to the purchaser at a point outside
Illinois so that the sale is exempt under the United States
Constitution as a sale in interstate or foreign commerce.
(e) Nothing in this Section shall be construed to authorize
the board to impose a tax upon the privilege of engaging in any
business that under the Constitution of the United States may
not be made the subject of taxation by this State.
(f) An ordinance imposing a tax under this Section or an
ordinance extending the imposition of a tax to an additional
county or counties shall be certified by the board and filed
with the Department of Revenue either (i) on or before the
first day of April, whereupon the Department shall proceed to
administer and enforce the tax as of the first day of July next
following the filing; or (ii) on or before the first day of
October, whereupon the Department shall proceed to administer
and enforce the tax as of the first day of January next
following the filing.
(g) When certifying the amount of a monthly disbursement to
the District under this Section, the Department shall increase
or decrease the amounts by an amount necessary to offset any
misallocation of previous disbursements. The offset amount

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shall be the amount erroneously disbursed within the previous 6
months from the time a misallocation is discovered.
(Source: P.A. 91-103, eff. 7-13-99.)
Section 60. The Regional Transportation Authority Act is
amended by changing Section 4.03 as follows:
(70 ILCS 3615/4.03) (from Ch. 111 2/3, par. 704.03)
Sec. 4.03. Taxes.
(a) In order to carry out any of the powers or purposes of
the Authority, the Board may by ordinance adopted with the
concurrence of 12 of the then Directors, impose throughout the
metropolitan region any or all of the taxes provided in this
Section. Except as otherwise provided in this Act, taxes
imposed under this Section and civil penalties imposed incident
thereto shall be collected and enforced by the State Department
of Revenue. The Department shall have the power to administer
and enforce the taxes and to determine all rights for refunds
for erroneous payments of the taxes. Nothing in this amendatory
Act of the 95th General Assembly is intended to invalidate any
taxes currently imposed by the Authority. The increased vote
requirements to impose a tax shall only apply to actions taken
after the effective date of this amendatory Act of the 95th
General Assembly.
(b) The Board may impose a public transportation tax upon
all persons engaged in the metropolitan region in the business

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of selling at retail motor fuel for operation of motor vehicles
upon public highways. The tax shall be at a rate not to exceed
5% of the gross receipts from the sales of motor fuel in the
course of the business. As used in this Act, the term "motor
fuel" shall have the same meaning as in the Motor Fuel Tax Law.
The Board may provide for details of the tax. The provisions of
any tax shall conform, as closely as may be practicable, to the
provisions of the Municipal Retailers Occupation Tax Act,
including without limitation, conformity to penalties with
respect to the tax imposed and as to the powers of the State
Department of Revenue to promulgate and enforce rules and
regulations relating to the administration and enforcement of
the provisions of the tax imposed, except that reference in the
Act to any municipality shall refer to the Authority and the
tax shall be imposed only with regard to receipts from sales of
motor fuel in the metropolitan region, at rates as limited by
this Section.
(c) In connection with the tax imposed under paragraph (b)
of this Section the Board may impose a tax upon the privilege
of using in the metropolitan region motor fuel for the
operation of a motor vehicle upon public highways, the tax to
be at a rate not in excess of the rate of tax imposed under
paragraph (b) of this Section. The Board may provide for
details of the tax.
(d) The Board may impose a motor vehicle parking tax upon
the privilege of parking motor vehicles at off-street parking

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facilities in the metropolitan region at which a fee is
charged, and may provide for reasonable classifications in and
exemptions to the tax, for administration and enforcement
thereof and for civil penalties and refunds thereunder and may
provide criminal penalties thereunder, the maximum penalties
not to exceed the maximum criminal penalties provided in the
Retailers' Occupation Tax Act. The Authority may collect and
enforce the tax itself or by contract with any unit of local
government. The State Department of Revenue shall have no
responsibility for the collection and enforcement unless the
Department agrees with the Authority to undertake the
collection and enforcement. As used in this paragraph, the term
"parking facility" means a parking area or structure having
parking spaces for more than 2 vehicles at which motor vehicles
are permitted to park in return for an hourly, daily, or other
periodic fee, whether publicly or privately owned, but does not
include parking spaces on a public street, the use of which is
regulated by parking meters.
(e) The Board may impose a Regional Transportation
Authority Retailers' Occupation Tax upon all persons engaged in
the business of selling tangible personal property at retail in
the metropolitan region. In Cook County the tax rate shall be
1.25% of the gross receipts from sales of food for human
consumption that is to be consumed off the premises where it is
sold (other than alcoholic beverages, soft drinks and food that
has been prepared for immediate consumption) and prescription

HB3876 - 372 - LRB096 11650 HLH 22225 b
and nonprescription medicines, drugs, medical appliances and
insulin, urine testing materials, syringes and needles used by
diabetics, and 1% of the gross receipts from other taxable
sales made in the course of that business. In DuPage, Kane,
Lake, McHenry, and Will Counties, the tax rate shall be 0.75%
of the gross receipts from all taxable sales made in the course
of that business. The tax imposed under this Section and all
civil penalties that may be assessed as an incident thereof
shall be collected and enforced by the State Department of
Revenue. The Department shall have full power to administer and
enforce this Section; to collect all taxes and penalties so
collected in the manner hereinafter provided; and to determine
all rights to credit memoranda arising on account of the
erroneous payment of tax or penalty hereunder. In the
administration of, and compliance with this Section, the
Department and persons who are subject to this Section shall
have the same rights, remedies, privileges, immunities, powers
and duties, and be subject to the same conditions,
restrictions, limitations, penalties, exclusions, exemptions
and definitions of terms, and employ the same modes of
procedure, as are prescribed in Sections 1, 1a, 1a-1, 1c, 1d,
1e, 1f, 1i, 1j, 2 through 2-65 (in respect to all provisions
therein other than the State rate of tax), 2c, 3 (except as to
the disposition of taxes and penalties collected), 4, 5, 5a,
5b, 5c, 5d, 5e, 5f, 5g, 5h, 5i, 5j, 5k, 5l, 6, 6a, 6b, 6c, 7, 8,
9, 10, 11, 12 and 13 of the Retailers' Occupation Tax Act and

HB3876 - 373 - LRB096 11650 HLH 22225 b
Section 3-7 of the Uniform Penalty and Interest Act, as fully
as if those provisions were set forth herein.
Persons subject to any tax imposed under the authority
granted in this Section may reimburse themselves for their
seller's tax liability hereunder by separately stating the tax
as an additional charge, which charge may be stated in
combination in a single amount with State taxes that sellers
are required to collect under the Use Tax Act, under any
bracket schedules the Department may prescribe.
Whenever the Department determines that a refund should be
made under this Section to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the warrant to be drawn for the
amount specified, and to the person named, in the notification
from the Department. The refund shall be paid by the State
Treasurer out of the Regional Transportation Authority tax fund
established under paragraph (n) of this Section.
If a tax is imposed under this subsection (e), a tax shall
also be imposed under subsections (f) and (g) of this Section.
For the purpose of determining whether a tax authorized
under this Section is applicable, a retail sale by a producer
of coal or other mineral mined in Illinois, is a sale at retail
at the place where the coal or other mineral mined in Illinois
is extracted from the earth. This paragraph does not apply to
coal or other mineral when it is delivered or shipped by the
seller to the purchaser at a point outside Illinois so that the

HB3876 - 374 - LRB096 11650 HLH 22225 b
sale is exempt under the Federal Constitution as a sale in
interstate or foreign commerce.
No tax shall be imposed or collected under this subsection
on the sale of a motor vehicle in this State to a resident of
another state if that motor vehicle will not be titled in this
State.
Nothing in this Section shall be construed to authorize the
Regional Transportation Authority to impose a tax upon the
privilege of engaging in any business that under the
Constitution of the United States may not be made the subject
of taxation by this State.
(f) If a tax has been imposed under paragraph (e), a
Regional Transportation Authority Service Occupation Tax shall
also be imposed upon all persons engaged, in the metropolitan
region in the business of making sales of service, who as an
incident to making the sales of service, transfer tangible
personal property within the metropolitan region, either in the
form of tangible personal property or in the form of real
estate as an incident to a sale of service. In Cook County, the
tax rate shall be: (1) 1.25% of the serviceman's cost price of
food prepared for immediate consumption and transferred
incident to a sale of service subject to the service occupation
tax by an entity licensed under the Hospital Licensing Act or
the Nursing Home Care Act that is located in the metropolitan
region; (2) 1.25% of the selling price of food for human
consumption that is to be consumed off the premises where it is

HB3876 - 375 - LRB096 11650 HLH 22225 b
sold (other than alcoholic beverages, soft drinks and food that
has been prepared for immediate consumption) and prescription
and nonprescription medicines, drugs, medical appliances and
insulin, urine testing materials, syringes and needles used by
diabetics; and (3) 1% of the selling price from other taxable
sales of tangible personal property transferred. In DuPage,
Kane, Lake, McHenry and Will Counties the rate shall be 0.75%
of the selling price of all tangible personal property
transferred.
The tax imposed under this paragraph and all civil
penalties that may be assessed as an incident thereof shall be
collected and enforced by the State Department of Revenue. The
Department shall have full power to administer and enforce this
paragraph; to collect all taxes and penalties due hereunder; to
dispose of taxes and penalties collected in the manner
hereinafter provided; and to determine all rights to credit
memoranda arising on account of the erroneous payment of tax or
penalty hereunder. In the administration of and compliance with
this paragraph, the Department and persons who are subject to
this paragraph shall have the same rights, remedies,
privileges, immunities, powers and duties, and be subject to
the same conditions, restrictions, limitations, penalties,
exclusions, exemptions and definitions of terms, and employ the
same modes of procedure, as are prescribed in Sections 1a-1, 2,
2a, 3 through 3-50 (in respect to all provisions therein other
than the State rate of tax), 4 (except that the reference to

HB3876 - 376 - LRB096 11650 HLH 22225 b
the State shall be to the Authority), 5, 7, 8 (except that the
jurisdiction to which the tax shall be a debt to the extent
indicated in that Section 8 shall be the Authority), 9 (except
as to the disposition of taxes and penalties collected, and
except that the returned merchandise credit for this tax may
not be taken against any State tax), 10, 11, 12 (except the
reference therein to Section 2b of the Retailers' Occupation
Tax Act), 13 (except that any reference to the State shall mean
the Authority), the first paragraph of Section 15, 16, 17, 18,
19 and 20 of the Service Occupation Tax Act and Section 3-7 of
the Uniform Penalty and Interest Act, as fully as if those
provisions were set forth herein.
Persons subject to any tax imposed under the authority
granted in this paragraph may reimburse themselves for their
serviceman's tax liability hereunder by separately stating the
tax as an additional charge, that charge may be stated in
combination in a single amount with State tax that servicemen
are authorized to collect under the Service Use Tax Act, under
any bracket schedules the Department may prescribe.
Whenever the Department determines that a refund should be
made under this paragraph to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the warrant to be drawn for the
amount specified, and to the person named in the notification
from the Department. The refund shall be paid by the State
Treasurer out of the Regional Transportation Authority tax fund

HB3876 - 377 - LRB096 11650 HLH 22225 b
established under paragraph (n) of this Section.
Nothing in this paragraph shall be construed to authorize
the Authority to impose a tax upon the privilege of engaging in
any business that under the Constitution of the United States
may not be made the subject of taxation by the State.
(g) If a tax has been imposed under paragraph (e), a tax
shall also be imposed upon the privilege of using in the
metropolitan region, any item of tangible personal property
that is purchased outside the metropolitan region at retail
from a retailer, and that is titled or registered with an
agency of this State's government. In Cook County the tax rate
shall be 1% of the selling price of the tangible personal
property, as "selling price" is defined in the Use Tax Act. In
DuPage, Kane, Lake, McHenry and Will counties the tax rate
shall be 0.75% of the selling price of the tangible personal
property, as "selling price" is defined in the Use Tax Act. The
tax shall be collected from persons whose Illinois address for
titling or registration purposes is given as being in the
metropolitan region. The tax shall be collected by the
Department of Revenue for the Regional Transportation
Authority. The tax must be paid to the State, or an exemption
determination must be obtained from the Department of Revenue,
before the title or certificate of registration for the
property may be issued. The tax or proof of exemption may be
transmitted to the Department by way of the State agency with
which, or the State officer with whom, the tangible personal

HB3876 - 378 - LRB096 11650 HLH 22225 b
property must be titled or registered if the Department and the
State agency or State officer determine that this procedure
will expedite the processing of applications for title or
registration.
The Department shall have full power to administer and
enforce this paragraph; to collect all taxes, penalties and
interest due hereunder; to dispose of taxes, penalties and
interest collected in the manner hereinafter provided; and to
determine all rights to credit memoranda or refunds arising on
account of the erroneous payment of tax, penalty or interest
hereunder. In the administration of and compliance with this
paragraph, the Department and persons who are subject to this
paragraph shall have the same rights, remedies, privileges,
immunities, powers and duties, and be subject to the same
conditions, restrictions, limitations, penalties, exclusions,
exemptions and definitions of terms and employ the same modes
of procedure, as are prescribed in Sections 2 (except the
definition of "retailer maintaining a place of business in this
State"), 3 through 3-80 (except provisions pertaining to the
State rate of tax, and except provisions concerning collection
or refunding of the tax by retailers), 4, 11, 12, 12a, 14, 15,
19 (except the portions pertaining to claims by retailers and
except the last paragraph concerning refunds), 20, 21 and 22 of
the Use Tax Act, and are not inconsistent with this paragraph,
as fully as if those provisions were set forth herein.
Whenever the Department determines that a refund should be

HB3876 - 379 - LRB096 11650 HLH 22225 b
made under this paragraph to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the order to be drawn for the
amount specified, and to the person named in the notification
from the Department. The refund shall be paid by the State
Treasurer out of the Regional Transportation Authority tax fund
established under paragraph (n) of this Section.
(h) (Blank). The Authority may impose a replacement vehicle
tax of $50 on any passenger car as defined in Section 1-157 of
the Illinois Vehicle Code purchased within the metropolitan
region by or on behalf of an insurance company to replace a
passenger car of an insured person in settlement of a total
loss claim. The tax imposed may not become effective before the
first day of the month following the passage of the ordinance
imposing the tax and receipt of a certified copy of the
ordinance by the Department of Revenue. The Department of
Revenue shall collect the tax for the Authority in accordance
with Sections 3-2002 and 3-2003 of the Illinois Vehicle Code.
The Department shall immediately pay over to the State
Treasurer, ex officio, as trustee, all taxes collected
hereunder. On or before the 25th day of each calendar month,
the Department shall prepare and certify to the Comptroller the
disbursement of stated sums of money to the Authority. The
amount to be paid to the Authority shall be the amount
collected hereunder during the second preceding calendar month
by the Department, less any amount determined by the Department

HB3876 - 380 - LRB096 11650 HLH 22225 b
to be necessary for the payment of refunds. Within 10 days
after receipt by the Comptroller of the disbursement
certification to the Authority provided for in this Section to
be given to the Comptroller by the Department, the Comptroller
shall cause the orders to be drawn for that amount in
accordance with the directions contained in the certification.
(i) The Board may not impose any other taxes except as it
may from time to time be authorized by law to impose.
(j) A certificate of registration issued by the State
Department of Revenue to a retailer under the Retailers'
Occupation Tax Act or under the Service Occupation Tax Act
shall permit the registrant to engage in a business that is
taxed under the tax imposed under paragraphs (b), (e), (f) or
(g) of this Section and no additional registration shall be
required under the tax. A certificate issued under the Use Tax
Act or the Service Use Tax Act shall be applicable with regard
to any tax imposed under paragraph (c) of this Section.
(k) The provisions of any tax imposed under paragraph (c)
of this Section shall conform as closely as may be practicable
to the provisions of the Use Tax Act, including without
limitation conformity as to penalties with respect to the tax
imposed and as to the powers of the State Department of Revenue
to promulgate and enforce rules and regulations relating to the
administration and enforcement of the provisions of the tax
imposed. The taxes shall be imposed only on use within the
metropolitan region and at rates as provided in the paragraph.

HB3876 - 381 - LRB096 11650 HLH 22225 b
(l) The Board in imposing any tax as provided in paragraphs
(b) and (c) of this Section, shall, after seeking the advice of
the State Department of Revenue, provide means for retailers,
users or purchasers of motor fuel for purposes other than those
with regard to which the taxes may be imposed as provided in
those paragraphs to receive refunds of taxes improperly paid,
which provisions may be at variance with the refund provisions
as applicable under the Municipal Retailers Occupation Tax Act.
The State Department of Revenue may provide for certificates of
registration for users or purchasers of motor fuel for purposes
other than those with regard to which taxes may be imposed as
provided in paragraphs (b) and (c) of this Section to
facilitate the reporting and nontaxability of the exempt sales
or uses.
(m) Any ordinance imposing or discontinuing any tax under
this Section shall be adopted and a certified copy thereof
filed with the Department on or before June 1, whereupon the
Department of Revenue shall proceed to administer and enforce
this Section on behalf of the Regional Transportation Authority
as of September 1 next following such adoption and filing.
Beginning January 1, 1992, an ordinance or resolution imposing
or discontinuing the tax hereunder shall be adopted and a
certified copy thereof filed with the Department on or before
the first day of July, whereupon the Department shall proceed
to administer and enforce this Section as of the first day of
October next following such adoption and filing. Beginning

HB3876 - 382 - LRB096 11650 HLH 22225 b
January 1, 1993, an ordinance or resolution imposing,
increasing, decreasing, or discontinuing the tax hereunder
shall be adopted and a certified copy thereof filed with the
Department, whereupon the Department shall proceed to
administer and enforce this Section as of the first day of the
first month to occur not less than 60 days following such
adoption and filing. Any ordinance or resolution of the
Authority imposing a tax under this Section and in effect on
August 1, 2007 shall remain in full force and effect and shall
be administered by the Department of Revenue under the terms
and conditions and rates of tax established by such ordinance
or resolution until the Department begins administering and
enforcing an increased tax under this Section as authorized by
this amendatory Act of the 95th General Assembly. The tax rates
authorized by this amendatory Act of the 95th General Assembly
are effective only if imposed by ordinance of the Authority.
(n) The State Department of Revenue shall, upon collecting
any taxes as provided in this Section, pay the taxes over to
the State Treasurer as trustee for the Authority. The taxes
shall be held in a trust fund outside the State Treasury. On or
before the 25th day of each calendar month, the State
Department of Revenue shall prepare and certify to the
Comptroller of the State of Illinois and to the Authority (i)
the amount of taxes collected in each County other than Cook
County in the metropolitan region, (ii) the amount of taxes
collected within the City of Chicago, and (iii) the amount

HB3876 - 383 - LRB096 11650 HLH 22225 b
collected in that portion of Cook County outside of Chicago,
each amount less the amount necessary for the payment of
refunds to taxpayers located in those areas described in items
(i), (ii), and (iii). Within 10 days after receipt by the
Comptroller of the certification of the amounts, the
Comptroller shall cause an order to be drawn for the payment of
two-thirds of the amounts certified in item (i) of this
subsection to the Authority and one-third of the amounts
certified in item (i) of this subsection to the respective
counties other than Cook County and the amount certified in
items (ii) and (iii) of this subsection to the Authority.
In addition to the disbursement required by the preceding
paragraph, an allocation shall be made in July 1991 and each
year thereafter to the Regional Transportation Authority. The
allocation shall be made in an amount equal to the average
monthly distribution during the preceding calendar year
(excluding the 2 months of lowest receipts) and the allocation
shall include the amount of average monthly distribution from
the Regional Transportation Authority Occupation and Use Tax
Replacement Fund. The distribution made in July 1992 and each
year thereafter under this paragraph and the preceding
paragraph shall be reduced by the amount allocated and
disbursed under this paragraph in the preceding calendar year.
The Department of Revenue shall prepare and certify to the
Comptroller for disbursement the allocations made in
accordance with this paragraph.

HB3876 - 384 - LRB096 11650 HLH 22225 b
(o) Failure to adopt a budget ordinance or otherwise to
comply with Section 4.01 of this Act or to adopt a Five-year
Capital Program or otherwise to comply with paragraph (b) of
Section 2.01 of this Act shall not affect the validity of any
tax imposed by the Authority otherwise in conformity with law.
(p) At no time shall a public transportation tax or motor
vehicle parking tax authorized under paragraphs (b), (c) and
(d) of this Section be in effect at the same time as any
retailers' occupation, use or service occupation tax
authorized under paragraphs (e), (f) and (g) of this Section is
in effect.
Any taxes imposed under the authority provided in
paragraphs (b), (c) and (d) shall remain in effect only until
the time as any tax authorized by paragraphs (e), (f) or (g) of
this Section are imposed and becomes effective. Once any tax
authorized by paragraphs (e), (f) or (g) is imposed the Board
may not reimpose taxes as authorized in paragraphs (b), (c) and
(d) of the Section unless any tax authorized by paragraphs (e),
(f) or (g) of this Section becomes ineffective by means other
than an ordinance of the Board.
(q) Any existing rights, remedies and obligations
(including enforcement by the Regional Transportation
Authority) arising under any tax imposed under paragraphs (b),
(c) or (d) of this Section shall not be affected by the
imposition of a tax under paragraphs (e), (f) or (g) of this
Section.

HB3876 - 385 - LRB096 11650 HLH 22225 b
(Source: P.A. 95-708, eff. 1-18-08.)
Section 65. The Water Commission Act of 1985 is amended by
changing Section 4 as follows:
(70 ILCS 3720/4) (from Ch. 111 2/3, par. 254)
Sec. 4. (a) The board of commissioners of any county water
commission may, by ordinance, impose throughout the territory
of the commission any or all of the taxes provided in this
Section for its corporate purposes. However, no county water
commission may impose any such tax unless the commission
certifies the proposition of imposing the tax to the proper
election officials, who shall submit the proposition to the
voters residing in the territory at an election in accordance
with the general election law, and the proposition has been
approved by a majority of those voting on the proposition.
The proposition shall be in the form provided in Section 5
or shall be substantially in the following form:
-------------------------------------------------------------
Shall the (insert corporate
name of county water commission) YES
impose (state type of tax or ------------------------
taxes to be imposed) at the NO
rate of 1/4%?
-------------------------------------------------------------
Taxes imposed under this Section and civil penalties

HB3876 - 386 - LRB096 11650 HLH 22225 b
imposed incident thereto shall be collected and enforced by the
State Department of Revenue. The Department shall have the
power to administer and enforce the taxes and to determine all
rights for refunds for erroneous payments of the taxes.
(b) The board of commissioners may impose a County Water
Commission Retailers' Occupation Tax upon all persons engaged
in the business of selling tangible personal property at retail
in the territory of the commission at a rate of 1/4% of the
gross receipts from the sales made in the course of such
business within the territory. The tax imposed under this
paragraph and all civil penalties that may be assessed as an
incident thereof shall be collected and enforced by the State
Department of Revenue. The Department shall have full power to
administer and enforce this paragraph; to collect all taxes and
penalties due hereunder; to dispose of taxes and penalties so
collected in the manner hereinafter provided; and to determine
all rights to credit memoranda arising on account of the
erroneous payment of tax or penalty hereunder. In the
administration of, and compliance with, this paragraph, the
Department and persons who are subject to this paragraph shall
have the same rights, remedies, privileges, immunities, powers
and duties, and be subject to the same conditions,
restrictions, limitations, penalties, exclusions, exemptions
and definitions of terms, and employ the same modes of
procedure, as are prescribed in Sections 1, 1a, 1a-1, 1c, 1d,
1e, 1f, 1i, 1j, 2 through 2-65 (in respect to all provisions

HB3876 - 387 - LRB096 11650 HLH 22225 b
therein other than the State rate of tax except that food for
human consumption that is to be consumed off the premises where
it is sold (other than alcoholic beverages, soft drinks, and
food that has been prepared for immediate consumption) and
prescription and nonprescription medicine, drugs, medical
appliances, modifications to a motor vehicle for the purpose of
rendering it usable by a disabled person, and insulin, urine
testing materials, syringes, and needles used by diabetics, for
human use, shall not be subject to tax hereunder), 2c, 3
(except as to the disposition of taxes and penalties
collected), 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5h, 5i, 5j, 5k,
5l, 6, 6a, 6b, 6c, 7, 8, 9, 10, 11, 12 and 13 of the Retailers'
Occupation Tax Act and Section 3-7 of the Uniform Penalty and
Interest Act, as fully as if those provisions were set forth
herein.
Persons subject to any tax imposed under the authority
granted in this paragraph may reimburse themselves for their
seller's tax liability hereunder by separately stating the tax
as an additional charge, which charge may be stated in
combination, in a single amount, with State taxes that sellers
are required to collect under the Use Tax Act and under
subsection (e) of Section 4.03 of the Regional Transportation
Authority Act, in accordance with such bracket schedules as the
Department may prescribe.
Whenever the Department determines that a refund should be
made under this paragraph to a claimant instead of issuing a

HB3876 - 388 - LRB096 11650 HLH 22225 b
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the warrant to be drawn for the
amount specified, and to the person named, in the notification
from the Department. The refund shall be paid by the State
Treasurer out of a county water commission tax fund established
under paragraph (g) of this Section.
For the purpose of determining whether a tax authorized
under this paragraph is applicable, a retail sale by a producer
of coal or other mineral mined in Illinois is a sale at retail
at the place where the coal or other mineral mined in Illinois
is extracted from the earth. This paragraph does not apply to
coal or other mineral when it is delivered or shipped by the
seller to the purchaser at a point outside Illinois so that the
sale is exempt under the Federal Constitution as a sale in
interstate or foreign commerce.
If a tax is imposed under this subsection (b) a tax shall
also be imposed under subsections (c) and (d) of this Section.
No tax shall be imposed or collected under this subsection
on the sale of a motor vehicle in this State to a resident of
another state if that motor vehicle will not be titled in this
State.
Nothing in this paragraph shall be construed to authorize a
county water commission to impose a tax upon the privilege of
engaging in any business which under the Constitution of the
United States may not be made the subject of taxation by this
State.

HB3876 - 389 - LRB096 11650 HLH 22225 b
(c) If a tax has been imposed under subsection (b), a
County Water Commission Service Occupation Tax shall also be
imposed upon all persons engaged, in the territory of the
commission, in the business of making sales of service, who, as
an incident to making the sales of service, transfer tangible
personal property within the territory. The tax rate shall be
1/4% of the selling price of tangible personal property so
transferred within the territory. The tax imposed under this
paragraph and all civil penalties that may be assessed as an
incident thereof shall be collected and enforced by the State
Department of Revenue. The Department shall have full power to
administer and enforce this paragraph; to collect all taxes and
penalties due hereunder; to dispose of taxes and penalties so
collected in the manner hereinafter provided; and to determine
all rights to credit memoranda arising on account of the
erroneous payment of tax or penalty hereunder. In the
administration of, and compliance with, this paragraph, the
Department and persons who are subject to this paragraph shall
have the same rights, remedies, privileges, immunities, powers
and duties, and be subject to the same conditions,
restrictions, limitations, penalties, exclusions, exemptions
and definitions of terms, and employ the same modes of
procedure, as are prescribed in Sections 1a-1, 2 (except that
the reference to State in the definition of supplier
maintaining a place of business in this State shall mean the
territory of the commission), 2a, 3 through 3-50 (in respect to

HB3876 - 390 - LRB096 11650 HLH 22225 b
all provisions therein other than the State rate of tax except
that food for human consumption that is to be consumed off the
premises where it is sold (other than alcoholic beverages, soft
drinks, and food that has been prepared for immediate
consumption) and prescription and nonprescription medicines,
drugs, medical appliances, modifications to a motor vehicle for
the purpose of rendering it usable by a disabled person, and
insulin, urine testing materials, syringes, and needles used by
diabetics, for human use, shall not be subject to tax
hereunder), 4 (except that the reference to the State shall be
to the territory of the commission), 5, 7, 8 (except that the
jurisdiction to which the tax shall be a debt to the extent
indicated in that Section 8 shall be the commission), 9 (except
as to the disposition of taxes and penalties collected and
except that the returned merchandise credit for this tax may
not be taken against any State tax), 10, 11, 12 (except the
reference therein to Section 2b of the Retailers' Occupation
Tax Act), 13 (except that any reference to the State shall mean
the territory of the commission), the first paragraph of
Section 15, 15.5, 16, 17, 18, 19 and 20 of the Service
Occupation Tax Act as fully as if those provisions were set
forth herein.
Persons subject to any tax imposed under the authority
granted in this paragraph may reimburse themselves for their
serviceman's tax liability hereunder by separately stating the
tax as an additional charge, which charge may be stated in

HB3876 - 391 - LRB096 11650 HLH 22225 b
combination, in a single amount, with State tax that servicemen
are authorized to collect under the Service Use Tax Act, and
any tax for which servicemen may be liable under subsection (f)
of Sec. 4.03 of the Regional Transportation Authority Act, in
accordance with such bracket schedules as the Department may
prescribe.
Whenever the Department determines that a refund should be
made under this paragraph to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the warrant to be drawn for the
amount specified, and to the person named, in the notification
from the Department. The refund shall be paid by the State
Treasurer out of a county water commission tax fund established
under paragraph (g) of this Section.
Nothing in this paragraph shall be construed to authorize a
county water commission to impose a tax upon the privilege of
engaging in any business which under the Constitution of the
United States may not be made the subject of taxation by the
State.
(d) If a tax has been imposed under subsection (b), a tax
shall also imposed upon the privilege of using, in the
territory of the commission, any item of tangible personal
property that is purchased outside the territory at retail from
a retailer, and that is titled or registered with an agency of
this State's government, at a rate of 1/4% of the selling price
of the tangible personal property within the territory, as

HB3876 - 392 - LRB096 11650 HLH 22225 b
"selling price" is defined in the Use Tax Act. The tax shall be
collected from persons whose Illinois address for titling or
registration purposes is given as being in the territory. The
tax shall be collected by the Department of Revenue for a
county water commission. The tax must be paid to the State, or
an exemption determination must be obtained from the Department
of Revenue, before the title or certificate of registration for
the property may be issued. The tax or proof of exemption may
be transmitted to the Department by way of the State agency
with which, or the State officer with whom, the tangible
personal property must be titled or registered if the
Department and the State agency or State officer determine that
this procedure will expedite the processing of applications for
title or registration.
The Department shall have full power to administer and
enforce this paragraph; to collect all taxes, penalties and
interest due hereunder; to dispose of taxes, penalties and
interest so collected in the manner hereinafter provided; and
to determine all rights to credit memoranda or refunds arising
on account of the erroneous payment of tax, penalty or interest
hereunder. In the administration of, and compliance with this
paragraph, the Department and persons who are subject to this
paragraph shall have the same rights, remedies, privileges,
immunities, powers and duties, and be subject to the same
conditions, restrictions, limitations, penalties, exclusions,
exemptions and definitions of terms and employ the same modes

HB3876 - 393 - LRB096 11650 HLH 22225 b
of procedure, as are prescribed in Sections 2 (except the
definition of "retailer maintaining a place of business in this
State"), 3 through 3-80 (except provisions pertaining to the
State rate of tax, and except provisions concerning collection
or refunding of the tax by retailers, and except that food for
human consumption that is to be consumed off the premises where
it is sold (other than alcoholic beverages, soft drinks, and
food that has been prepared for immediate consumption) and
prescription and nonprescription medicines, drugs, medical
appliances, modifications to a motor vehicle for the purpose of
rendering it usable by a disabled person, and insulin, urine
testing materials, syringes, and needles used by diabetics, for
human use, shall not be subject to tax hereunder), 4, 11, 12,
12a, 14, 15, 19 (except the portions pertaining to claims by
retailers and except the last paragraph concerning refunds),
20, 21 and 22 of the Use Tax Act and Section 3-7 of the Uniform
Penalty and Interest Act that are not inconsistent with this
paragraph, as fully as if those provisions were set forth
herein.
Whenever the Department determines that a refund should be
made under this paragraph to a claimant instead of issuing a
credit memorandum, the Department shall notify the State
Comptroller, who shall cause the order to be drawn for the
amount specified, and to the person named, in the notification
from the Department. The refund shall be paid by the State
Treasurer out of a county water commission tax fund established

HB3876 - 394 - LRB096 11650 HLH 22225 b
under paragraph (g) of this Section.
(e) A certificate of registration issued by the State
Department of Revenue to a retailer under the Retailers'
Occupation Tax Act or under the Service Occupation Tax Act
shall permit the registrant to engage in a business that is
taxed under the tax imposed under paragraphs (b), (c) or (d) of
this Section and no additional registration shall be required
under the tax. A certificate issued under the Use Tax Act or
the Service Use Tax Act shall be applicable with regard to any
tax imposed under paragraph (c) of this Section.
(f) Any ordinance imposing or discontinuing any tax under
this Section shall be adopted and a certified copy thereof
filed with the Department on or before June 1, whereupon the
Department of Revenue shall proceed to administer and enforce
this Section on behalf of the county water commission as of
September 1 next following the adoption and filing. Beginning
January 1, 1992, an ordinance or resolution imposing or
discontinuing the tax hereunder shall be adopted and a
certified copy thereof filed with the Department on or before
the first day of July, whereupon the Department shall proceed
to administer and enforce this Section as of the first day of
October next following such adoption and filing. Beginning
January 1, 1993, an ordinance or resolution imposing or
discontinuing the tax hereunder shall be adopted and a
certified copy thereof filed with the Department on or before
the first day of October, whereupon the Department shall

HB3876 - 395 - LRB096 11650 HLH 22225 b
proceed to administer and enforce this Section as of the first
day of January next following such adoption and filing.
(g) The State Department of Revenue shall, upon collecting
any taxes as provided in this Section, pay the taxes over to
the State Treasurer as trustee for the commission. The taxes
shall be held in a trust fund outside the State Treasury. On or
before the 25th day of each calendar month, the State
Department of Revenue shall prepare and certify to the
Comptroller of the State of Illinois the amount to be paid to
the commission, which shall be the then balance in the fund,
less any amount determined by the Department to be necessary
for the payment of refunds. Within 10 days after receipt by the
Comptroller of the certification of the amount to be paid to
the commission, the Comptroller shall cause an order to be
drawn for the payment for the amount in accordance with the
direction in the certification.
(Source: P.A. 92-221, eff. 8-2-01; 93-1068, eff. 1-15-05.)
Section 70. The Environmental Impact Fee Law is amended by
changing Section 325 as follows:
(415 ILCS 125/325)
(Section scheduled to be repealed on January 1, 2013)
Sec. 325. Incorporation of other Acts. The provisions of
Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5i, 5j, 6, 6a, 6b,
6c, 8, 9, 10 and 12 (except to the extent to which the minimum

HB3876 - 396 - LRB096 11650 HLH 22225 b
notice requirement for hearings conflicts with that provided
for in Section 16 of the Motor Fuel Tax Law), of the Retailers'
Occupation Tax Act that are not inconsistent with this Act, and
Section 3-7 of the Uniform Penalty and Interest Act shall apply
as far as practicable, to the subject matter of this Law to the
same extent as if those provisions were included in this Law.
In addition, Sections 2d, 12, 12a, 13a.8, 14, 15, 16, 17,
17a, and 18 of the Motor Fuel Tax Law shall apply as far as
practicable, to the subject matter of this Law to the same
extent as if those provisions were included in this Law.
References to "taxes" in these incorporated Sections shall
be construed to apply to the administration, payment, and
remittance of all fees under this Law.
(Source: P.A. 95-264, eff. 8-17-07.)
Section 99. Effective date. This Act takes effect upon
becoming law.
HB3876 - 397 - LRB096 11650 HLH 22225 b
INDEX
Statutes amended in order of appearance
20 ILCS 2505/2505-800 new
30 ILCS 105/13.3 from Ch. 127, par. 149.3
30 ILCS 210/8 rep.
30 ILCS 500/50-11
30 ILCS 500/50-60
35 ILCS 5/201 from Ch. 120, par. 2-201
35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 5/204 from Ch. 120, par. 2-204
35 ILCS 5/205 from Ch. 120, par. 2-205
35 ILCS 5/207 from Ch. 120, par. 2-207
35 ILCS 5/214
35 ILCS 5/304 from Ch. 120, par. 3-304
35 ILCS 5/502 from Ch. 120, par. 5-502
35 ILCS 5/506 from Ch. 120, par. 5-506
35 ILCS 5/601 from Ch. 120, par. 6-601
35 ILCS 5/701 from Ch. 120, par. 7-701
35 ILCS 5/702 from Ch. 120, par. 7-702
35 ILCS 5/703 from Ch. 120, par. 7-703
35 ILCS 5/704A
35 ILCS 5/804 from Ch. 120, par. 8-804
35 ILCS 5/909 from Ch. 120, par. 9-909
35 ILCS 5/911 from Ch. 120, par. 9-911
35 ILCS 5/1002 from Ch. 120, par. 10-1002
HB3876 - 398 - LRB096 11650 HLH 22225 b
35 ILCS 5/1101 from Ch. 120, par. 11-1101
35 ILCS 5/1405.4
35 ILCS 135/1 from Ch. 120, par. 453.31
35 ILCS 505/1.2 from Ch. 120, par. 417.2
35 ILCS 505/1.14 from Ch. 120, par. 417.14
35 ILCS 505/1.22
35 ILCS 505/3 from Ch. 120, par. 419
35 ILCS 505/3a from Ch. 120, par. 419a
35 ILCS 505/5 from Ch. 120, par. 421
35 ILCS 505/5a from Ch. 120, par. 421a
35 ILCS 505/8 from Ch. 120, par. 424
35 ILCS 505/13 from Ch. 120, par. 429
35 ILCS 505/13a.4 from Ch. 120, par. 429a4
35 ILCS 505/13a.5 from Ch. 120, par. 429a5
35 ILCS 505/17a new
35 ILCS 735/3-3 from Ch. 120, par. 2603-3
55 ILCS 5/5-1006 from Ch. 34, par. 5-1006
55 ILCS 5/5-1006.5
55 ILCS 5/5-1006.7
55 ILCS 5/5-1007 from Ch. 34, par. 5-1007
55 ILCS 5/5-1035 rep.
65 ILCS 5/8-11-1 from Ch. 24, par. 8-11-1
65 ILCS 5/8-11-1.1 from Ch. 24, par. 8-11-1.1
65 ILCS 5/8-11-1.3 from Ch. 24, par. 8-11-1.3
65 ILCS 5/8-11-1.4 from Ch. 24, par. 8-11-1.4
65 ILCS 5/8-11-5 from Ch. 24, par. 8-11-5
HB3876 - 399 - LRB096 11650 HLH 22225 b
65 ILCS 5/11-74.3-6
65 ILCS 5/8-11-9 rep.
70 ILCS 1605/30
70 ILCS 3615/4.03 from Ch. 111 2/3, par. 704.03
70 ILCS 3720/4 from Ch. 111 2/3, par. 254
415 ILCS 125/325