Bill Text: IL SB2126 | 2021-2022 | 102nd General Assembly | Introduced

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Bill Title: Amends the Illinois Income Tax Act. Provides that all the corporations, wherever incorporated or domiciled, that are members of a unitary business shall file a combined return as a combined group. Makes changes to the definition of "unitary business". Contains provisions concerning a water's edge election. Provides that, with respect to unitary business groups, "United States" means the 50 states of the United States, the District of Columbia, and United States' territories and possessions.

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Introduced - Dead) 2021-05-19 - Added as Co-Sponsor Sen. Robert F. Martwick [SB2126 Detail]

Download: Illinois-2021-SB2126-Introduced.html

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102ND GENERAL ASSEMBLY State of Illinois 2021 and 2022 SB2126 Introduced 2/26/2021, by Sen. Robert Peters SYNOPSIS AS INTRODUCED:
35 ILCS 5/304 from Ch. 120, par. 3-304
35 ILCS 5/304.1 new
35 ILCS 5/1501 from Ch. 120, par. 15-1501
Amends the Illinois Income Tax Act. Provides that all the corporations, wherever incorporated or domiciled, that are members of a unitary business shall file a combined return as a combined group. Makes changes to the definition of "unitary business". Contains provisions concerning a water's edge election. Provides that, with respect to unitary business groups, "United States" means the 50 states of the United States, the District of Columbia, and United States' territories and possessions.
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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 Illinois Income Tax Act is amended by
changing Sections 304, 304.1, 1501 as follows:
(35 ILCS 5/304) (from Ch. 120, par. 3-304)
Sec. 304. Business income of persons other than residents.
(a) In general. The business income of a person other than
a resident shall be allocated to this State if such person's
business income is derived solely from this State. If a person
other than a resident derives business income from this State
and one or more other states, then, for tax years ending on or
before December 30, 1998, and except as otherwise provided by
this Section, such person's business income shall be
apportioned to this State by multiplying the income by a
fraction, the numerator of which is the sum of the property
factor (if any), the payroll factor (if any) and 200% of the
sales factor (if any), and the denominator of which is 4
reduced by the number of factors other than the sales factor
which have a denominator of zero and by an additional 2 if the
sales factor has a denominator of zero. For tax years ending on
or after December 31, 1998, and except as otherwise provided
by this Section, persons other than residents who derive

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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
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.

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(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
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) For tax years ending prior to December 31,
2020, 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. For tax years ending on or after December 31,
2020, compensation is paid in this State if some of the
individual's service is performed within this State,
the individual's service performed within this State
is nonincidental to the individual's service performed

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without this State, and the individual's service is
performed within this State for more than 30 working
days during the tax year. The amount of compensation
paid in this State shall include the portion of the
individual's total compensation for services performed
on behalf of his or her employer during the tax year
which the number of working days spent within this
State during the tax year bears to the total number of
working days spent both within and without this State
during the tax year. For purposes of this paragraph:
(a) The term "working day" means all days
during the tax year in which the individual
performs duties on behalf of his or her employer.
All days in which the individual performs no
duties on behalf of his or her employer (e.g.,
weekends, vacation days, sick days, and holidays)
are not working days.
(b) A working day is spent within this State
if:
(1) the individual performs service on
behalf of the employer and a greater amount of
time on that day is spent by the individual
performing duties on behalf of the employer
within this State, without regard to time
spent traveling, than is spent performing
duties on behalf of the employer without this

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State; or
(2) the only service the individual
performs on behalf of the employer on that day
is traveling to a destination within this
State, and the individual arrives on that day.
(c) Working days spent within this State do
not include any day in which the employee is
performing services in this State during a
disaster period solely in response to a request
made to his or her employer by the government of
this State, by any political subdivision of this
State, or by a person conducting business in this
State to perform disaster or emergency-related
services in this State. For purposes of this item
(c):
"Declared State disaster or emergency"
means a disaster or emergency event (i) for
which a Governor's proclamation of a state of
emergency has been issued or (ii) for which a
Presidential declaration of a federal major
disaster or emergency has been issued.
"Disaster period" means a period that
begins 10 days prior to the date of the
Governor's proclamation or the President's
declaration (whichever is earlier) and extends
for a period of 60 calendar days after the end

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of the declared disaster or emergency period.
"Disaster or emergency-related services"
means repairing, renovating, installing,
building, or rendering services or conducting
other business activities that relate to
infrastructure that has been damaged,
impaired, or destroyed by the declared State
disaster or emergency.
"Infrastructure" means property and
equipment owned or used by a public utility,
communications network, broadband and internet
service provider, cable and video service
provider, electric or gas distribution system,
or water pipeline that provides service to
more than one customer or person, including
related support facilities. "Infrastructure"
includes, but is not limited to, real and
personal property such as buildings, offices,
power lines, cable lines, poles,
communications lines, pipes, structures, and
equipment.
(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

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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 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,

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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
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

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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
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

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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
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

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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
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.

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(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 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

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the United States and the property is purchased for
resale.
(B-1) Patents, copyrights, trademarks, and similar
items of intangible personal property.
(i) Gross receipts from the licensing, sale, or
other disposition of a patent, copyright, trademark,
or similar item of intangible personal property, other
than gross receipts governed by paragraph (B-7) of
this item (3), are in this State to the extent the item
is utilized in this State during the year the gross
receipts are included in gross income.
(ii) Place of utilization.
(I) A patent is utilized in a state to the
extent that it is employed in production,
fabrication, manufacturing, or other processing in
the state or to the extent that a patented product
is produced in the state. If a patent is utilized
in more than one state, the extent to which it is
utilized in any one state shall be a fraction
equal to the gross receipts of the licensee or
purchaser from sales or leases of items produced,
fabricated, manufactured, or processed within that
state using the patent and of patented items
produced within that state, divided by the total
of such gross receipts for all states in which the
patent is utilized.

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(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
from the books and records of any person related to the
taxpayer within the meaning of Section 267(b) of the
Internal Revenue Code, 26 U.S.C. 267, the gross
receipts attributable to that item shall be excluded
from both the numerator and the denominator of the
sales factor.
(B-2) Gross receipts from the license, sale, or other
disposition of patents, copyrights, trademarks, and
similar items of intangible personal property, other than
gross receipts governed by paragraph (B-7) of this item

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(3), may be included in the numerator or denominator of
the sales factor only if gross receipts from licenses,
sales, or other disposition of such items comprise more
than 50% of the taxpayer's total gross receipts included
in gross income during the tax year and during each of the
2 immediately preceding tax years; provided that, when a
taxpayer is a member of a unitary business group, such
determination shall be made on the basis of the gross
receipts of the entire unitary business group.
(B-5) For taxable years ending on or after December
31, 2008, except as provided in subsections (ii) through
(vii), receipts from the sale of telecommunications
service or mobile telecommunications service are in this
State if the customer's service address is in this State.
(i) For purposes of this subparagraph (B-5), the
following terms have the following meanings:
"Ancillary services" means services that are
associated with or incidental to the provision of
"telecommunications services", including, but not
limited to, "detailed telecommunications billing",
"directory assistance", "vertical service", and "voice
mail services".
"Air-to-Ground Radiotelephone service" means a
radio service, as that term is defined in 47 CFR 22.99,
in which common carriers are authorized to offer and
provide radio telecommunications service for hire to

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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.
"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

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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
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.

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"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
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:

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(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,
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

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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
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

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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".
(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.

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(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.
(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

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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
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:

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(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
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.

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(B-7) For taxable years ending on or after December
31, 2008, receipts from the sale of broadcasting services
are in this State if the broadcasting services are
received in this State. For purposes of this paragraph
(B-7), the following terms have the following meanings:
"Advertising revenue" means consideration received
by the taxpayer in exchange for broadcasting services
or allowing the broadcasting of commercials or
announcements in connection with the broadcasting of
film or radio programming, from sponsorships of the
programming, or from product placements in the
programming.
"Audience factor" means the ratio that the
audience or subscribers located in this State of a
station, a network, or a cable system bears to the
total audience or total subscribers for that station,
network, or cable system. The audience factor for film
or radio programming shall be determined by reference
to the books and records of the taxpayer or by
reference to published rating statistics provided the
method used by the taxpayer is consistently used from
year to year for this purpose and fairly represents
the taxpayer's activity in this State.
"Broadcast" or "broadcasting" or "broadcasting
services" means the transmission or provision of film
or radio programming, whether through the public

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airwaves, by cable, by direct or indirect satellite
transmission, or by any other means of communication,
either through a station, a network, or a cable
system.
"Film" or "film programming" means the broadcast
on television of any and all performances, events, or
productions, including, but not limited to, news,
sporting events, plays, stories, or other literary,
commercial, educational, or artistic works, either
live or through the use of video tape, disc, or any
other type of format or medium. Each episode of a
series of films produced for television shall
constitute separate "film" notwithstanding that the
series relates to the same principal subject and is
produced during one or more tax periods.
"Radio" or "radio programming" means the broadcast
on radio of any and all performances, events, or
productions, including, but not limited to, news,
sporting events, plays, stories, or other literary,
commercial, educational, or artistic works, either
live or through the use of an audio tape, disc, or any
other format or medium. Each episode in a series of
radio programming produced for radio broadcast shall
constitute a separate "radio programming"
notwithstanding that the series relates to the same
principal subject and is produced during one or more

SB2126 - 27 - LRB102 15189 HLH 20544 b
tax periods.
(i) In the case of advertising revenue from
broadcasting, the customer is the advertiser and
the service is received in this State if the
commercial domicile of the advertiser is in this
State.
(ii) In the case where film or radio
programming is broadcast by a station, a network,
or a cable system for a fee or other remuneration
received from the recipient of the broadcast, the
portion of the service that is received in this
State is measured by the portion of the recipients
of the broadcast located in this State.
Accordingly, the fee or other remuneration for
such service that is included in the Illinois
numerator of the sales factor is the total of
those fees or other remuneration received from
recipients in Illinois. For purposes of this
paragraph, a taxpayer may determine the location
of the recipients of its broadcast using the
address of the recipient shown in its contracts
with the recipient or using the billing address of
the recipient in the taxpayer's records.
(iii) In the case where film or radio
programming is broadcast by a station, a network,
or a cable system for a fee or other remuneration

SB2126 - 28 - LRB102 15189 HLH 20544 b
from the person providing the programming, the
portion of the broadcast service that is received
by such station, network, or cable system in this
State is measured by the portion of recipients of
the broadcast located in this State. Accordingly,
the amount of revenue related to such an
arrangement that is included in the Illinois
numerator of the sales factor is the total fee or
other total remuneration from the person providing
the programming related to that broadcast
multiplied by the Illinois audience factor for
that broadcast.
(iv) In the case where film or radio
programming is provided by a taxpayer that is a
network or station to a customer for broadcast in
exchange for a fee or other remuneration from that
customer the broadcasting service is received at
the location of the office of the customer from
which the services were ordered in the regular
course of the customer's trade or business.
Accordingly, in such a case the revenue derived by
the taxpayer that is included in the taxpayer's
Illinois numerator of the sales factor is the
revenue from such customers who receive the
broadcasting service in Illinois.
(v) In the case where film or radio

SB2126 - 29 - LRB102 15189 HLH 20544 b
programming is provided by a taxpayer that is not
a network or station to another person for
broadcasting in exchange for a fee or other
remuneration from that person, the broadcasting
service is received at the location of the office
of the customer from which the services were
ordered in the regular course of the customer's
trade or business. Accordingly, in such a case the
revenue derived by the taxpayer that is included
in the taxpayer's Illinois numerator of the sales
factor is the revenue from such customers who
receive the broadcasting service in Illinois.
(B-8) Gross receipts from winnings under the Illinois
Lottery Law from the assignment of a prize under Section
13.1 of the Illinois Lottery Law are received in this
State. This paragraph (B-8) applies only to taxable years
ending on or after December 31, 2013.
(B-9) For taxable years ending on or after December
31, 2019, gross receipts from winnings from pari-mutuel
wagering conducted at a wagering facility licensed under
the Illinois Horse Racing Act of 1975 or from winnings
from gambling games conducted on a riverboat or in a
casino or organization gaming facility licensed under the
Illinois Gambling Act are in this State.
(C) For taxable years ending before December 31, 2008,
sales, other than sales governed by paragraphs (B), (B-1),

SB2126 - 30 - LRB102 15189 HLH 20544 b
(B-2), and (B-8) are in this State if:
(i) The income-producing activity is performed in
this State; or
(ii) The income-producing activity is performed
both within and without this State and a greater
proportion of the income-producing activity is
performed within this State than without this State,
based on performance costs.
(C-5) For taxable years ending on or after December
31, 2008, sales, other than sales governed by paragraphs
(B), (B-1), (B-2), (B-5), and (B-7), are in this State if
any of the following criteria are met:
(i) Sales from the sale or lease of real property
are in this State if the property is located in this
State.
(ii) Sales from the lease or rental of tangible
personal property are in this State if the property is
located in this State during the rental period. Sales
from the lease or rental of tangible personal property
that is characteristically moving property, including,
but not limited to, motor vehicles, rolling stock,
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

SB2126 - 31 - LRB102 15189 HLH 20544 b
intangible personal property, the sale is in this
State if:
(a) in the case of a taxpayer who is a dealer
in the item of intangible personal property within
the meaning of Section 475 of the Internal Revenue
Code, the income or gain is received from a
customer in this State. For purposes of this
subparagraph, a customer is in this State if the
customer is an individual, trust or estate who is
a resident of this State and, for all other
customers, if the customer's commercial domicile
is in this State. Unless the dealer has actual
knowledge of the residence or commercial domicile
of a customer during a taxable year, the customer
shall be deemed to be a customer in this State if
the billing address of the customer, as shown in
the records of the dealer, is in this State; or
(b) in all other cases, if the
income-producing activity of the taxpayer is
performed in this State or, if the
income-producing activity of the taxpayer is
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.

SB2126 - 32 - LRB102 15189 HLH 20544 b
(iv) Sales of services are in this State if the
services are received in this State. For the purposes
of this section, gross receipts from the performance
of services provided to a corporation, partnership, or
trust may only be attributed to a state where that
corporation, partnership, or trust has a fixed place
of business. If the state where the services are
received is not readily determinable or is a state
where the corporation, partnership, or trust receiving
the service does not have a fixed place of business,
the services shall be deemed to be received at the
location of the office of the customer from which the
services were ordered in the regular course of the
customer's trade or business. If the ordering office
cannot be determined, the services shall be deemed to
be received at the office of the customer to which the
services are billed. If the taxpayer is not taxable in
the state in which the services are received, the sale
must be excluded from both the numerator and the
denominator of the sales factor. The Department shall
adopt rules prescribing where specific types of
service are received, including, but not limited to,
publishing, and utility service.
(D) For taxable years ending on or after December 31,
1995, the following items of income shall not be included
in the numerator or denominator of the sales factor:

SB2126 - 33 - LRB102 15189 HLH 20544 b
dividends; amounts included under Section 78 of the
Internal Revenue Code; and Subpart F income as defined in
Section 952 of the Internal Revenue Code. No inference
shall be drawn from the enactment of this paragraph (D) in
construing this Section for taxable years ending before
December 31, 1995.
(E) Paragraphs (B-1) and (B-2) shall apply to tax
years ending on or after December 31, 1999, provided that
a taxpayer may elect to apply the provisions of these
paragraphs to prior tax years. Such election shall be made
in the form and manner prescribed by the Department, shall
be irrevocable, and shall apply to all tax years; provided
that, if a taxpayer's Illinois income tax liability for
any tax year, as assessed under Section 903 prior to
January 1, 1999, was computed in a manner contrary to the
provisions of paragraphs (B-1) or (B-2), no refund shall
be payable to the taxpayer for that tax year to the extent
such refund is the result of applying the provisions of
paragraph (B-1) or (B-2) retroactively. In the case of a
unitary business group, such election shall apply to all
members of such group for every tax year such group is in
existence, but 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

SB2126 - 34 - LRB102 15189 HLH 20544 b
paragraph (2), business income of an insurance company for
a taxable year shall be apportioned to this State by
multiplying such income by a fraction, the numerator of
which is the direct premiums written for insurance upon
property or risk in this State, and the denominator of
which is the direct premiums written for insurance upon
property or risk everywhere. For purposes of this
subsection, the term "direct premiums written" means the
total amount of direct premiums written, assessments and
annuity considerations as reported for the taxable year on
the annual statement filed by the company with the
Illinois Director of Insurance in the form approved by the
National Convention of Insurance Commissioners or such
other form as may be prescribed in lieu thereof.
(2) Reinsurance. If the principal source of premiums
written by an insurance company consists of premiums for
reinsurance accepted by it, the business income of such
company shall be apportioned to this State by multiplying
such income by a fraction, the numerator of which is the
sum of (i) direct premiums written for insurance upon
property or risk in this State, plus (ii) premiums written
for reinsurance accepted in respect of property or risk in
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

SB2126 - 35 - LRB102 15189 HLH 20544 b
everywhere. For purposes of this paragraph, premiums
written for reinsurance accepted in respect of property or
risk in this State, whether or not otherwise determinable,
may, at the election of the company, be determined on the
basis of the proportion which premiums written for
reinsurance accepted from companies commercially domiciled
in Illinois bears to premiums written for reinsurance
accepted from all sources, or, alternatively, in the
proportion which the sum of the direct premiums written
for insurance upon property or risk in this State by each
ceding company from which reinsurance is accepted bears to
the sum of the total direct premiums written by each such
ceding company for the taxable year. The election made by
a company under this paragraph for its first taxable year
ending on or after December 31, 2011, shall be binding for
that company for that taxable year and for all subsequent
taxable years, and may be altered only with the written
permission of the Department, which shall not be
unreasonably withheld.
(c) Financial organizations.
(1) In general. For taxable years ending before
December 31, 2008, business income of a financial
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

SB2126 - 36 - LRB102 15189 HLH 20544 b
from all sources. For the purposes of this subsection, the
business income of a financial organization from sources
within this State is the sum of the amounts referred to in
subparagraphs (A) through (E) following, but excluding the
adjusted income of an international banking facility as
determined in paragraph (2):
(A) Fees, commissions or other compensation for
financial services rendered within this State;
(B) Gross profits from trading in stocks, bonds or
other securities managed within this State;
(C) Dividends, and interest from Illinois
customers, which are received within this State;
(D) Interest charged to customers at places of
business maintained within this State for carrying
debit balances of margin accounts, without deduction
of any costs incurred in carrying such accounts; and
(E) Any other gross income resulting from the
operation as a financial organization within this
State.
In computing the amounts referred to in paragraphs (A)
through (E) of this subsection, any amount received by a
member of an affiliated group (determined under Section
1504(a) of the Internal 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

SB2126 - 37 - LRB102 15189 HLH 20544 b
only to the extent such amount exceeds expenses of the
recipient directly related thereto.
(2) International Banking Facility. For taxable years
ending before December 31, 2008:
(A) Adjusted Income. The adjusted income of an
international banking facility is its income reduced
by the amount of the floor amount.
(B) Floor Amount. The floor amount shall be the
amount, if any, determined by multiplying the income
of the international banking facility by a fraction,
not greater than one, which is determined as follows:
(i) The numerator shall be:
The average aggregate, determined on a
quarterly basis, of the financial organization's
loans to banks in foreign countries, to foreign
domiciled borrowers (except where secured
primarily by real estate) and to foreign
governments and other foreign official
institutions, as reported for its branches,
agencies and offices within the state on its
"Consolidated Report of Condition", Schedule A,
Lines 2.c., 5.b., and 7.a., which was filed with
the Federal Deposit Insurance Corporation and
other regulatory authorities, for the year 1980,
minus
The average aggregate, determined on a

SB2126 - 38 - LRB102 15189 HLH 20544 b
quarterly basis, of such loans (other than loans
of an international banking facility), as reported
by the financial institution for its branches,
agencies and offices within the state, on the
corresponding Schedule and lines of the
Consolidated Report of Condition for the current
taxable year, provided, however, that in no case
shall the amount determined in this clause (the
subtrahend) exceed the amount determined in the
preceding clause (the minuend); and
(ii) the denominator shall be the average
aggregate, determined on a quarterly basis, of the
international banking facility's loans to banks in
foreign countries, to foreign domiciled borrowers
(except where secured primarily by real estate)
and to foreign governments and other foreign
official institutions, which were recorded in its
financial accounts for the current taxable year.
(C) Change to Consolidated Report of Condition and
in Qualification. In the event the Consolidated Report
of Condition which is filed with the Federal Deposit
Insurance Corporation and other regulatory authorities
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

SB2126 - 39 - LRB102 15189 HLH 20544 b
Department may, by regulations or otherwise, prescribe
or authorize the use of an alternative source for such
information. The financial institution shall also
notify the Department should its international banking
facility fail to qualify as such, in whole or in part,
or should there be any amendment or change to the
Consolidated Report of Condition, as originally filed,
to the extent such amendment or change alters the
information used in determining the floor amount.
(3) For taxable years ending on or after December 31,
2008, the business income of a financial organization
shall be apportioned to this State by multiplying such
income by a fraction, the numerator of which is its gross
receipts from sources in this State or otherwise
attributable to this State's marketplace and the
denominator of which is its gross receipts everywhere
during the taxable year. "Gross receipts" for purposes of
this subparagraph (3) means gross income, including net
taxable gain on disposition of assets, including
securities and money market instruments, when derived from
transactions and activities in the regular course of the
financial organization's trade or business. The following
examples 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

SB2126 - 40 - LRB102 15189 HLH 20544 b
period. Receipts from the lease or rental of tangible
personal property that is characteristically moving
property, including, but not limited to, motor
vehicles, rolling stock, aircraft, vessels, or mobile
equipment are from sources in this State to the extent
that the property is used in this State.
(ii) Interest income, commissions, fees, gains on
disposition, and other receipts from assets in the
nature of loans that are secured primarily by real
estate or tangible personal property are from sources
in this State if the security is located in this State.
(iii) Interest income, commissions, fees, gains on
disposition, and other receipts from consumer loans
that are not secured by real or tangible personal
property are from sources in this State if the debtor
is a resident of this State.
(iv) Interest income, commissions, fees, gains on
disposition, and other receipts from commercial loans
and installment obligations that are not secured by
real or tangible personal property are from sources in
this State if the proceeds of the loan are to be
applied in this State. If it cannot be determined
where 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

SB2126 - 41 - LRB102 15189 HLH 20544 b
State. If the location of this office cannot be
determined, the income and receipts shall be excluded
from the numerator and denominator of the sales
factor.
(v) Interest income, fees, gains on disposition,
service charges, merchant discount income, and other
receipts from credit card receivables are from sources
in this State if the card charges are regularly billed
to a customer in this State.
(vi) Receipts from the performance of services,
including, but not limited to, fiduciary, advisory,
and brokerage services, are in this State if the
services are received in this State within the meaning
of subparagraph (a)(3)(C-5)(iv) of this Section.
(vii) Receipts from the issuance of travelers
checks and money orders are from sources in this State
if the checks and money orders are issued from a
location within this State.
(viii) Receipts from investment assets and
activities and trading assets and activities are
included in the receipts factor as follows:
(1) Interest, dividends, net gains (but not
less than zero) and other income from investment
assets and activities from trading assets and
activities shall be included in the receipts
factor. Investment assets and activities and

SB2126 - 42 - LRB102 15189 HLH 20544 b
trading assets and activities include, but are not
limited to: investment securities; trading account
assets; federal funds; securities purchased and
sold under agreements to resell or repurchase;
options; futures contracts; forward contracts;
notional principal contracts such as swaps;
equities; and foreign currency transactions. With
respect to the investment and trading assets and
activities described in subparagraphs (A) and (B)
of this paragraph, the receipts factor shall
include the amounts described in such
subparagraphs.
(A) The receipts factor shall include the
amount by which interest from federal funds
sold and securities purchased under resale
agreements exceeds interest expense on federal
funds purchased and securities sold under
repurchase agreements.
(B) The receipts factor shall include the
amount by which interest, dividends, gains and
other income from trading assets and
activities, including, but not limited to,
assets and activities in the matched book, in
the arbitrage book, and foreign currency
transactions, exceed amounts paid in lieu of
interest, amounts paid in lieu of dividends,

SB2126 - 43 - LRB102 15189 HLH 20544 b
and losses from such assets and activities.
(2) The numerator of the receipts factor
includes interest, dividends, net gains (but not
less than zero), and other income from investment
assets and activities and from trading assets and
activities described in paragraph (1) of this
subsection that are attributable to this State.
(A) The amount of interest, dividends, net
gains (but not less than zero), and other
income from investment assets and activities
in the investment account to be attributed to
this State and included in the numerator is
determined by multiplying all such income from
such assets and activities by a fraction, the
numerator of which is the gross income from
such assets and activities which are properly
assigned to a fixed place of business of the
taxpayer within this State and the denominator
of which is the gross income from all such
assets and activities.
(B) The amount of interest from federal
funds sold and purchased and from securities
purchased under resale agreements and
securities sold under repurchase agreements
attributable to this State and included in the
numerator is determined by multiplying the

SB2126 - 44 - LRB102 15189 HLH 20544 b
amount described in subparagraph (A) of
paragraph (1) of this subsection from such
funds and such securities by a fraction, the
numerator of which is the gross income from
such funds and such securities which are
properly assigned to a fixed place of business
of the taxpayer within this State and the
denominator of which is the gross income from
all such funds and such securities.
(C) The amount of interest, dividends,
gains, and other income from trading assets
and activities, including, but not limited to,
assets and activities in the matched book, in
the arbitrage book and foreign currency
transactions (but excluding amounts described
in subparagraphs (A) or (B) of this
paragraph), attributable to this State and
included in the numerator is determined by
multiplying the amount described in
subparagraph (B) of paragraph (1) of this
subsection by a fraction, the numerator of
which is the gross income from such trading
assets and activities which are properly
assigned to a fixed place of business of the
taxpayer within this State and the denominator
of which is the gross income from all such

SB2126 - 45 - LRB102 15189 HLH 20544 b
assets and activities.
(D) Properly assigned, for purposes of
this paragraph (2) of this subsection, means
the investment or trading asset or activity is
assigned to the fixed place of business with
which it has a preponderance of substantive
contacts. An investment or trading asset or
activity assigned by the taxpayer to a fixed
place of business without the State shall be
presumed to have been properly assigned if:
(i) the taxpayer has assigned, in the
regular course of its business, such asset
or activity on its records to a fixed
place of business consistent with federal
or state regulatory requirements;
(ii) such assignment on its records is
based upon substantive contacts of the
asset or activity to such fixed place of
business; and
(iii) the taxpayer uses such records
reflecting assignment of such assets or
activities for the filing of all state and
local tax returns for which an assignment
of such assets or activities to a fixed
place of business is required.
(E) The presumption of proper assignment

SB2126 - 46 - LRB102 15189 HLH 20544 b
of an investment or trading asset or activity
provided in subparagraph (D) of paragraph (2)
of this subsection may be rebutted upon a
showing by the Department, supported by a
preponderance of the evidence, that the
preponderance of substantive contacts
regarding such asset or activity did not occur
at the fixed place of business to which it was
assigned on the taxpayer's records. If the
fixed place of business that has a
preponderance of substantive contacts cannot
be determined for an investment or trading
asset or activity to which the presumption in
subparagraph (D) of paragraph (2) of this
subsection does not apply or with respect to
which that presumption has been rebutted, that
asset or activity is properly assigned to the
state in which the taxpayer's commercial
domicile is located. For purposes of this
subparagraph (E), it shall be presumed,
subject to rebuttal, that taxpayer's
commercial domicile is in the state of the
United States or the District of Columbia to
which the greatest number of employees are
regularly connected with the management of the
investment or trading income or out of which

SB2126 - 47 - LRB102 15189 HLH 20544 b
they are working, irrespective of where the
services of such employees are performed, as
of the last day of the taxable year.
(4) (Blank).
(5) (Blank).
(c-1) Federally regulated exchanges. For taxable years
ending on or after December 31, 2012, business income of a
federally regulated exchange shall, at the option of the
federally regulated exchange, be apportioned to this State by
multiplying such income by a fraction, the numerator of which
is its business income from sources within this State, and the
denominator of which is its business income from all sources.
For purposes of this subsection, the business income within
this State of a federally regulated exchange is the sum of the
following:
(1) Receipts attributable to transactions executed on
a physical trading floor if that physical trading floor is
located in this State.
(2) Receipts attributable to all other matching,
execution, or clearing transactions, including without
limitation receipts from the provision of matching,
execution, or clearing services to another entity,
multiplied by (i) for taxable years ending on or after
December 31, 2012 but before December 31, 2013, 63.77%;
and (ii) for taxable years ending on or after December 31,
2013, 27.54%.

SB2126 - 48 - LRB102 15189 HLH 20544 b
(3) All other receipts not governed by subparagraphs
(1) or (2) of this subsection (c-1), to the extent the
receipts would be characterized as "sales in this State"
under item (3) of subsection (a) of this Section.
"Federally regulated exchange" means (i) a "registered
entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B),
or (C), (ii) an "exchange" or "clearing agency" within the
meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such
entities regulated under any successor regulatory structure to
the foregoing, and (iv) all taxpayers who are members of the
same unitary business group as a federally regulated exchange,
determined without regard to the prohibition in Section
1501(a)(27) of this Act against including in a unitary
business group taxpayers who are ordinarily required to
apportion business income under different subsections of this
Section; provided that this subparagraph (iv) shall apply only
if 50% or more of the business receipts of the unitary business
group determined by application of this subparagraph (iv) for
the taxable year are attributable to the matching, execution,
or clearing of transactions conducted by an entity described
in subparagraph (i), (ii), or (iii) of this paragraph.
In no event shall the Illinois apportionment percentage
computed in accordance with this subsection (c-1) for any
taxpayer for any tax year be less than the Illinois
apportionment percentage computed under this subsection (c-1)
for that taxpayer for the first full tax year ending on or

SB2126 - 49 - LRB102 15189 HLH 20544 b
after December 31, 2013 for which this subsection (c-1)
applied to the taxpayer.
(d) Transportation services. For taxable years ending
before December 31, 2008, business income derived from
furnishing transportation services shall be apportioned to
this State in accordance with paragraphs (1) and (2):
(1) Such business income (other than that derived from
transportation by pipeline) shall be apportioned to this
State by multiplying such income by a fraction, the
numerator of which is the revenue miles of the person in
this State, and the denominator of which is the revenue
miles of the person everywhere. For purposes of this
paragraph, a revenue mile is the transportation of 1
passenger or 1 net ton of freight the distance of 1 mile
for a consideration. Where a person is engaged in the
transportation of both passengers and freight, the
fraction above referred to shall be determined by means of
an average of the passenger revenue mile fraction and the
freight revenue mile fraction, weighted to reflect the
person's
(A) relative railway operating income from total
passenger and total freight service, as reported to
the Interstate Commerce Commission, in the case of
transportation by railroad, and
(B) relative gross receipts from passenger and
freight transportation, in case of transportation

SB2126 - 50 - LRB102 15189 HLH 20544 b
other than by railroad.
(2) Such business income derived from transportation
by pipeline shall be apportioned to this State by
multiplying such income by a fraction, the numerator of
which is the revenue miles of the person in this State, and
the denominator of which is the revenue miles of the
person everywhere. For the purposes of this paragraph, a
revenue mile is the transportation by pipeline of 1 barrel
of oil, 1,000 cubic feet of gas, or of any specified
quantity of any other substance, the distance of 1 mile
for a consideration.
(3) For taxable years ending on or after December 31,
2008, business income derived from providing
transportation services other than airline services shall
be apportioned to this State by using a fraction, (a) the
numerator of which shall be (i) all receipts from any
movement or shipment of people, goods, mail, oil, gas, or
any other substance (other than by airline) that both
originates and terminates in this State, plus (ii) that
portion of the person's gross receipts from movements or
shipments of people, goods, mail, oil, gas, or any other
substance (other than by airline) that originates in one
state or jurisdiction and terminates in another state or
jurisdiction, that is determined by the ratio that the
miles traveled in this State bears to total miles
everywhere and (b) the denominator of which shall be all

SB2126 - 51 - LRB102 15189 HLH 20544 b
revenue derived from the movement or shipment of people,
goods, mail, oil, gas, or any other substance (other than
by airline). Where a taxpayer is engaged in the
transportation of both passengers and freight, the
fraction above referred to shall first be determined
separately for passenger miles and freight miles. Then an
average of the passenger miles fraction and the freight
miles fraction shall be weighted to reflect the
taxpayer's:
(A) relative railway operating income from total
passenger and total freight service, as reported to
the Surface Transportation Board, in the case of
transportation by railroad; and
(B) relative gross receipts from passenger and
freight transportation, in case of transportation
other than by railroad.
(4) For taxable years ending on or after December 31,
2008, business income derived from furnishing airline
transportation services shall be apportioned to this State
by multiplying such income by a fraction, the numerator of
which is the revenue miles of the person in this State, and
the denominator of which is the revenue miles of the
person everywhere. For purposes of this paragraph, a
revenue mile is the transportation of one passenger or one
net ton of freight the distance of one mile for a
consideration. If a person is engaged in the

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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
set forth in Section 304.1.
(f) Alternative allocation. If the allocation and
apportionment provisions of subsections (a) through (e) and of
subsection (h) do not, for taxable years ending before
December 31, 2008, fairly represent the extent of a person's
business activity in this State, or, for taxable years ending
on or after December 31, 2008, fairly represent the market for
the person's goods, services, or other sources of business
income, the person may petition for, or the Director may,
without a petition, permit or require, in respect of all or any
part of the person's business activity, if reasonable:
(1) Separate accounting;
(2) The exclusion of any one or more factors;
(3) The inclusion of one or more additional factors

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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, 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

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equal to zero.
(Source: P.A. 100-201, eff. 8-18-17; 101-31, eff. 6-28-19;
101-585, eff. 8-26-19; revised 9-12-19.)
(35 ILCS 5/304.1 new)
Sec. 304.1. Requirement to file a combined return; joint
and several liability.
(a) Except as otherwise provided, for taxable years
beginning on or after January 1, 2022, all the corporations,
wherever incorporated or domiciled, that are members of a
unitary business shall file a combined return as a combined
group. That return must include the income and apportionment
factors, and other information required by the Department for
all members of the combined group wherever located or doing
business. The combined return must be filed under the name and
federal employer identification number of the parent
corporation if the parent is a member of the combined group. If
there is no parent corporation, or if the parent is not a group
member, the members of the combined group shall choose a
member to file the return. The filing member must remain the
same in subsequent years unless the filing member is no longer
the parent corporation or is no longer a member of the combined
group. The return must be signed by a responsible officer of
the filing member on behalf of the combined group members.
Members of the combined group are jointly and severally liable
for the tax liability of the combined group included in the

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combined return.
(b) The Department, by rule, may require that the combined
return include the income and associated apportionment factors
of persons that are not included pursuant to subsection (a),
but that are members of a unitary business, in order to reflect
proper apportionment of income of the entire unitary business.
Authority to require combination by rule under this subsection
(b) includes authority to require combination of the income
and associated apportionment factors of persons that are not
subject to the Illinois Income Tax Act or would not be subject
to the Illinois Income Tax Act if doing business in this State.
(c) In addition, if the Department determines that the
reported income or loss of a taxpayer engaged in a unitary
business with a person not included pursuant to subsection (a)
or pursuant to an election under subsection (e) represents an
avoidance or evasion of tax by such taxpayer, the Department
may, on a case by case basis, require all or part of the income
and associated apportionment factors of such person be
included in the taxpayer's combined return.
(d) With respect to inclusion of associated apportionment
factors pursuant to this Section, the Department may require
the exclusion of one or more of the factors, the inclusion of
one or more additional factors that will fairly represent the
taxpayer's business activity in this State, or the employment
of any other method to effectuate a proper reflection of the
total amount of income subject to apportionment and an

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equitable allocation and apportionment of the taxpayer's
income.
(e) Water's-edge election; initiation and withdrawal.
Members of a unitary group that meet the requirements of
this subsection may elect to file as a combined group pursuant
to a water's-edge election. Under such election, the combined
group takes into account all or a portion of the income and
apportionment factors of only the following members:
(1) the entire income and apportionment factors of a
member incorporated in the United States or formed under
the laws of any state, the District of Columbia, or any
territory or possession of the United States;
(2) the entire income and apportionment factors of a
member, regardless of the place incorporated or formed, if
the average of its property, payroll, and receipts factors
within the United States is 20% or more;
(3) the entire income and apportionment factors of a
member which is a domestic international sales
corporations as described in Internal Revenue Code
Sections 991 to 994, inclusive; a foreign sales
corporation as described in Internal Revenue Code Sections
921 to 927, inclusive; or a member which is an export trade
corporation, as described in Internal Revenue Code
Sections 970 to 971, inclusive;
(4) for a member not described in paragraphs (1)
through (3), include the portion of its income derived

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from or attributable to sources within the United States,
as determined under the Internal Revenue Code without
regard to federal treaties, and its apportionment factors
related thereto;
(5) for a member that is a "controlled foreign
corporation," as defined in Internal Revenue Code Section
957, include income to the extent of the income of that
member that is defined in Section 952 of Subpart F of the
Internal Revenue Code ("Subpart F income") not excluding
lower-tier subsidiaries' distributions of such income
which were previously taxed, determined without regard to
federal treaties, and the apportionment factors related to
that income; any item of income received by a controlled
foreign corporation is excluded if such income was subject
to an effective rate of income tax imposed by a foreign
country greater than 90% of the maximum rate of tax
specified in Internal Revenue Code Section 11;
(6) for a member that earns more than 20% of its
income, directly or indirectly, from intangible property
or service related activities that are deductible against
the apportionable income of other members of the combined
group, include the related income and the apportionment
factors; and
(7) the entire income and apportionment factors of a
member that is doing business in a tax haven, where "doing
business in a tax haven" is defined as being engaged in

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activity sufficient for that tax haven jurisdiction to
impose a tax under United States constitutional standards.
If the member's business activity within a tax haven is
entirely outside the scope of the laws, provisions and
practices that cause the jurisdiction to meet the criteria
of a tax haven, the activity of the member shall be treated
as not having been conducted in a tax haven.
A water's-edge election is effective only if made on a
timely-filed, original return for a tax year by the members of
the unitary business. The Department shall adopt rules
governing the impact, if any, on the scope or application of a
water's-edge election, including the procedures for election
and termination or deemed election, resulting from a change in
the composition of the unitary group, the combined group, the
members, and any other similar change.
In the discretion of the Department, a water's-edge
election may be disregarded in part or in whole, and the income
and apportionment factors of any member of the unitary group
may be included in the combined report without regard to the
provisions of this Section, if any member of the unitary group
fails to comply with any provision of this Act or if a person
otherwise not included in the water's-edge combined group was
availed of with a substantial objective of avoiding state
income tax.
A water's edge election has no effect on whether entities
that are excluded from the water's edge combined group may be

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separately liable for tax under this Act. Those entities must
separately file and pay tax in the State, if applicable.
(35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
Sec. 1501. Definitions.
(a) In general. When used in this Act, where not otherwise
distinctly expressed or manifestly incompatible with the
intent thereof:
(1) Business income. The term "business income" means
all income that may be treated as apportionable business
income under the Constitution of the United States.
Business income is net of the deductions allocable
thereto. Such term does not include compensation or the
deductions allocable thereto. For each taxable year
beginning on or after January 1, 2003, a taxpayer may
elect to treat all income other than compensation as
business income. This election shall be made in accordance
with rules adopted by the Department and, once made, shall
be irrevocable.
(1.5) Captive real estate investment trust:
(A) The term "captive real estate investment
trust" means a corporation, trust, or association:
(i) that is considered a real estate
investment trust for the taxable year under
Section 856 of the Internal Revenue Code;
(ii) the certificates of beneficial interest

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or shares of which are not regularly traded on an
established securities market; and
(iii) of which more than 50% of the voting
power or value of the beneficial interest or
shares, at any time during the last half of the
taxable year, is owned or controlled, directly,
indirectly, or constructively, by a single
corporation.
(B) The term "captive real estate investment
trust" does not include:
(i) a real estate investment trust of which
more than 50% of the voting power or value of the
beneficial interest or shares is owned or
controlled, directly, indirectly, or
constructively, by:
(a) a real estate investment trust, other
than a captive real estate investment trust;
(b) a person who is exempt from taxation
under Section 501 of the Internal Revenue
Code, and who is not required to treat income
received from the real estate investment trust
as unrelated business taxable income under
Section 512 of the Internal Revenue Code;
(c) a listed Australian property trust, if
no more than 50% of the voting power or value
of the beneficial interest or shares of that

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trust, at any time during the last half of the
taxable year, is owned or controlled, directly
or indirectly, by a single person;
(d) an entity organized as a trust,
provided a listed Australian property trust
described in subparagraph (c) owns or
controls, directly or indirectly, or
constructively, 75% or more of the voting
power or value of the beneficial interests or
shares of such entity; or
(e) an entity that is organized outside of
the laws of the United States and that
satisfies all of the following criteria:
(1) at least 75% of the entity's total
asset value at the close of its taxable
year is represented by real estate assets
(as defined in Section 856(c)(5)(B) of the
Internal Revenue Code, thereby including
shares or certificates of beneficial
interest in any real estate investment
trust), cash and cash equivalents, and
U.S. Government securities;
(2) the entity is not subject to tax
on amounts that are distributed to its
beneficial owners or is exempt from
entity-level taxation;

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(3) the entity distributes at least
85% of its taxable income (as computed in
the jurisdiction in which it is organized)
to the holders of its shares or
certificates of beneficial interest on an
annual basis;
(4) either (i) the shares or
beneficial interests of the entity are
regularly traded on an established
securities market or (ii) not more than
10% of the voting power or value in the
entity is held, directly, indirectly, or
constructively, by a single entity or
individual; and
(5) the entity is organized in a
country that has entered into a tax treaty
with the United States; or
(ii) during its first taxable year for which
it elects to be treated as a real estate
investment trust under Section 856(c)(1) of the
Internal Revenue Code, a real estate investment
trust the certificates of beneficial interest or
shares of which are not regularly traded on an
established securities market, but only if the
certificates of beneficial interest or shares of
the real estate investment trust are regularly

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traded on an established securities market prior
to the earlier of the due date (including
extensions) for filing its return under this Act
for that first taxable year or the date it
actually files that return.
(C) For the purposes of this subsection (1.5), the
constructive ownership rules prescribed under Section
318(a) of the Internal Revenue Code, as modified by
Section 856(d)(5) of the Internal Revenue Code, apply
in determining the ownership of stock, assets, or net
profits of any person.
(D) For the purposes of this item (1.5), for
taxable years ending on or after August 16, 2007, the
voting power or value of the beneficial interest or
shares of a real estate investment trust does not
include any voting power or value of beneficial
interest or shares in a real estate investment trust
held directly or indirectly in a segregated asset
account by a life insurance company (as described in
Section 817 of the Internal Revenue Code) to the
extent such voting power or value is for the benefit of
entities or persons who are either immune from
taxation or exempt from taxation under subtitle A of
the Internal Revenue Code.
(2) Commercial domicile. The term "commercial
domicile" means the principal place from which the trade

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or business of the taxpayer is directed or managed.
(3) Compensation. The term "compensation" means wages,
salaries, commissions and any other form of remuneration
paid to employees for personal services.
(4) Corporation. The term "corporation" includes
associations, joint-stock companies, insurance companies
and cooperatives. Any entity, including a limited
liability company formed under the Illinois Limited
Liability Company Act, shall be treated as a corporation
if it is so classified for federal income tax purposes.
(5) Department. The term "Department" means the
Department of Revenue of this State.
(6) Director. The term "Director" means the Director
of Revenue of this State.
(7) Fiduciary. The term "fiduciary" means a guardian,
trustee, executor, administrator, receiver, or any person
acting in any fiduciary capacity for any person.
(8) Financial organization.
(A) The term "financial organization" means any
bank, bank holding company, trust company, savings
bank, industrial bank, land bank, safe deposit
company, private banker, savings and loan association,
building and loan association, credit union, currency
exchange, cooperative bank, small loan company, sales
finance company, investment company, or any person
which is owned by a bank or bank holding company. For

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the purpose of this Section a "person" will include
only those persons which a bank holding company may
acquire and hold an interest in, directly or
indirectly, under the provisions of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841, et seq.), except
where interests in any person must be disposed of
within certain required time limits under the Bank
Holding Company Act of 1956.
(B) For purposes of subparagraph (A) of this
paragraph, the term "bank" includes (i) any entity
that is regulated by the Comptroller of the Currency
under the National Bank Act, or by the Federal Reserve
Board, or by the Federal Deposit Insurance Corporation
and (ii) any federally or State chartered bank
operating as a credit card bank.
(C) For purposes of subparagraph (A) of this
paragraph, the term "sales finance company" has the
meaning provided in the following item (i) or (ii):
(i) A person primarily engaged in one or more
of the following businesses: the business of
purchasing customer receivables, the business of
making loans upon the security of customer
receivables, the business of making loans for the
express purpose of funding purchases of tangible
personal property or services by the borrower, or
the business of finance leasing. For purposes of

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this item (i), "customer receivable" means:
(a) a retail installment contract or
retail charge agreement within the meaning of
the Sales Finance Agency Act, the Retail
Installment Sales Act, or the Motor Vehicle
Retail Installment Sales Act;
(b) an installment, charge, credit, or
similar contract or agreement arising from the
sale of tangible personal property or services
in a transaction involving a deferred payment
price payable in one or more installments
subsequent to the sale; or
(c) the outstanding balance of a contract
or agreement described in provisions (a) or
(b) of this item (i).
A customer receivable need not provide for
payment of interest on deferred payments. A sales
finance company may purchase a customer receivable
from, or make a loan secured by a customer
receivable to, the seller in the original
transaction or to a person who purchased the
customer receivable directly or indirectly from
that seller.
(ii) A corporation meeting each of the
following criteria:
(a) the corporation must be a member of an

SB2126 - 67 - LRB102 15189 HLH 20544 b
"affiliated group" within the meaning of
Section 1504(a) of the Internal Revenue Code,
determined without regard to Section 1504(b)
of the Internal Revenue Code;
(b) more than 50% of the gross income of
the corporation for the taxable year must be
interest income derived from qualifying loans.
A "qualifying loan" is a loan made to a member
of the corporation's affiliated group that
originates customer receivables (within the
meaning of item (i)) or to whom customer
receivables originated by a member of the
affiliated group have been transferred, to the
extent the average outstanding balance of
loans from that corporation to members of its
affiliated group during the taxable year do
not exceed the limitation amount for that
corporation. The "limitation amount" for a
corporation is the average outstanding
balances during the taxable year of customer
receivables (within the meaning of item (i))
originated by all members of the affiliated
group. If the average outstanding balances of
the loans made by a corporation to members of
its affiliated group exceed the limitation
amount, the interest income of that

SB2126 - 68 - LRB102 15189 HLH 20544 b
corporation from qualifying loans shall be
equal to its interest income from loans to
members of its affiliated groups times a
fraction equal to the limitation amount
divided by the average outstanding balances of
the loans made by that corporation to members
of its affiliated group;
(c) the total of all shareholder's equity
(including, without limitation, paid-in
capital on common and preferred stock and
retained earnings) of the corporation plus the
total of all of its loans, advances, and other
obligations payable or owed to members of its
affiliated group may not exceed 20% of the
total assets of the corporation at any time
during the tax year; and
(d) more than 50% of all interest-bearing
obligations of the affiliated group payable to
persons outside the group determined in
accordance with generally accepted accounting
principles must be obligations of the
corporation.
This amendatory Act of the 91st General Assembly
is declaratory of existing law.
(D) Subparagraphs (B) and (C) of this paragraph
are declaratory of existing law and apply

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retroactively, for all tax years beginning on or
before December 31, 1996, to all original returns, to
all amended returns filed no later than 30 days after
the effective date of this amendatory Act of 1996, and
to all notices issued on or before the effective date
of this amendatory Act of 1996 under subsection (a) of
Section 903, subsection (a) of Section 904, subsection
(e) of Section 909, or Section 912. A taxpayer that is
a "financial organization" that engages in any
transaction with an affiliate shall be a "financial
organization" for all purposes of this Act.
(E) For all tax years beginning on or before
December 31, 1996, a taxpayer that falls within the
definition of a "financial organization" under
subparagraphs (B) or (C) of this paragraph, but who
does not fall within the definition of a "financial
organization" under the Proposed Regulations issued by
the Department of Revenue on July 19, 1996, may
irrevocably elect to apply the Proposed Regulations
for all of those years as though the Proposed
Regulations had been lawfully promulgated, adopted,
and in effect for all of those years. For purposes of
applying subparagraphs (B) or (C) of this paragraph to
all of those years, the election allowed by this
subparagraph applies only to the taxpayer making the
election and to those members of the taxpayer's

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unitary business group who are ordinarily required to
apportion business income under the same subsection of
Section 304 of this Act as the taxpayer making the
election. No election allowed by this subparagraph
shall be made under a claim filed under subsection (d)
of Section 909 more than 30 days after the effective
date of this amendatory Act of 1996.
(F) Finance Leases. For purposes of this
subsection, a finance lease shall be treated as a loan
or other extension of credit, rather than as a lease,
regardless of how the transaction is characterized for
any other purpose, including the purposes of any
regulatory agency to which the lessor is subject. A
finance lease is any transaction in the form of a lease
in which the lessee is treated as the owner of the
leased asset entitled to any deduction for
depreciation allowed under Section 167 of the Internal
Revenue Code.
(9) Fiscal year. The term "fiscal year" means an
accounting period of 12 months ending on the last day of
any month other than December.
(9.5) Fixed place of business. The term "fixed place
of business" has the same meaning as that term is given in
Section 864 of the Internal Revenue Code and the related
Treasury regulations.
(10) Includes and including. The terms "includes" and

SB2126 - 71 - LRB102 15189 HLH 20544 b
"including" when used in a definition contained in this
Act shall not be deemed to exclude other things otherwise
within the meaning of the term defined.
(11) Internal Revenue Code. The term "Internal Revenue
Code" means the United States Internal Revenue Code of
1954 or any successor law or laws relating to federal
income taxes in effect for the taxable year.
(11.5) Investment partnership.
(A) The term "investment partnership" means any
entity that is treated as a partnership for federal
income tax purposes that meets the following
requirements:
(i) no less than 90% of the partnership's cost
of its total assets consists of qualifying
investment securities, deposits at banks or other
financial institutions, and office space and
equipment reasonably necessary to carry on its
activities as an investment partnership;
(ii) no less than 90% of its gross income
consists of interest, dividends, and gains from
the sale or exchange of qualifying investment
securities; and
(iii) the partnership is not a dealer in
qualifying investment securities.
(B) For purposes of this paragraph (11.5), the
term "qualifying investment securities" includes all

SB2126 - 72 - LRB102 15189 HLH 20544 b
of the following:
(i) common stock, including preferred or debt
securities convertible into common stock, and
preferred stock;
(ii) bonds, debentures, and other debt
securities;
(iii) foreign and domestic currency deposits
secured by federal, state, or local governmental
agencies;
(iv) mortgage or asset-backed securities
secured by federal, state, or local governmental
agencies;
(v) repurchase agreements and loan
participations;
(vi) foreign currency exchange contracts and
forward and futures contracts on foreign
currencies;
(vii) stock and bond index securities and
futures contracts and other similar financial
securities and futures contracts on those
securities;
(viii) options for the purchase or sale of any
of the securities, currencies, contracts, or
financial instruments described in items (i) to
(vii), inclusive;
(ix) regulated futures contracts;

SB2126 - 73 - LRB102 15189 HLH 20544 b
(x) commodities (not described in Section
1221(a)(1) of the Internal Revenue Code) or
futures, forwards, and options with respect to
such commodities, provided, however, that any item
of a physical commodity to which title is actually
acquired in the partnership's capacity as a dealer
in such commodity shall not be a qualifying
investment security;
(xi) derivatives; and
(xii) a partnership interest in another
partnership that is an investment partnership.
(12) Mathematical error. The term "mathematical error"
includes the following types of errors, omissions, or
defects in a return filed by a taxpayer which prevents
acceptance of the return as filed for processing:
(A) arithmetic errors or incorrect computations on
the return or supporting schedules;
(B) entries on the wrong lines;
(C) omission of required supporting forms or
schedules or the omission of the information in whole
or in part called for thereon; and
(D) an attempt to claim, exclude, deduct, or
improperly report, in a manner directly contrary to
the provisions of the Act and regulations thereunder
any item of income, exemption, deduction, or credit.
(13) Nonbusiness income. The term "nonbusiness income"

SB2126 - 74 - LRB102 15189 HLH 20544 b
means all income other than business income or
compensation.
(14) Nonresident. The term "nonresident" means a
person who is not a resident.
(15) Paid, incurred and accrued. The terms "paid",
"incurred" and "accrued" shall be construed according to
the method of accounting upon the basis of which the
person's base income is computed under this Act.
(16) Partnership and partner. The term "partnership"
includes a syndicate, group, pool, joint venture or other
unincorporated organization, through or by means of which
any business, financial operation, or venture is carried
on, and which is not, within the meaning of this Act, a
trust or estate or a corporation; and the term "partner"
includes a member in such syndicate, group, pool, joint
venture or organization.
The term "partnership" includes any entity, including
a limited liability company formed under the Illinois
Limited Liability Company Act, classified as a partnership
for federal income tax purposes.
The term "partnership" does not include a syndicate,
group, pool, joint venture, or other unincorporated
organization established for the sole purpose of playing
the Illinois State Lottery.
(17) Part-year resident. The term "part-year resident"
means an individual who became a resident during the

SB2126 - 75 - LRB102 15189 HLH 20544 b
taxable year or ceased to be a resident during the taxable
year. Under Section 1501(a)(20)(A)(i) residence commences
with presence in this State for other than a temporary or
transitory purpose and ceases with absence from this State
for other than a temporary or transitory purpose. Under
Section 1501(a)(20)(A)(ii) residence commences with the
establishment of domicile in this State and ceases with
the establishment of domicile in another State.
(18) Person. The term "person" shall be construed to
mean and include an individual, a trust, estate,
partnership, association, firm, company, corporation,
limited liability company, or fiduciary. For purposes of
Section 1301 and 1302 of this Act, a "person" means (i) an
individual, (ii) a corporation, (iii) an officer, agent,
or employee of a corporation, (iv) a member, agent or
employee of a partnership, or (v) a member, manager,
employee, officer, director, or agent of a limited
liability company who in such capacity commits an offense
specified in Section 1301 and 1302.
(18A) Records. The term "records" includes all data
maintained by the taxpayer, whether on paper, microfilm,
microfiche, or any type of machine-sensible data
compilation.
(19) Regulations. The term "regulations" includes
rules promulgated and forms prescribed by the Department.
(20) Resident. The term "resident" means:

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(A) an individual (i) who is in this State for
other than a temporary or transitory purpose during
the taxable year; or (ii) who is domiciled in this
State but is absent from the State for a temporary or
transitory purpose during the taxable year;
(B) The estate of a decedent who at his or her
death was domiciled in this State;
(C) A trust created by a will of a decedent who at
his death was domiciled in this State; and
(D) An irrevocable trust, the grantor of which was
domiciled in this State at the time such trust became
irrevocable. For purpose of this subparagraph, a trust
shall be considered irrevocable to the extent that the
grantor is not treated as the owner thereof under
Sections 671 through 678 of the Internal Revenue Code.
(21) Sales. The term "sales" means all gross receipts
of the taxpayer not allocated under Sections 301, 302 and
303.
(22) State. The term "state" when applied to a
jurisdiction other than this State means any state of the
United States, the District of Columbia, the Commonwealth
of Puerto Rico, any Territory or Possession of the United
States, and any foreign country, or any political
subdivision of any of the foregoing. For purposes of the
foreign tax credit under Section 601, the term "state"
means any state of the United States, the District of

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Columbia, the Commonwealth of Puerto Rico, and any
territory or possession of the United States, or any
political subdivision of any of the foregoing, effective
for tax years ending on or after December 31, 1989.
(23) Taxable year. The term "taxable year" means the
calendar year, or the fiscal year ending during such
calendar year, upon the basis of which the base income is
computed under this Act. "Taxable year" means, in the case
of a return made for a fractional part of a year under the
provisions of this Act, the period for which such return
is made.
(24) Taxpayer. The term "taxpayer" means any person
subject to the tax imposed by this Act.
(25) International banking facility. The term
international banking facility shall have the same meaning
as is set forth in the Illinois Banking Act or as is set
forth in the laws of the United States or regulations of
the Board of Governors of the Federal Reserve System.
(26) Income Tax Return Preparer.
(A) The term "income tax return preparer" means
any person who prepares for compensation, or who
employs one or more persons to prepare for
compensation, any return of tax imposed by this Act or
any claim for refund of tax imposed by this Act. The
preparation of a substantial portion of a return or
claim for refund shall be treated as the preparation

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of that return or claim for refund.
(B) A person is not an income tax return preparer
if all he or she does is
(i) furnish typing, reproducing, or other
mechanical assistance;
(ii) prepare returns or claims for refunds for
the employer by whom he or she is regularly and
continuously employed;
(iii) prepare as a fiduciary returns or claims
for refunds for any person; or
(iv) prepare claims for refunds for a taxpayer
in response to any notice of deficiency issued to
that taxpayer or in response to any waiver of
restriction after the commencement of an audit of
that taxpayer or of another taxpayer if a
determination in the audit of the other taxpayer
directly or indirectly affects the tax liability
of the taxpayer whose claims he or she is
preparing.
(26.5) Unitary business. "Unitary business" means a
single economic enterprise made up either of separate
parts of a single business entity or of a commonly
controlled group of business entities that are
sufficiently interdependent, integrated, and interrelated
through their activities so as to provide a synergy and
mutual benefit that produces a sharing or exchange of

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value among them and a significant flow of value to the
separate parts. A unitary business includes that part of
the business that meets the definition in this paragraph
(26.5) and is conducted by a taxpayer through the
taxpayer's interest in a partnership, whether the interest
in that partnership is held directly or indirectly through
a series of partnerships or other pass-through entities.
(27) Unitary business group.
(A) The term "unitary business group" means a
group of persons related through common ownership
whose business activities are integrated with,
dependent upon and contribute to each other. The group
will not include those members whose business activity
outside the United States is 80% or more of any such
member's total business activity; for purposes of this
paragraph and clause (a)(3)(B)(ii) of Section 304,
business activity within the United States shall be
measured by means of the factors ordinarily applicable
under subsections (a), (b), (c), (d), or (h) of
Section 304 except that, in the case of members
ordinarily required to apportion business income by
means of the 3 factor formula of property, payroll and
sales specified in subsection (a) of Section 304,
including the formula as weighted in subsection (h) of
Section 304, such members shall not use the sales
factor in the computation and the results of the

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property and payroll factor computations of subsection
(a) of Section 304 shall be divided by 2 (by one if
either the property or payroll factor has a
denominator of zero). The computation required by the
preceding sentence shall, in each case, involve the
division of the member's property, payroll, or revenue
miles in the United States, insurance premiums on
property or risk in the United States, or financial
organization business income from sources within the
United States, as the case may be, by the respective
worldwide figures for such items. Common ownership in
the case of corporations is the direct or indirect
control or ownership of more than 50% of the
outstanding voting stock of the persons carrying on
unitary business activity. Unitary business activity
can ordinarily be illustrated where the activities of
the members are: (1) in the same general line (such as
manufacturing, wholesaling, retailing of tangible
personal property, insurance, transportation or
finance); or (2) are steps in a vertically structured
enterprise or process (such as the steps involved in
the production of natural resources, which might
include exploration, mining, refining, and marketing);
and, in either instance, the members are functionally
integrated through the exercise of strong centralized
management (where, for example, authority over such

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matters as purchasing, financing, tax compliance,
product line, personnel, marketing and capital
investment is not left to each member).
(B) In no event, for taxable years ending prior to
December 31, 2017, shall any unitary business group
include members which are ordinarily required to
apportion business income under different subsections
of Section 304 except that for tax years ending on or
after December 31, 1987 this prohibition shall not
apply to a holding company that would otherwise be a
member of a unitary business group with taxpayers that
apportion business income under any of subsections
(b), (c), (c-1), or (d) of Section 304. If a unitary
business group would, but for the preceding sentence,
include members that are ordinarily required to
apportion business income under different subsections
of Section 304, then for each subsection of Section
304 for which there are two or more members, there
shall be a separate unitary business group composed of
such members. For purposes of the preceding two
sentences, a member is "ordinarily required to
apportion business income" under a particular
subsection of Section 304 if it would be required to
use the apportionment method prescribed by such
subsection except for the fact that it derives
business income solely from Illinois. As used in this

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paragraph, for taxable years ending before December
31, 2017, the phrase "United States" means only the 50
states and the District of Columbia, but does not
include any territory or possession of the United
States or any area over which the United States has
asserted jurisdiction or claimed exclusive rights with
respect to the exploration for or exploitation of
natural resources. For taxable years ending on or
after December 31, 2017 and beginning prior to January
1, 2022, the phrase "United States", as used in this
paragraph, means only the 50 states, the District of
Columbia, and any area over which the United States
has asserted jurisdiction or claimed exclusive rights
with respect to the exploration for or exploitation of
natural resources, but does not include any territory
or possession of the United States. For taxable years
beginning on or after January 1, 2022, "United States"
means the 50 states of the United States, the District
of Columbia, and United States' territories and
possessions.
(C) Holding companies.
(i) For purposes of this subparagraph, a
"holding company" is a corporation (other than a
corporation that is a financial organization under
paragraph (8) of this subsection (a) of Section
1501 because it is a bank holding company under

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the provisions of the Bank Holding Company Act of
1956 (12 U.S.C. 1841, et seq.) or because it is
owned by a bank or a bank holding company) that
owns a controlling interest in one or more other
taxpayers ("controlled taxpayers"); that, during
the period that includes the taxable year and the
2 immediately preceding taxable years or, if the
corporation was formed during the current or
immediately preceding taxable year, the taxable
years in which the corporation has been in
existence, derived substantially all its gross
income from dividends, interest, rents, royalties,
fees or other charges received from controlled
taxpayers for the provision of services, and gains
on the sale or other disposition of interests in
controlled taxpayers or in property leased or
licensed to controlled taxpayers or used by the
taxpayer in providing services to controlled
taxpayers; and that incurs no substantial expenses
other than expenses (including interest and other
costs of borrowing) incurred in connection with
the acquisition and holding of interests in
controlled taxpayers and in the provision of
services to controlled taxpayers or in the leasing
or licensing of property to controlled taxpayers.
(ii) The income of a holding company which is

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a member of more than one unitary business group
shall be included in each unitary business group
of which it is a member on a pro rata basis, by
including in each unitary business group that
portion of the base income of the holding company
that bears the same proportion to the total base
income of the holding company as the gross
receipts of the unitary business group bears to
the combined gross receipts of all unitary
business groups (in both cases without regard to
the holding company) or on any other reasonable
basis, consistently applied.
(iii) A holding company shall apportion its
business income under the subsection of Section
304 used by the other members of its unitary
business group. The apportionment factors of a
holding company which would be a member of more
than one unitary business group shall be included
with the apportionment factors of each unitary
business group of which it is a member on a pro
rata basis using the same method used in clause
(ii).
(iv) The provisions of this subparagraph (C)
are intended to clarify existing law.
(D) If including the base income and factors of a
holding company in more than one unitary business

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group under subparagraph (C) does not fairly reflect
the degree of integration between the holding company
and one or more of the unitary business groups, the
dependence of the holding company and one or more of
the unitary business groups upon each other, or the
contributions between the holding company and one or
more of the unitary business groups, the holding
company may petition the Director, under the
procedures provided under Section 304(f), for
permission to include all base income and factors of
the holding company only with members of a unitary
business group apportioning their business income
under one subsection of subsections (a), (b), (c), or
(d) of Section 304. If the petition is granted, the
holding company shall be included in a unitary
business group only with persons apportioning their
business income under the selected subsection of
Section 304 until the Director grants a petition of
the holding company either to be included in more than
one unitary business group under subparagraph (C) or
to include its base income and factors only with
members of a unitary business group apportioning their
business income under a different subsection of
Section 304.
(E) If the unitary business group members'
accounting periods differ, the common parent's

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accounting period or, if there is no common parent,
the accounting period of the member that is expected
to have, on a recurring basis, the greatest Illinois
income tax liability must be used to determine whether
to use the apportionment method provided in subsection
(a) or subsection (h) of Section 304. The prohibition
against membership in a unitary business group for
taxpayers ordinarily required to apportion income
under different subsections of Section 304 does not
apply to taxpayers required to apportion income under
subsection (a) and subsection (h) of Section 304. The
provisions of this amendatory Act of 1998 apply to tax
years ending on or after December 31, 1998.
(28) Subchapter S corporation. The term "Subchapter S
corporation" means a corporation for which there is in
effect an election under Section 1362 of the Internal
Revenue Code, or for which there is 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.
(28.1) Tax haven. The term "tax haven" means a
jurisdiction that, during the tax year in question, has no
or nominal effective tax on the relevant income and:
(A) has laws or practices that prevent effective
exchange of information for tax purposes with other
governments on taxpayers benefiting from the tax

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regime;
(B) has a tax regime that lacks transparency; a
tax regime lacks transparency if the details of
legislative, legal, or administrative provisions are
not open and apparent or are not consistently applied
among similarly situated taxpayers, or if the
information needed by tax authorities to determine a
taxpayer's correct tax liability, such as accounting
records and underlying documentation, is not
adequately available;
(C) facilitates the establishment of foreign-owned
entities without the need for a local substantive
presence or prohibits these entities from having any
commercial impact on the local economy;
(D) explicitly or implicitly excludes the
jurisdiction's resident taxpayers from taking
advantage of the tax regime's benefits or prohibits
enterprises that benefit from the regime from
operating in the jurisdiction's domestic market; or
(E) has created a tax regime that is favorable for
tax avoidance, based upon an overall assessment of
relevant factors, including whether the jurisdiction
has a significant untaxed offshore financial or other
services sector relative to its overall economy.
(30) Foreign person. The term "foreign person" means
any person who is a nonresident alien individual and any

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nonindividual entity, regardless of where created or
organized, whose business activity outside the United
States is 80% or more of the entity's total business
activity.
(b) Other definitions.
(1) Words denoting number, gender, and so forth, when
used in this Act, where not otherwise distinctly expressed
or manifestly incompatible with the intent thereof:
(A) Words importing the singular include and apply
to several persons, parties or things;
(B) Words importing the plural include the
singular; and
(C) Words importing the masculine gender include
the feminine as well.
(2) "Company" or "association" as including successors
and assigns. The word "company" or "association", when
used in reference to a corporation, shall be deemed to
embrace the words "successors and assigns of such company
or association", and in like manner as if these last-named
words, or words of similar import, were expressed.
(3) Other terms. Any term used in any Section of this
Act with respect to the application of, or in connection
with, the provisions of any other Section of this Act
shall have the same meaning as in such other Section.
(Source: P.A. 99-213, eff. 7-31-15; 100-22, eff. 7-6-17.)