Bill Text: IL SB2505 | 2009-2010 | 96th General Assembly | Enrolled

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Bill Title: Amends the Property Tax Code. Provides that municipalities and counties may establish green energy special service areas. Provides that those green energy special service areas shall include only property for which each owner of record has executed a contract or agreement with the county or municipality consenting to the inclusion of the property within the green energy special service area. Provides that green energy special service areas are not subject to certain notice and hearing requirements set forth in the Property Tax Code. Provides that the owner of record of each parcel of property within a green energy special service area may arrange, through an agreement with the municipality or county, for specific energy efficiency improvements or renewable energy improvements and may obtain financing for such improvements through the process set forth in the ordinance establishing the special service area. Provides that counties and municipalities may levy property taxes in connection with green energy special service areas. Provides that counties and municipalities may issue bonds in connection with those special service area projects and may sell, assign, or pledge those bonds to the Illinois Finance Authority. Amends the Illinois Finance Authority Act to make conforming changes. Contains other provisions.

Spectrum: Partisan Bill (Democrat 16-0)

Status: (Passed) 2011-01-13 - Public Act . . . . . . . . . 96-1496 [SB2505 Detail]

Download: Illinois-2009-SB2505-Enrolled.html

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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. This Act shall be known as the Taxpayer
Accountability and Budget Stabilization Act.
Section 5. The Secretary of State Act is amended by
changing Section 5 as follows:
(15 ILCS 305/5) (from Ch. 124, par. 5)
Sec. 5. It shall be the duty of the Secretary of State:
1. To countersign and affix the seal of state to all
commissions required by law to be issued by the Governor.
2. To make a register of all appointments by the Governor,
specifying the person appointed, the office conferred, the date
of the appointment, the date when bond or oath is taken and the
date filed. If Senate confirmation is required, the date of the
confirmation shall be included in the register.
3. To make proper indexes to public acts, resolutions,
papers and documents in his office.
3-a. To review all rules of all State agencies adopted in
compliance with the codification system prescribed by the
Secretary. The review shall be for the purposes and include all
the powers and duties provided in the Illinois Administrative

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Procedure Act. The Secretary of State shall cooperate with the
Legislative Information System to insure the accuracy of the
text of the rules maintained under the Legislative Information
System Act.
4. To give any person requiring the same paying the lawful
fees therefor, a copy of any law, act, resolution, record or
paper in his office, and attach thereto his certificate, under
the seal of the state.
5. To take charge of and preserve from waste, and keep in
repair, the houses, lots, grounds and appurtenances, situated
in the City of Springfield, and belonging to or occupied by the
State, the care of which is not otherwise provided for by law,
and to take charge of and preserve from waste, and keep in
repair, the houses, lots, grounds and appurtenances, situated
in the State outside the City of Springfield where such houses,
lots, grounds and appurtenances are occupied by the Secretary
of State and no other State officer or agency.
6. To supervise the distribution of the laws.
7. To perform such other duties as may be required by law.
The Secretary of State may, within appropriations authorized by
the General Assembly, maintain offices in the State Capital and
in such other places in the State as he may deem necessary to
properly carry out the powers and duties vested in him by law.
8. In addition to all other authority granted to the
Secretary by law, subject to appropriation, to make grants or
otherwise provide assistance to, among others without

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limitation, units of local government, school districts,
educational institutions, private agencies, not-for-profit
organizations, and for-profit entities for the health, safety,
and welfare of Illinois residents for purposes related to
education, transportation, construction, capital improvements,
social services, and any other lawful public purpose. Upon
request of the Secretary, all State agencies are mandated to
provide the Secretary with assistance in administering the
grants.
9. To notify the Auditor General of any Public Act filed
with the Office of the Secretary of State making an
appropriation or transfer of funds from the State treasury.
This paragraph (9) applies only through June 30, 2015.
(Source: P.A. 96-37, eff. 7-13-09.)
Section 10. The Illinois State Auditing Act is amended by
adding Section 3-20 as follows:
(30 ILCS 5/3-20 new)
Sec. 3-20. Spending limitation reports. The Auditor
General shall issue reports in accordance with Section 201.5 of
the Illinois Income Tax Act. This Section applies through June
30, 2015 or the effective date of a reduction in the rate of
tax imposed by subsections (a) and (b) of Section 201 of the
Illinois Income Tax Act pursuant to Section 201.5 of the
Illinois Income Tax Act, whichever is earlier.

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Section 15. The State Finance Act is amended by adding
Sections 5.786, 5.787, 6z-85, 6z-86, and 25.2 as follows:
(30 ILCS 105/5.786 new)
Sec. 5.786. The Fund for the Advancement of Education.
(30 ILCS 105/5.787 new)
Sec. 5.787. The Commitment to Human Services Fund.
(30 ILCS 105/6z-85 new)
Sec. 6z-85. The Fund for the Advancement of Education;
creation. The Fund for the Advancement of Education is hereby
created as a special fund in the State treasury. All moneys
deposited into the fund shall be appropriated to provide
financial assistance for education programs. Moneys
appropriated from the Fund shall supplement and not supplant
the current level of education funding.
(30 ILCS 105/6z-86 new)
Sec. 6z-86. The Commitment to Human Services Fund; uses.
The Commitment to Human Services Fund is hereby created as a
special fund in the State treasury. All moneys deposited into
the fund shall be appropriated to provide financial assistance
for community-based human service providers and for State
funded human service programs. Moneys appropriated from the

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Fund shall supplement and not supplant the current level of
human services funding.
(30 ILCS 105/25.2 new)
Sec. 25.2. Statutory mandates not designated in law as
being subject to appropriation. Notwithstanding any law to the
contrary, from the effective date of this Section through
fiscal year 2015, with respect to any statutory mandate that is
not designated in law as being subject to appropriation, if and
only if the Governor determines that funds appropriated for
such statutory mandates are insufficient to satisfy those
mandates, the Governor may reduce the amount of funds
appropriated for some or all of those statutory mandates in
amounts he or she deems necessary to accommodate budgetary
limitations while attempting to implement such mandates to the
extent reasonably practical. The reduction shall become
effective upon the Governor giving notice of the reduction to
the Speaker of the House of Representatives, the President of
the Senate, the Minority Leader of the House of
Representatives, the Minority Leader of the Senate, the State
Comptroller, the State Treasurer, and the Commission on
Government Forecasting and Accountability. Nothing in this
Section prohibits adjustments to the Governor's reduction by
law.
Section 20. The Illinois Income Tax Act is amended by

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changing Sections 201, 207, 804, and 901 and by adding Sections
201.5 and 202.5 as follows:
(35 ILCS 5/201) (from Ch. 120, par. 2-201)
Sec. 201. Tax Imposed.
(a) In general. A tax measured by net income is hereby
imposed on every individual, corporation, trust and estate for
each taxable year ending after July 31, 1969 on the privilege
of earning or receiving income in or as a resident of this
State. Such tax shall be in addition to all other occupation or
privilege taxes imposed by this State or by any municipal
corporation or political subdivision thereof.
(b) Rates. The tax imposed by subsection (a) of this
Section shall be determined as follows, except as adjusted by
subsection (d-1):
(1) In the case of an individual, trust or estate, for
taxable years ending prior to July 1, 1989, an amount equal
to 2 1/2% of the taxpayer's net income for the taxable
year.
(2) In the case of an individual, trust or estate, for
taxable years beginning prior to July 1, 1989 and ending
after June 30, 1989, an amount equal to the sum of (i) 2
1/2% of the taxpayer's net income for the period prior to
July 1, 1989, as calculated under Section 202.3, and (ii)
3% of the taxpayer's net income for the period after June
30, 1989, as calculated under Section 202.3.

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(3) In the case of an individual, trust or estate, for
taxable years beginning after June 30, 1989, and ending
prior to January 1, 2011, an amount equal to 3% of the
taxpayer's net income for the taxable year.
(4) In the case of an individual, trust, or estate, for
taxable years beginning prior to January 1, 2011, and
ending after December 31, 2010, an amount equal to the sum
of (i) 3% of the taxpayer's net income for the period prior
to January 1, 2011, as calculated under Section 202.5, and
(ii) 5% of the taxpayer's net income for the period after
December 31, 2010, as calculated under Section 202.5.
(Blank).
(5) In the case of an individual, trust, or estate, for
taxable years beginning on or after January 1, 2011, and
ending prior to January 1, 2015, an amount equal to 5% of
the taxpayer's net income for the taxable year. (Blank).
(5.1) In the case of an individual, trust, or estate,
for taxable years beginning prior to January 1, 2015, and
ending after December 31, 2014, an amount equal to the sum
of (i) 5% of the taxpayer's net income for the period prior
to January 1, 2015, as calculated under Section 202.5, and
(ii) 3.75% of the taxpayer's net income for the period
after December 31, 2014, as calculated under Section 202.5.
(5.2) In the case of an individual, trust, or estate,
for taxable years beginning on or after January 1, 2015,
and ending prior to January 1, 2025, an amount equal to

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3.75% of the taxpayer's net income for the taxable year.
(5.3) In the case of an individual, trust, or estate,
for taxable years beginning prior to January 1, 2025, and
ending after December 31, 2024, an amount equal to the sum
of (i) 3.75% of the taxpayer's net income for the period
prior to January 1, 2025, as calculated under Section
202.5, and (ii) 3.25% of the taxpayer's net income for the
period after December 31, 2024, as calculated under Section
202.5.
(5.4) In the case of an individual, trust, or estate,
for taxable years beginning on or after January 1, 2025, an
amount equal to 3.25% of the taxpayer's net income for the
taxable year.
(6) In the case of a corporation, for taxable years
ending prior to July 1, 1989, an amount equal to 4% of the
taxpayer's net income for the taxable year.
(7) In the case of a corporation, for taxable years
beginning prior to July 1, 1989 and ending after June 30,
1989, an amount equal to the sum of (i) 4% of the
taxpayer's net income for the period prior to July 1, 1989,
as calculated under Section 202.3, and (ii) 4.8% of the
taxpayer's net income for the period after June 30, 1989,
as calculated under Section 202.3.
(8) In the case of a corporation, for taxable years
beginning after June 30, 1989, and ending prior to January
1, 2011, an amount equal to 4.8% of the taxpayer's net

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income for the taxable year.
(9) In the case of a corporation, for taxable years
beginning prior to January 1, 2011, and ending after
December 31, 2010, an amount equal to the sum of (i) 4.8%
of the taxpayer's net income for the period prior to
January 1, 2011, as calculated under Section 202.5, and
(ii) 7% of the taxpayer's net income for the period after
December 31, 2010, as calculated under Section 202.5.
(10) In the case of a corporation, for taxable years
beginning on or after January 1, 2011, and ending prior to
January 1, 2015, an amount equal to 7% of the taxpayer's
net income for the taxable year.
(11) In the case of a corporation, for taxable years
beginning prior to January 1, 2015, and ending after
December 31, 2014, an amount equal to the sum of (i) 7% of
the taxpayer's net income for the period prior to January
1, 2015, as calculated under Section 202.5, and (ii) 5.25%
of the taxpayer's net income for the period after December
31, 2014, as calculated under Section 202.5.
(12) In the case of a corporation, for taxable years
beginning on or after January 1, 2015, and ending prior to
January 1, 2025, an amount equal to 5.25% of the taxpayer's
net income for the taxable year.
(13) In the case of a corporation, for taxable years
beginning prior to January 1, 2025, and ending after
December 31, 2024, an amount equal to the sum of (i) 5.25%

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of the taxpayer's net income for the period prior to
January 1, 2025, as calculated under Section 202.5, and
(ii) 4.8% of the taxpayer's net income for the period after
December 31, 2024, as calculated under Section 202.5.
(14) In the case of a corporation, for taxable years
beginning on or after January 1, 2025, an amount equal to
4.8% of the taxpayer's net income for the taxable year.
The rates under this subsection (b) are subject to the
provisions of Section 201.5.
(c) Personal Property Tax Replacement Income Tax.
Beginning on July 1, 1979 and thereafter, in addition to such
income tax, there is also hereby imposed the Personal Property
Tax Replacement Income Tax measured by net income on every
corporation (including Subchapter S corporations), partnership
and trust, for each taxable year ending after June 30, 1979.
Such taxes are imposed on the privilege of earning or receiving
income in or as a resident of this State. The Personal Property
Tax Replacement Income Tax shall be in addition to the income
tax imposed by subsections (a) and (b) of this Section and in
addition to all other occupation or privilege taxes imposed by
this State or by any municipal corporation or political
subdivision thereof.
(d) Additional Personal Property Tax Replacement Income
Tax Rates. The personal property tax replacement income tax
imposed by this subsection and subsection (c) of this Section
in the case of a corporation, other than a Subchapter S

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

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

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by subsection (b) and only after the tax imposed by
subsection (a) net of all credits allowed under this
Section other than the credit allowed under subsection (i)
has been reduced to zero, against the rates imposed by
subsection (d).
This subsection (d-1) is exempt from the provisions of
Section 250.
(e) Investment credit. A taxpayer shall be allowed a credit
against the Personal Property Tax Replacement Income Tax for
investment in qualified property.
(1) A taxpayer shall be allowed a credit equal to .5%
of the basis of qualified property placed in service during
the taxable year, provided such property is placed in
service on or after July 1, 1984. There shall be allowed an
additional credit equal to .5% of the basis of qualified
property placed in service during the taxable year,
provided such property is placed in service on or after
July 1, 1986, and the taxpayer's base employment within
Illinois has increased by 1% or more over the preceding
year as determined by the taxpayer's employment records
filed with the Illinois Department of Employment Security.
Taxpayers who are new to Illinois shall be deemed to have
met the 1% growth in base employment for the first year in
which they file employment records with the Illinois
Department of Employment Security. The provisions added to
this Section by Public Act 85-1200 (and restored by Public

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Act 87-895) shall be construed as declaratory of existing
law and not as a new enactment. If, in any year, the
increase in base employment within Illinois over the
preceding year is less than 1%, the additional credit shall
be limited to that percentage times a fraction, the
numerator of which is .5% and the denominator of which is
1%, but shall not exceed .5%. The investment credit shall
not be allowed to the extent that it would reduce a
taxpayer's liability in any tax year below zero, nor may
any credit for qualified property be allowed for any year
other than the year in which the property was placed in
service in Illinois. For tax years ending on or after
December 31, 1987, and on or before December 31, 1988, the
credit shall be allowed for the tax year in which the
property is placed in service, or, if the amount of the
credit exceeds the tax liability for that year, whether it
exceeds the original liability or the liability as later
amended, such excess may be carried forward and applied to
the tax liability of the 5 taxable years following the
excess credit years if the taxpayer (i) makes investments
which cause the creation of a minimum of 2,000 full-time
equivalent jobs in Illinois, (ii) is located in an
enterprise zone established pursuant to the Illinois
Enterprise Zone Act and (iii) is certified by the
Department of Commerce and Community Affairs (now
Department of Commerce and Economic Opportunity) as

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complying with the requirements specified in clause (i) and
(ii) by July 1, 1986. The Department of Commerce and
Community Affairs (now Department of Commerce and Economic
Opportunity) shall notify the Department of Revenue of all
such certifications immediately. For tax years ending
after December 31, 1988, the credit shall be allowed for
the tax year in which the property is placed in service,
or, if the amount of the credit exceeds the tax liability
for that year, whether it exceeds the original liability or
the liability as later amended, such excess may be carried
forward and applied to the tax liability of the 5 taxable
years following the excess credit years. The credit shall
be applied to the earliest year for which there is a
liability. If there is credit from more than one tax year
that is available to offset a liability, earlier credit
shall be applied first.
(2) The term "qualified property" means property
which:
(A) is tangible, whether new or used, including
buildings and structural components of buildings and
signs that are real property, but not including land or
improvements to real property that are not a structural
component of a building such as landscaping, sewer
lines, local access roads, fencing, parking lots, and
other appurtenances;
(B) is depreciable pursuant to Section 167 of the

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Internal Revenue Code, except that "3-year property"
as defined in Section 168(c)(2)(A) of that Code is not
eligible for the credit provided by this subsection
(e);
(C) is acquired by purchase as defined in Section
179(d) of the Internal Revenue Code;
(D) is used in Illinois by a taxpayer who is
primarily engaged in manufacturing, or in mining coal
or fluorite, or in retailing, or was placed in service
on or after July 1, 2006 in a River Edge Redevelopment
Zone established pursuant to the River Edge
Redevelopment Zone Act; and
(E) has not previously been used in Illinois in
such a manner and by such a person as would qualify for
the credit provided by this subsection (e) or
subsection (f).
(3) For purposes of this subsection (e),
"manufacturing" means the material staging and production
of tangible personal property by procedures commonly
regarded as manufacturing, processing, fabrication, or
assembling which changes some existing material into new
shapes, new qualities, or new combinations. For purposes of
this subsection (e) the term "mining" shall have the same
meaning as the term "mining" in Section 613(c) of the
Internal Revenue Code. For purposes of this subsection (e),
the term "retailing" means the sale of tangible personal

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property for use or consumption and not for resale, or
services rendered in conjunction with the sale of tangible
personal property for use or consumption and not for
resale. For purposes of this subsection (e), "tangible
personal property" has the same meaning as when that term
is used in the Retailers' Occupation Tax Act, and, for
taxable years ending after December 31, 2008, does not
include the generation, transmission, or distribution of
electricity.
(4) The basis of qualified property shall be the basis
used to compute the depreciation deduction for federal
income tax purposes.
(5) If the basis of the property for federal income tax
depreciation purposes is increased after it has been placed
in service in Illinois by the taxpayer, the amount of such
increase shall be deemed property placed in service on the
date of such increase in basis.
(6) The term "placed in service" shall have the same
meaning as under Section 46 of the Internal Revenue Code.
(7) If during any taxable year, any property ceases to
be qualified property in the hands of the taxpayer within
48 months after being placed in service, or the situs of
any qualified property is moved outside Illinois within 48
months after being placed in service, the Personal Property
Tax Replacement Income Tax for such taxable year shall be
increased. Such increase shall be determined by (i)

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recomputing the investment credit which would have been
allowed for the year in which credit for such property was
originally allowed by eliminating such property from such
computation and, (ii) subtracting such recomputed credit
from the amount of credit previously allowed. For the
purposes of this paragraph (7), a reduction of the basis of
qualified property resulting from a redetermination of the
purchase price shall be deemed a disposition of qualified
property to the extent of such reduction.
(8) Unless the investment credit is extended by law,
the basis of qualified property shall not include costs
incurred after December 31, 2013, except for costs incurred
pursuant to a binding contract entered into on or before
December 31, 2013.
(9) Each taxable year ending before December 31, 2000,
a partnership may elect to pass through to its partners the
credits to which the partnership is entitled under this
subsection (e) for the taxable year. A partner may use the
credit allocated to him or her under this paragraph only
against the tax imposed in subsections (c) and (d) of this
Section. If the partnership makes that election, those
credits shall be allocated among the partners in the
partnership in accordance with the rules set forth in
Section 704(b) of the Internal Revenue Code, and the rules
promulgated under that Section, and the allocated amount of
the credits shall be allowed to the partners for that

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taxable year. The partnership shall make this election on
its Personal Property Tax Replacement Income Tax return for
that taxable year. The election to pass through the credits
shall be irrevocable.
For taxable years ending on or after December 31, 2000,
a partner that qualifies its partnership for a subtraction
under subparagraph (I) of paragraph (2) of subsection (d)
of Section 203 or a shareholder that qualifies a Subchapter
S corporation for a subtraction under subparagraph (S) of
paragraph (2) of subsection (b) of Section 203 shall be
allowed a credit under this subsection (e) equal to its
share of the credit earned under this subsection (e) during
the taxable year by the partnership or Subchapter S
corporation, determined in accordance with the
determination of income and distributive share of income
under Sections 702 and 704 and Subchapter S of the Internal
Revenue Code. This paragraph is exempt from the provisions
of Section 250.
(f) Investment credit; Enterprise Zone; River Edge
Redevelopment Zone.
(1) A taxpayer shall be allowed a credit against the
tax imposed by subsections (a) and (b) of this Section for
investment in qualified property which is placed in service
in an Enterprise Zone created pursuant to the Illinois
Enterprise Zone Act or, for property placed in service on
or after July 1, 2006, a River Edge Redevelopment Zone

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established pursuant to the River Edge Redevelopment Zone
Act. For partners, shareholders of Subchapter S
corporations, and owners of limited liability companies,
if the liability company is treated as a partnership for
purposes of federal and State income taxation, there shall
be allowed a credit under this subsection (f) to be
determined in accordance with the determination of income
and distributive share of income under Sections 702 and 704
and Subchapter S of the Internal Revenue Code. The credit
shall be .5% of the basis for such property. The credit
shall be available only in the taxable year in which the
property is placed in service in the Enterprise Zone or
River Edge Redevelopment Zone and shall not be allowed to
the extent that it would reduce a taxpayer's liability for
the tax imposed by subsections (a) and (b) of this Section
to below zero. For tax years ending on or after December
31, 1985, the credit shall be allowed for the tax year in
which the property is placed in service, or, if the amount
of the credit exceeds the tax liability for that year,
whether it exceeds the original liability or the liability
as later amended, such excess may be carried forward and
applied to the tax liability of the 5 taxable years
following the excess credit year. The credit shall be
applied to the earliest year for which there is a
liability. If there is credit from more than one tax year
that is available to offset a liability, the credit

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accruing first in time shall be applied first.
(2) The term qualified property means property which:
(A) is tangible, whether new or used, including
buildings and structural components of buildings;
(B) is depreciable pursuant to Section 167 of the
Internal Revenue Code, except that "3-year property"
as defined in Section 168(c)(2)(A) of that Code is not
eligible for the credit provided by this subsection
(f);
(C) is acquired by purchase as defined in Section
179(d) of the Internal Revenue Code;
(D) is used in the Enterprise Zone or River Edge
Redevelopment Zone by the taxpayer; and
(E) has not been previously used in Illinois in
such a manner and by such a person as would qualify for
the credit provided by this subsection (f) or
subsection (e).
(3) The basis of qualified property shall be the basis
used to compute the depreciation deduction for federal
income tax purposes.
(4) If the basis of the property for federal income tax
depreciation purposes is increased after it has been placed
in service in the Enterprise Zone or River Edge
Redevelopment Zone by the taxpayer, the amount of such
increase shall be deemed property placed in service on the
date of such increase in basis.

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(5) The term "placed in service" shall have the same
meaning as under Section 46 of the Internal Revenue Code.
(6) If during any taxable year, any property ceases to
be qualified property in the hands of the taxpayer within
48 months after being placed in service, or the situs of
any qualified property is moved outside the Enterprise Zone
or River Edge Redevelopment Zone within 48 months after
being placed in service, the tax imposed under subsections
(a) and (b) of this Section for such taxable year shall be
increased. Such increase shall be determined by (i)
recomputing the investment credit which would have been
allowed for the year in which credit for such property was
originally allowed by eliminating such property from such
computation, and (ii) subtracting such recomputed credit
from the amount of credit previously allowed. For the
purposes of this paragraph (6), a reduction of the basis of
qualified property resulting from a redetermination of the
purchase price shall be deemed a disposition of qualified
property to the extent of such reduction.
(7) There shall be allowed an additional credit equal
to 0.5% of the basis of qualified property placed in
service during the taxable year in a River Edge
Redevelopment Zone, provided such property is placed in
service on or after July 1, 2006, and the taxpayer's base
employment within Illinois has increased by 1% or more over
the preceding year as determined by the taxpayer's

SB2505 Enrolled - 23 - LRB096 16340 HLH 31604 b
employment records filed with the Illinois Department of
Employment Security. Taxpayers who are new to Illinois
shall be deemed to have met the 1% growth in base
employment for the first year in which they file employment
records with the Illinois Department of Employment
Security. If, in any year, the increase in base employment
within Illinois over the preceding year is less than 1%,
the additional credit shall be limited to that percentage
times a fraction, the numerator of which is 0.5% and the
denominator of which is 1%, but shall not exceed 0.5%.
(g) Jobs Tax Credit; Enterprise Zone, River Edge
Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
(1) A taxpayer conducting a trade or business in an
enterprise zone or a High Impact Business designated by the
Department of Commerce and Economic Opportunity or for
taxable years ending on or after December 31, 2006, in a
River Edge Redevelopment Zone conducting a trade or
business in a federally designated Foreign Trade Zone or
Sub-Zone shall be allowed a credit against the tax imposed
by subsections (a) and (b) of this Section in the amount of
$500 per eligible employee hired to work in the zone during
the taxable year.
(2) To qualify for the credit:
(A) the taxpayer must hire 5 or more eligible
employees to work in an enterprise zone, River Edge
Redevelopment Zone, or federally designated Foreign

SB2505 Enrolled - 24 - LRB096 16340 HLH 31604 b
Trade Zone or Sub-Zone during the taxable year;
(B) the taxpayer's total employment within the
enterprise zone, River Edge Redevelopment Zone, or
federally designated Foreign Trade Zone or Sub-Zone
must increase by 5 or more full-time employees beyond
the total employed in that zone at the end of the
previous tax year for which a jobs tax credit under
this Section was taken, or beyond the total employed by
the taxpayer as of December 31, 1985, whichever is
later; and
(C) the eligible employees must be employed 180
consecutive days in order to be deemed hired for
purposes of this subsection.
(3) An "eligible employee" means an employee who is:
(A) Certified by the Department of Commerce and
Economic Opportunity as "eligible for services"
pursuant to regulations promulgated in accordance with
Title II of the Job Training Partnership Act, Training
Services for the Disadvantaged or Title III of the Job
Training Partnership Act, Employment and Training
Assistance for Dislocated Workers Program.
(B) Hired after the enterprise zone, River Edge
Redevelopment Zone, or federally designated Foreign
Trade Zone or Sub-Zone was designated or the trade or
business was located in that zone, whichever is later.
(C) Employed in the enterprise zone, River Edge

SB2505 Enrolled - 25 - LRB096 16340 HLH 31604 b
Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
An employee is employed in an enterprise zone or
federally designated Foreign Trade Zone or Sub-Zone if
his services are rendered there or it is the base of
operations for the services performed.
(D) A full-time employee working 30 or more hours
per week.
(4) For tax years ending on or after December 31, 1985
and prior to December 31, 1988, the credit shall be allowed
for the tax year in which the eligible employees are hired.
For tax years ending on or after December 31, 1988, the
credit shall be allowed for the tax year immediately
following the tax year in which the eligible employees are
hired. If the amount of the credit exceeds the tax
liability for that year, whether it exceeds the original
liability or the liability as later amended, such excess
may be carried forward and applied to the tax liability of
the 5 taxable years following the excess credit year. The
credit shall be applied to the earliest year for which
there is a liability. If there is credit from more than one
tax year that is available to offset a liability, earlier
credit shall be applied first.
(5) The Department of Revenue shall promulgate such
rules and regulations as may be deemed necessary to carry
out the purposes of this subsection (g).
(6) The credit shall be available for eligible

SB2505 Enrolled - 26 - LRB096 16340 HLH 31604 b
employees hired on or after January 1, 1986.
(h) Investment credit; High Impact Business.
(1) Subject to subsections (b) and (b-5) of Section 5.5
of the Illinois Enterprise Zone Act, a taxpayer shall be
allowed a credit against the tax imposed by subsections (a)
and (b) of this Section for investment in qualified
property which is placed in service by a Department of
Commerce and Economic Opportunity designated High Impact
Business. The credit shall be .5% of the basis for such
property. The credit shall not be available (i) until the
minimum investments in qualified property set forth in
subdivision (a)(3)(A) of Section 5.5 of the Illinois
Enterprise Zone Act have been satisfied or (ii) until the
time authorized in subsection (b-5) of the Illinois
Enterprise Zone Act for entities designated as High Impact
Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
(a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
Act, and shall not be allowed to the extent that it would
reduce a taxpayer's liability for the tax imposed by
subsections (a) and (b) of this Section to below zero. The
credit applicable to such investments shall be taken in the
taxable year in which such investments have been completed.
The credit for additional investments beyond the minimum
investment by a designated high impact business authorized
under subdivision (a)(3)(A) of Section 5.5 of the Illinois
Enterprise Zone Act shall be available only in the taxable

SB2505 Enrolled - 27 - LRB096 16340 HLH 31604 b
year in which the property is placed in service and shall
not be allowed to the extent that it would reduce a
taxpayer's liability for the tax imposed by subsections (a)
and (b) of this Section to below zero. For tax years ending
on or after December 31, 1987, the credit shall be allowed
for the tax year in which the property is placed in
service, or, if the amount of the credit exceeds the tax
liability for that year, whether it exceeds the original
liability or the liability as later amended, such excess
may be carried forward and applied to the tax liability of
the 5 taxable years following the excess credit year. The
credit shall be applied to the earliest year for which
there is a liability. If there is credit from more than one
tax year that is available to offset a liability, the
credit accruing first in time shall be applied first.
Changes made in this subdivision (h)(1) by Public Act
88-670 restore changes made by Public Act 85-1182 and
reflect existing law.
(2) The term qualified property means property which:
(A) is tangible, whether new or used, including
buildings and structural components of buildings;
(B) is depreciable pursuant to Section 167 of the
Internal Revenue Code, except that "3-year property"
as defined in Section 168(c)(2)(A) of that Code is not
eligible for the credit provided by this subsection
(h);

SB2505 Enrolled - 28 - LRB096 16340 HLH 31604 b
(C) is acquired by purchase as defined in Section
179(d) of the Internal Revenue Code; and
(D) is not eligible for the Enterprise Zone
Investment Credit provided by subsection (f) of this
Section.
(3) The basis of qualified property shall be the basis
used to compute the depreciation deduction for federal
income tax purposes.
(4) If the basis of the property for federal income tax
depreciation purposes is increased after it has been placed
in service in a federally designated Foreign Trade Zone or
Sub-Zone located in Illinois by the taxpayer, the amount of
such increase shall be deemed property placed in service on
the date of such increase in basis.
(5) The term "placed in service" shall have the same
meaning as under Section 46 of the Internal Revenue Code.
(6) If during any taxable year ending on or before
December 31, 1996, any property ceases to be qualified
property in the hands of the taxpayer within 48 months
after being placed in service, or the situs of any
qualified property is moved outside Illinois within 48
months after being placed in service, the tax imposed under
subsections (a) and (b) of this Section for such taxable
year shall be increased. Such increase shall be determined
by (i) recomputing the investment credit which would have
been allowed for the year in which credit for such property

SB2505 Enrolled - 29 - LRB096 16340 HLH 31604 b
was originally allowed by eliminating such property from
such computation, and (ii) subtracting such recomputed
credit from the amount of credit previously allowed. For
the purposes of this paragraph (6), a reduction of the
basis of qualified property resulting from a
redetermination of the purchase price shall be deemed a
disposition of qualified property to the extent of such
reduction.
(7) Beginning with tax years ending after December 31,
1996, if a taxpayer qualifies for the credit under this
subsection (h) and thereby is granted a tax abatement and
the taxpayer relocates its entire facility in violation of
the explicit terms and length of the contract under Section
18-183 of the Property Tax Code, the tax imposed under
subsections (a) and (b) of this Section shall be increased
for the taxable year in which the taxpayer relocated its
facility by an amount equal to the amount of credit
received by the taxpayer under this subsection (h).
(i) Credit for Personal Property Tax Replacement Income
Tax. For tax years ending prior to December 31, 2003, a credit
shall be allowed against the tax imposed by subsections (a) and
(b) of this Section for the tax imposed by subsections (c) and
(d) of this Section. This credit shall be computed by
multiplying the tax imposed by subsections (c) and (d) of this
Section by a fraction, the numerator of which is base income
allocable to Illinois and the denominator of which is Illinois

SB2505 Enrolled - 30 - LRB096 16340 HLH 31604 b
base income, and further multiplying the product by the tax
rate imposed by subsections (a) and (b) of this Section.
Any credit earned on or after December 31, 1986 under this
subsection which is unused in the year the credit is computed
because it exceeds the tax liability imposed by subsections (a)
and (b) for that year (whether it exceeds the original
liability or the liability as later amended) may be carried
forward and applied to the tax liability imposed by subsections
(a) and (b) of the 5 taxable years following the excess credit
year, provided that no credit may be carried forward to any
year ending on or after December 31, 2003. This credit shall be
applied first to the earliest year for which there is a
liability. If there is a credit under this subsection from more
than one tax year that is available to offset a liability the
earliest credit arising under this subsection shall be applied
first.
If, during any taxable year ending on or after December 31,
1986, the tax imposed by subsections (c) and (d) of this
Section for which a taxpayer has claimed a credit under this
subsection (i) is reduced, the amount of credit for such tax
shall also be reduced. Such reduction shall be determined by
recomputing the credit to take into account the reduced tax
imposed by subsections (c) and (d). If any portion of the
reduced amount of credit has been carried to a different
taxable year, an amended return shall be filed for such taxable
year to reduce the amount of credit claimed.

SB2505 Enrolled - 31 - LRB096 16340 HLH 31604 b
(j) Training expense credit. Beginning with tax years
ending on or after December 31, 1986 and prior to December 31,
2003, a taxpayer shall be allowed a credit against the tax
imposed by subsections (a) and (b) under this Section for all
amounts paid or accrued, on behalf of all persons employed by
the taxpayer in Illinois or Illinois residents employed outside
of Illinois by a taxpayer, for educational or vocational
training in semi-technical or technical fields or semi-skilled
or skilled fields, which were deducted from gross income in the
computation of taxable income. The credit against the tax
imposed by subsections (a) and (b) shall be 1.6% of such
training expenses. For partners, shareholders of subchapter S
corporations, and owners of limited liability companies, if the
liability company is treated as a partnership for purposes of
federal and State income taxation, there shall be allowed a
credit under this subsection (j) to be determined in accordance
with the determination of income and distributive share of
income under Sections 702 and 704 and subchapter S of the
Internal Revenue Code.
Any credit allowed under this subsection which is unused in
the year the credit is earned may be carried forward to each of
the 5 taxable years following the year for which the credit is
first computed until it is used. This credit shall be applied
first to the earliest year for which there is a liability. If
there is a credit under this subsection from more than one tax
year that is available to offset a liability the earliest

SB2505 Enrolled - 32 - LRB096 16340 HLH 31604 b
credit arising under this subsection shall be applied first. No
carryforward credit may be claimed in any tax year ending on or
after December 31, 2003.
(k) Research and development credit.
For tax years ending after July 1, 1990 and prior to
December 31, 2003, and beginning again for tax years ending on
or after December 31, 2004, and ending prior to January 1,
2011, a taxpayer shall be allowed a credit against the tax
imposed by subsections (a) and (b) of this Section for
increasing research activities in this State. The credit
allowed against the tax imposed by subsections (a) and (b)
shall be equal to 6 1/2% of the qualifying expenditures for
increasing research activities in this State. For partners,
shareholders of subchapter S corporations, and owners of
limited liability companies, if the liability company is
treated as a partnership for purposes of federal and State
income taxation, there shall be allowed a credit under this
subsection to be determined in accordance with the
determination of income and distributive share of income under
Sections 702 and 704 and subchapter S of the Internal Revenue
Code.
For purposes of this subsection, "qualifying expenditures"
means the qualifying expenditures as defined for the federal
credit for increasing research activities which would be
allowable under Section 41 of the Internal Revenue Code and
which are conducted in this State, "qualifying expenditures for

SB2505 Enrolled - 33 - LRB096 16340 HLH 31604 b
increasing research activities in this State" means the excess
of qualifying expenditures for the taxable year in which
incurred over qualifying expenditures for the base period,
"qualifying expenditures for the base period" means the average
of the qualifying expenditures for each year in the base
period, and "base period" means the 3 taxable years immediately
preceding the taxable year for which the determination is being
made.
Any credit in excess of the tax liability for the taxable
year may be carried forward. A taxpayer may elect to have the
unused credit shown on its final completed return carried over
as a credit against the tax liability for the following 5
taxable years or until it has been fully used, whichever occurs
first; provided that no credit earned in a tax year ending
prior to December 31, 2003 may be carried forward to any year
ending on or after December 31, 2003, and no credit may be
carried forward to any taxable year ending on or after January
1, 2011.
If an unused credit is carried forward to a given year from
2 or more earlier years, that credit arising in the earliest
year will be applied first against the tax liability for the
given year. If a tax liability for the given year still
remains, the credit from the next earliest year will then be
applied, and so on, until all credits have been used or no tax
liability for the given year remains. Any remaining unused
credit or credits then will be carried forward to the next

SB2505 Enrolled - 34 - LRB096 16340 HLH 31604 b
following year in which a tax liability is incurred, except
that no credit can be carried forward to a year which is more
than 5 years after the year in which the expense for which the
credit is given was incurred.
No inference shall be drawn from this amendatory Act of the
91st General Assembly in construing this Section for taxable
years beginning before January 1, 1999.
(l) Environmental Remediation Tax Credit.
(i) For tax years ending after December 31, 1997 and on
or before December 31, 2001, a taxpayer shall be allowed a
credit against the tax imposed by subsections (a) and (b)
of this Section for certain amounts paid for unreimbursed
eligible remediation costs, as specified in this
subsection. For purposes of this Section, "unreimbursed
eligible remediation costs" means costs approved by the
Illinois Environmental Protection Agency ("Agency") under
Section 58.14 of the Environmental Protection Act that were
paid in performing environmental remediation at a site for
which a No Further Remediation Letter was issued by the
Agency and recorded under Section 58.10 of the
Environmental Protection Act. The credit must be claimed
for the taxable year in which Agency approval of the
eligible remediation costs is granted. The credit is not
available to any taxpayer if the taxpayer or any related
party caused or contributed to, in any material respect, a
release of regulated substances on, in, or under the site

SB2505 Enrolled - 35 - LRB096 16340 HLH 31604 b
that was identified and addressed by the remedial action
pursuant to the Site Remediation Program of the
Environmental Protection Act. After the Pollution Control
Board rules are adopted pursuant to the Illinois
Administrative Procedure Act for the administration and
enforcement of Section 58.9 of the Environmental
Protection Act, determinations as to credit availability
for purposes of this Section shall be made consistent with
those rules. For purposes of this Section, "taxpayer"
includes a person whose tax attributes the taxpayer has
succeeded to under Section 381 of the Internal Revenue Code
and "related party" includes the persons disallowed a
deduction for losses by paragraphs (b), (c), and (f)(1) of
Section 267 of the Internal Revenue Code by virtue of being
a related taxpayer, as well as any of its partners. The
credit allowed against the tax imposed by subsections (a)
and (b) shall be equal to 25% of the unreimbursed eligible
remediation costs in excess of $100,000 per site, except
that the $100,000 threshold shall not apply to any site
contained in an enterprise zone as determined by the
Department of Commerce and Community Affairs (now
Department of Commerce and Economic Opportunity). The
total credit allowed shall not exceed $40,000 per year with
a maximum total of $150,000 per site. For partners and
shareholders of subchapter S corporations, there shall be
allowed a credit under this subsection to be determined in

SB2505 Enrolled - 36 - LRB096 16340 HLH 31604 b
accordance with the determination of income and
distributive share of income under Sections 702 and 704 and
subchapter S of the Internal Revenue Code.
(ii) A credit allowed under this subsection that is
unused in the year the credit is earned may be carried
forward to each of the 5 taxable years following the year
for which the credit is first earned until it is used. The
term "unused credit" does not include any amounts of
unreimbursed eligible remediation costs in excess of the
maximum credit per site authorized under paragraph (i).
This credit shall be applied first to the earliest year for
which there is a liability. If there is a credit under this
subsection from more than one tax year that is available to
offset a liability, the earliest credit arising under this
subsection shall be applied first. A credit allowed under
this subsection may be sold to a buyer as part of a sale of
all or part of the remediation site for which the credit
was granted. The purchaser of a remediation site and the
tax credit shall succeed to the unused credit and remaining
carry-forward period of the seller. To perfect the
transfer, the assignor shall record the transfer in the
chain of title for the site and provide written notice to
the Director of the Illinois Department of Revenue of the
assignor's intent to sell the remediation site and the
amount of the tax credit to be transferred as a portion of
the sale. In no event may a credit be transferred to any

SB2505 Enrolled - 37 - LRB096 16340 HLH 31604 b
taxpayer if the taxpayer or a related party would not be
eligible under the provisions of subsection (i).
(iii) For purposes of this Section, the term "site"
shall have the same meaning as under Section 58.2 of the
Environmental Protection Act.
(m) Education expense credit. Beginning with tax years
ending after December 31, 1999, a taxpayer who is the custodian
of one or more qualifying pupils shall be allowed a credit
against the tax imposed by subsections (a) and (b) of this
Section for qualified education expenses incurred on behalf of
the qualifying pupils. The credit shall be equal to 25% of
qualified education expenses, but in no event may the total
credit under this subsection claimed by a family that is the
custodian of qualifying pupils exceed $500. In no event shall a
credit under this subsection reduce the taxpayer's liability
under this Act to less than zero. This subsection is exempt
from the provisions of Section 250 of this Act.
For purposes of this subsection:
"Qualifying pupils" means individuals who (i) are
residents of the State of Illinois, (ii) are under the age of
21 at the close of the school year for which a credit is
sought, and (iii) during the school year for which a credit is
sought were full-time pupils enrolled in a kindergarten through
twelfth grade education program at any school, as defined in
this subsection.
"Qualified education expense" means the amount incurred on

SB2505 Enrolled - 38 - LRB096 16340 HLH 31604 b
behalf of a qualifying pupil in excess of $250 for tuition,
book fees, and lab fees at the school in which the pupil is
enrolled during the regular school year.
"School" means any public or nonpublic elementary or
secondary school in Illinois that is in compliance with Title
VI of the Civil Rights Act of 1964 and attendance at which
satisfies the requirements of Section 26-1 of the School Code,
except that nothing shall be construed to require a child to
attend any particular public or nonpublic school to qualify for
the credit under this Section.
"Custodian" means, with respect to qualifying pupils, an
Illinois resident who is a parent, the parents, a legal
guardian, or the legal guardians of the qualifying pupils.
(n) River Edge Redevelopment Zone site remediation tax
credit.
(i) For tax years ending on or after December 31, 2006,
a taxpayer shall be allowed a credit against the tax
imposed by subsections (a) and (b) of this Section for
certain amounts paid for unreimbursed eligible remediation
costs, as specified in this subsection. For purposes of
this Section, "unreimbursed eligible remediation costs"
means costs approved by the Illinois Environmental
Protection Agency ("Agency") under Section 58.14a of the
Environmental Protection Act that were paid in performing
environmental remediation at a site within a River Edge
Redevelopment Zone for which a No Further Remediation

SB2505 Enrolled - 39 - LRB096 16340 HLH 31604 b
Letter was issued by the Agency and recorded under Section
58.10 of the Environmental Protection Act. The credit must
be claimed for the taxable year in which Agency approval of
the eligible remediation costs is granted. The credit is
not available to any taxpayer if the taxpayer or any
related party caused or contributed to, in any material
respect, a release of regulated substances on, in, or under
the site that was identified and addressed by the remedial
action pursuant to the Site Remediation Program of the
Environmental Protection Act. Determinations as to credit
availability for purposes of this Section shall be made
consistent with rules adopted by the Pollution Control
Board pursuant to the Illinois Administrative Procedure
Act for the administration and enforcement of Section 58.9
of the Environmental Protection Act. For purposes of this
Section, "taxpayer" includes a person whose tax attributes
the taxpayer has succeeded to under Section 381 of the
Internal Revenue Code and "related party" includes the
persons disallowed a deduction for losses by paragraphs
(b), (c), and (f)(1) of Section 267 of the Internal Revenue
Code by virtue of being a related taxpayer, as well as any
of its partners. The credit allowed against the tax imposed
by subsections (a) and (b) shall be equal to 25% of the
unreimbursed eligible remediation costs in excess of
$100,000 per site.
(ii) A credit allowed under this subsection that is

SB2505 Enrolled - 40 - LRB096 16340 HLH 31604 b
unused in the year the credit is earned may be carried
forward to each of the 5 taxable years following the year
for which the credit is first earned until it is used. This
credit shall be applied first to the earliest year for
which there is a liability. If there is a credit under this
subsection from more than one tax year that is available to
offset a liability, the earliest credit arising under this
subsection shall be applied first. A credit allowed under
this subsection may be sold to a buyer as part of a sale of
all or part of the remediation site for which the credit
was granted. The purchaser of a remediation site and the
tax credit shall succeed to the unused credit and remaining
carry-forward period of the seller. To perfect the
transfer, the assignor shall record the transfer in the
chain of title for the site and provide written notice to
the Director of the Illinois Department of Revenue of the
assignor's intent to sell the remediation site and the
amount of the tax credit to be transferred as a portion of
the sale. In no event may a credit be transferred to any
taxpayer if the taxpayer or a related party would not be
eligible under the provisions of subsection (i).
(iii) For purposes of this Section, the term "site"
shall have the same meaning as under Section 58.2 of the
Environmental Protection Act.
(iv) This subsection is exempt from the provisions of
Section 250.

SB2505 Enrolled - 41 - LRB096 16340 HLH 31604 b
(Source: P.A. 95-454, eff. 8-27-07; 96-115, eff. 7-31-09;
96-116, eff. 7-31-09; 96-937, eff. 6-23-10; 96-1000, eff.
7-2-10.)
(35 ILCS 5/201.5 new)
Sec. 201.5. State spending limitation and tax reduction.
(a) If, beginning in State fiscal year 2012 and continuing
through State fiscal year 2015, State spending for any fiscal
year exceeds the State spending limitation set forth in
subsection (b) of this Section, then the tax rates set forth in
subsection (b) of Section 201 of this Act shall be reduced,
according to the procedures set forth in this Section, to 3% of
the taxpayer's net income for individuals, trusts, and estates
and to 4.8% of the taxpayer's net income for corporations. For
all taxable years following the taxable year in which the rate
has been reduced pursuant to this Section, the tax rate set
forth in subsection (b) of Section 201 of this Act shall be 3%
of the taxpayer's net income for individuals, trusts, and
estates and 4.8% of the taxpayer's net income for corporations.
(b) The State spending limitation for fiscal years 2012
through 2015 shall be as follows: (i) for fiscal year 2012,
$36,818,000,000; (ii) for fiscal year 2013, $37,554,000,000;
(iii) for fiscal year 2014, $38,305,000,000; and (iv) for
fiscal year 2015, $39,072,000,000.
(c) Nothwithstanding any other provision of law to the
contrary, the Auditor General shall examine each Public Act

SB2505 Enrolled - 42 - LRB096 16340 HLH 31604 b
authorizing State spending from State general funds and prepare
a report no later than 30 days after receiving notification of
the Public Act from the Secretary of State or 60 days after the
effective date of the Public Act, whichever is earlier. The
Auditor General shall file the report with the Secretary of
State and copies with the Governor, the State Treasurer, the
State Comptroller, the Senate, and the House of
Representatives. The report shall indicate: (i) the amount of
State spending set forth in the applicable Public Act; (ii) the
total amount of State spending authorized by law for the
applicable fiscal year as of the date of the report; and (iii)
whether State spending exceeds the State spending limitation
set forth in subsection (b). The Auditor General may examine
multiple Public Acts in one consolidated report, provided that
each Public Act is examined within the time period mandated by
this subsection (c). The Auditor General shall issue reports in
accordance with this Section through June 30, 2015 or the
effective date of a reduction in the rate of tax imposed by
subsections (a) and (b) of Section 201 of this Act pursuant to
this Section, whichever is earlier.
At the request of the Auditor General, each State agency
shall, without delay, make available to the Auditor General or
his or her designated representative any record or information
requested and shall provide for examination or copying all
records, accounts, papers, reports, vouchers, correspondence,
books and other documentation in the custody of that agency,

SB2505 Enrolled - 43 - LRB096 16340 HLH 31604 b
including information stored in electronic data processing
systems, which is related to or within the scope of a report
prepared under this Section. The Auditor General shall report
to the Governor each instance in which a State agency fails to
cooperate promptly and fully with his or her office as required
by this Section.
The Auditor General's report shall not be in the nature of
a post-audit or examination and shall not lead to the issuance
of an opinion as that term is defined in generally accepted
government auditing standards.
(d) If the Auditor General reports that State spending has
exceeded the State spending limitation set forth in subsection
(b) and if the Governor has not been presented with a bill or
bills passed by the General Assembly to reduce State spending
to a level that does not exceed the State spending limitation
within 45 calendar days of receipt of the Auditor General's
report, then the Governor may, for the purpose of reducing
State spending to a level that does not exceed the State
spending limitation set forth in subsection (b), designate
amounts to be set aside as a reserve from the amounts
appropriated from the State general funds for all boards,
commissions, agencies, institutions, authorities, colleges,
universities, and bodies politic and corporate of the State,
but not other constitutional officers, the legislative or
judicial branch, the office of the Executive Inspector General,
or the Executive Ethics Commission. Such a designation must be

SB2505 Enrolled - 44 - LRB096 16340 HLH 31604 b
made within 15 calendar days after the end of that 45-day
period. If the Governor designates amounts to be set aside as a
reserve, the Governor shall give notice of the designation to
the Auditor General, the State Treasurer, the State
Comptroller, the Senate, and the House of Representatives. The
amounts placed in reserves shall not be transferred, obligated,
encumbered, expended, or otherwise committed unless so
authorized by law. Any amount placed in reserves is not State
spending and shall not be considered when calculating the total
amount of State spending. Any Public Act authorizing the use of
amounts placed in reserve by the Governor is considered State
spending, unless such Public Act authorizes the use of amounts
placed in reserves in response to a fiscal emergency under
subsection (g).
(e) If the Auditor General reports under subsection (c)
that State spending has exceeded the State spending limitation
set forth in subsection (b), then the Auditor General shall
issue a supplemental report no sooner than the 61st day and no
later than the 65th day after issuing the report pursuant to
subsection (c). The supplemental report shall: (i) summarize
details of actions taken by the General Assembly and the
Governor after the issuance of the initial report to reduce
State spending, if any, (ii) indicate whether the level of
State spending has changed since the initial report, and (iii)
indicate whether State spending exceeds the State spending
limitation. The Auditor General shall file the report with the

SB2505 Enrolled - 45 - LRB096 16340 HLH 31604 b
Secretary of State and copies with the Governor, the State
Treasurer, the State Comptroller, the Senate, and the House of
Representatives. If the supplemental report of the Auditor
General provides that State spending exceeds the State spending
limitation, then the rate of tax imposed by subsections (a) and
(b) of Section 201 is reduced as provided in this Section
beginning on the first day of the first month to occur not less
than 30 days after issuance of the supplemental report.
(f) For any taxable year in which the rates of tax have
been reduced under this Section, the tax imposed by subsections
(a) and (b) of Section 201 shall be determined as follows:
(1) In the case of an individual, trust, or estate, the
tax shall be imposed in an amount equal to the sum of (i)
the rate applicable to the taxpayer under subsection (b) of
Section 201 (without regard to the provisions of this
Section) times the taxpayer's net income for any portion of
the taxable year prior to the effective date of the
reduction and (ii) 3% of the taxpayer's net income for any
portion of the taxable year on or after the effective date
of the reduction.
(2) In the case of a corporation, the tax shall be
imposed in an amount equal to the sum of (i) the rate
applicable to the taxpayer under subsection (b) of Section
201 (without regard to the provisions of this Section)
times the taxpayer's net income for any portion of the
taxable year prior to the effective date of the reduction

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and (ii) 4.8% of the taxpayer's net income for any portion
of the taxable year on or after the effective date of the
reduction.
(3) For any taxpayer for whom the rate has been reduced
under this Section for a portion of a taxable year, the
taxpayer shall determine the net income for each portion of
the taxable year following the rules set forth in Section
202.5 of this Act, using the effective date of the rate
reduction rather than the January 1 dates found in that
Section, and the day before the effective date of the rate
reduction rather than the December 31 dates found in that
Section.
(4) If the rate applicable to the taxpayer under
subsection (b) of Section 201 (without regard to the
provisions of this Section) changes during a portion of the
taxable year to which that rate is applied under paragraphs
(1) or (2) of this subsection (f), the tax for that portion
of the taxable year for purposes of paragraph (1) or (2) of
this subsection (f) shall be determined as if that portion
of the taxable year were a separate taxable year, following
the rules set forth in Section 202.5 of this Act. If the
taxpayer elects to follow the rules set forth in subsection
(b) of Section 202.5, the taxpayer shall follow the rules
set forth in subsection (b) of Section 202.5 for all
purposes of this Section for that taxable year.
(g) Notwithstanding the State spending limitation set

SB2505 Enrolled - 47 - LRB096 16340 HLH 31604 b
forth in subsection (b) of this Section, the Governor may
declare a fiscal emergency by filing a declaration with the
Secretary of State and copies with the State Treasurer, the
State Comptroller, the Senate, and the House of
Representatives. The declaration must be limited to only one
State fiscal year, set forth compelling reasons for declaring a
fiscal emergency, and request a specific dollar amount. Unless,
within 10 calendar days of receipt of the Governor's
declaration, the State Comptroller or State Treasurer notifies
the Senate and the House of Representatives that he or she does
not concur in the Governor's declaration, State spending
authorized by law to address the fiscal emergency in an amount
no greater than the dollar amount specified in the declaration
shall not be considered "State spending" for purposes of the
State spending limitation.
(h) As used in this Section:
"State general funds" means the General Revenue Fund, the
Common School Fund, the General Revenue Common School Special
Account Fund, the Education Assistance Fund, and the Budget
Stabilization Fund.
"State spending" means (i) the total amount authorized for
spending by appropriation or statutory transfer from the State
general funds in the applicable fiscal year, and (ii) any
amounts the Governor places in reserves in accordance with
subsection (d) that are subsequently released from reserves
following authorization by a Public Act. For the purpose of

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this definition, "appropriation" means authority to spend
money from a State general fund for a specific amount, purpose,
and time period, including any supplemental appropriation or
continuing appropriation, but does not include
reappropriations from a previous fiscal year. For the purpose
of this definition, "statutory transfer" means authority to
transfer funds from one State general fund to any other fund in
the State treasury, but does not include transfers made from
one State general fund to another State general fund.
"State spending limitation" means the amount described in
subsection (b) of this Section for the applicable fiscal year.
(35 ILCS 5/202.5 new)
Sec. 202.5. Net income attributable to the period beginning
prior to January 1 of any year and ending after December 31 of
the preceding year.
(a) In general. With respect to the taxable year of a
taxpayer beginning prior to January 1 of any year and ending
after December 31 of the preceding year, net income for the
period after December 31 of the preceding year, is that amount
that bears the same ratio to the taxpayer's net income for the
entire taxable year as the number of days in that taxable year
after December 31 bears to the total number of days in that
taxable year, and the net income for the period prior to
January 1 is that amount that bears the same ratio to the
taxpayer's net income for the entire taxable year as the number

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of days in that taxable year prior to January 1 bears to the
total number of days in that taxable year.
(b) Election to attribute income and deduction items
specifically to the respective portions of a taxable year prior
to January 1 of any year and after December 31 of the preceding
year. In the case of a taxpayer with a taxable year beginning
prior to January 1 of any year and ending after December 31 of
the preceding year, the taxpayer may elect, instead of the
procedure established in subsection (a) of this Section, to
determine net income on a specific accounting basis for the 2
portions of the taxable year:
(1) from the beginning of the taxable year through
December 31; and
(2) from January 1 through the end of the taxable year.
The election provided by this subsection must be made in
form and manner that the Department requires by rule, and must
be made no later than the due date (including any extensions
thereof) for the filing of the return for the taxable year, and
is irrevocable.
(c) If the taxpayer elects specific accounting under
subsection (b):
(1) there shall be taken into account in computing base
income for each of the 2 portions of the taxable year only
those items earned, received, paid, incurred or accrued in
each such period;
(2) for purposes of apportioning business income of the

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taxpayer, the provisions in Article 3 shall be applied on
the basis of the taxpayer's full taxable year, without
regard to this Section;
(3) the net loss carryforward deduction for the taxable
year under Section 207 may not exceed combined net income
of both portions of the taxable year, and shall be used
against the net income of the portion of the taxable year
from the beginning of the taxable year through December 31
before any remaining amount is used against the net income
of the latter portion of the taxable year.
(35 ILCS 5/207) (from Ch. 120, par. 2-207)
Sec. 207. Net Losses.
(a) If after applying all of the (i) modifications provided
for in paragraph (2) of Section 203(b), paragraph (2) of
Section 203(c) and paragraph (2) of Section 203(d) and (ii) the
allocation and apportionment provisions of Article 3 of this
Act and subsection (c) of this Section, the taxpayer's net
income results in a loss;
(1) for any taxable year ending prior to December 31,
1999, such loss shall be allowed as a carryover or
carryback deduction in the manner allowed under Section 172
of the Internal Revenue Code;
(2) for any taxable year ending on or after December
31, 1999 and prior to December 31, 2003, such loss shall be
allowed as a carryback to each of the 2 taxable years

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preceding the taxable year of such loss and shall be a net
operating loss carryover to each of the 20 taxable years
following the taxable year of such loss; and
(3) for any taxable year ending on or after December
31, 2003, such loss shall be allowed as a net operating
loss carryover to each of the 12 taxable years following
the taxable year of such loss, except as provided in
subsection (d).
(a-5) Election to relinquish carryback and order of
application of losses.
(A) For losses incurred in tax years ending prior
to December 31, 2003, the taxpayer may elect to
relinquish the entire carryback period with respect to
such loss. Such election shall be made in the form and
manner prescribed by the Department and shall be made
by the due date (including extensions of time) for
filing the taxpayer's return for the taxable year in
which such loss is incurred, and such election, once
made, shall be irrevocable.
(B) The entire amount of such loss shall be carried
to the earliest taxable year to which such loss may be
carried. The amount of such loss which shall be carried
to each of the other taxable years shall be the excess,
if any, of the amount of such loss over the sum of the
deductions for carryback or carryover of such loss
allowable for each of the prior taxable years to which

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

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this subsection (c) shall be made after the determination of
Illinois net income for the taxable year in which the
indebtedness is discharged.
(d) In the case of a corporation (other than a Subchapter S
corporation), no carryover deduction shall be allowed under
this Section for any taxable year ending after December 31,
2010 and prior to December 31, 2014; provided that, for
purposes of determining the taxable years to which a net loss
may be carried under subsection (a) of this Section, no taxable
year for which a deduction is disallowed under this subsection
shall be counted.
(Source: P.A. 95-233, eff. 8-16-07.)
(35 ILCS 5/804) (from Ch. 120, par. 8-804)
Sec. 804. Failure to Pay Estimated Tax.
(a) In general. In case of any underpayment of estimated
tax by a taxpayer, except as provided in subsection (d) or (e),
the taxpayer shall be liable to a penalty in an amount
determined at the rate prescribed by Section 3-3 of the Uniform
Penalty and Interest Act upon the amount of the underpayment
(determined under subsection (b)) for each required
installment.
(b) Amount of underpayment. For purposes of subsection (a),
the amount of the underpayment shall be the excess of:
(1) the amount of the installment which would be
required to be paid under subsection (c), over

SB2505 Enrolled - 54 - LRB096 16340 HLH 31604 b
(2) the amount, if any, of the installment paid on or
before the last date prescribed for payment.
(c) Amount of Required Installments.
(1) Amount.
(A) In General. Except as provided in paragraph
(2), the amount of any required installment shall be
25% of the required annual payment.
(B) Required Annual Payment. For purposes of
subparagraph (A), the term "required annual payment"
means the lesser of
(i) 90% of the tax shown on the return for the
taxable year, or if no return is filed, 90% of the
tax for such year, or
(ii) for installments due prior to February 1,
2011, and after January 31, 2012, 100% of the tax
shown on the return of the taxpayer for the
preceding taxable year if a return showing a
liability for tax was filed by the taxpayer for the
preceding taxable year and such preceding year was
a taxable year of 12 months; or .
(iii) for installments due after January 31,
2011, and prior to February 1, 2012, 150% of the
tax shown on the return of the taxpayer for the
preceding taxable year if a return showing a
liability for tax was filed by the taxpayer for the
preceding taxable year and such preceding year was

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

SB2505 Enrolled - 56 - LRB096 16340 HLH 31604 b
due date for the installment, over
(ii) the aggregate amount of any prior
required installments for the taxable year.
(C) Applicable Percentage.
In the case of the following The applicable
required installments: percentage is:
1st ............................... 22.5%
2nd ............................... 45%
3rd ............................... 67.5%
4th ............................... 90%
(D) Annualized Net Income; Individuals. For
individuals, net income shall be placed on an
annualized basis by:
(i) multiplying by 12, or in the case of a
taxable year of less than 12 months, by the number
of months in the taxable year, the net income
computed without regard to the standard exemption
for the months in the taxable year ending before
the month in which the installment is required to
be paid;
(ii) dividing the resulting amount by the
number of months in the taxable year ending before
the month in which such installment date falls; and
(iii) deducting from such amount the standard
exemption allowable for the taxable year, such
standard exemption being determined as of the last

SB2505 Enrolled - 57 - LRB096 16340 HLH 31604 b
date prescribed for payment of the installment.
(E) Annualized Net Income; Corporations. For
corporations, net income shall be placed on an
annualized basis by multiplying by 12 the taxable
income
(i) for the first 3 months of the taxable year,
in the case of the installment required to be paid
in the 4th month,
(ii) for the first 3 months or for the first 5
months of the taxable year, in the case of the
installment required to be paid in the 6th month,
(iii) for the first 6 months or for the first 8
months of the taxable year, in the case of the
installment required to be paid in the 9th month,
and
(iv) for the first 9 months or for the first 11
months of the taxable year, in the case of the
installment required to be paid in the 12th month
of the taxable year,
then dividing the resulting amount by the number of
months in the taxable year (3, 5, 6, 8, 9, or 11 as the
case may be).
(d) Exceptions. Notwithstanding the provisions of the
preceding subsections, the penalty imposed by subsection (a)
shall not be imposed if the taxpayer was not required to file
an Illinois income tax return for the preceding taxable year,

SB2505 Enrolled - 58 - LRB096 16340 HLH 31604 b
or, for individuals, if the taxpayer had no tax liability for
the preceding taxable year and such year was a taxable year of
12 months. The penalty imposed by subsection (a) shall also not
be imposed on any underpayments of estimated tax due before the
effective date of this amendatory Act of 1998 which
underpayments are solely attributable to the change in
apportionment from subsection (a) to subsection (h) of Section
304. The provisions of this amendatory Act of 1998 apply to tax
years ending on or after December 31, 1998.
(e) The penalty imposed for underpayment of estimated tax
by subsection (a) of this Section shall not be imposed to the
extent that the Director or his or her designate determines,
pursuant to Section 3-8 of the Uniform Penalty and Interest Act
that the penalty should not be imposed.
(f) Definition of tax. For purposes of subsections (b) and
(c), the term "tax" means the excess of the tax imposed under
Article 2 of this Act, over the amounts credited against such
tax under Sections 601(b) (3) and (4).
(g) Application of Section in case of tax withheld under
Article 7. For purposes of applying this Section:
(1) in the case of an individual, tax withheld from
compensation for the taxable year shall be deemed a payment
of estimated tax, and an equal part of such amount shall be
deemed paid on each installment date for such taxable year,
unless the taxpayer establishes the dates on which all
amounts were actually withheld, in which case the amounts

SB2505 Enrolled - 59 - LRB096 16340 HLH 31604 b
so withheld shall be deemed payments of estimated tax on
the dates on which such amounts were actually withheld;
(2) amounts timely paid by a partnership, Subchapter S
corporation, or trust on behalf of a partner, shareholder,
or beneficiary pursuant to subsection (f) of Section 502 or
Section 709.5 and claimed as a payment of estimated tax
shall be deemed a payment of estimated tax made on the last
day of the taxable year of the partnership, Subchapter S
corporation, or trust for which the income from the
withholding is made was computed; and
(3) all other amounts pursuant to Article 7 shall be
deemed a payment of estimated tax on the date the payment
is made to the taxpayer of the amount from which the tax is
withheld.
(g-5) Amounts withheld under the State Salary and Annuity
Withholding Act. An individual who has amounts withheld under
paragraph (10) of Section 4 of the State Salary and Annuity
Withholding Act may elect to have those amounts treated as
payments of estimated tax made on the dates on which those
amounts are actually withheld.
(i) Short taxable year. The application of this Section to
taxable years of less than 12 months shall be in accordance
with regulations prescribed by the Department.
The changes in this Section made by Public Act 84-127 shall
apply to taxable years ending on or after January 1, 1986.
(Source: P.A. 95-233, eff. 8-16-07.)

SB2505 Enrolled - 60 - LRB096 16340 HLH 31604 b
(35 ILCS 5/901) (from Ch. 120, par. 9-901)
Sec. 901. Collection Authority.
(a) In general.
The Department shall collect the taxes imposed by this Act.
The Department shall collect certified past due child support
amounts under Section 2505-650 of the Department of Revenue Law
(20 ILCS 2505/2505-650). Except as provided in subsections (c),
and (e), (f), and (g) of this Section, money collected pursuant
to subsections (a) and (b) of Section 201 of this Act shall be
paid into the General Revenue Fund in the State treasury; money
collected pursuant to subsections (c) and (d) of Section 201 of
this Act shall be paid into the Personal Property Tax
Replacement Fund, a special fund in the State Treasury; and
money collected under Section 2505-650 of the Department of
Revenue Law (20 ILCS 2505/2505-650) shall be paid into the
Child Support Enforcement Trust Fund, a special fund outside
the State Treasury, or to the State Disbursement Unit
established under Section 10-26 of the Illinois Public Aid
Code, as directed by the Department of Healthcare and Family
Services.
(b) Local Government Distributive Fund.
Beginning August 1, 1969, and continuing through June 30,
1994, the Treasurer shall transfer each month from the General
Revenue Fund to a special fund in the State treasury, to be
known as the "Local Government Distributive Fund", an amount

SB2505 Enrolled - 61 - LRB096 16340 HLH 31604 b
equal to 1/12 of the net revenue realized from the tax imposed
by subsections (a) and (b) of Section 201 of this Act during
the preceding month. Beginning July 1, 1994, and continuing
through June 30, 1995, the Treasurer shall transfer each month
from the General Revenue Fund to the Local Government
Distributive Fund an amount equal to 1/11 of the net revenue
realized from the tax imposed by subsections (a) and (b) of
Section 201 of this Act during the preceding month. Beginning
July 1, 1995 and continuing through January 31, 2011, the
Treasurer shall transfer each month from the General Revenue
Fund to the Local Government Distributive Fund an amount equal
to the net of (i) 1/10 of the net revenue realized from the tax
imposed by subsections (a) and (b) of Section 201 of the
Illinois Income Tax Act during the preceding month (ii) minus,
beginning July 1, 2003 and ending June 30, 2004, $6,666,666,
and beginning July 1, 2004, zero. Beginning February 1, 2011,
and continuing through January 31, 2015, the Treasurer shall
transfer each month from the General Revenue Fund to the Local
Government Distributive Fund an amount equal to the sum of (i)
6% (10% of the ratio of the 3% individual income tax rate prior
to 2011 to the 5% individual income tax rate after 2010) of the
net revenue realized from the tax imposed by subsections (a)
and (b) of Section 201 of this Act upon individuals, trusts,
and estates during the preceding month and (ii) 6.86% (10% of
the ratio of the 4.8% corporate income tax rate prior to 2011
to the 7% corporate income tax rate after 2010) of the net

SB2505 Enrolled - 62 - LRB096 16340 HLH 31604 b
revenue realized from the tax imposed by subsections (a) and
(b) of Section 201 of this Act upon corporations during the
preceding month. Beginning February 1, 2015 and continuing
through January 31, 2025, the Treasurer shall transfer each
month from the General Revenue Fund to the Local Government
Distributive Fund an amount equal to the sum of (i) 8% (10% of
the ratio of the 3% individual income tax rate prior to 2011 to
the 3.75% individual income tax rate after 2014) of the net
revenue realized from the tax imposed by subsections (a) and
(b) of Section 201 of this Act upon individuals, trusts, and
estates during the preceding month and (ii) 9.14% (10% of the
ratio of the 4.8% corporate income tax rate prior to 2011 to
the 5.25% corporate income tax rate after 2014) of the net
revenue realized from the tax imposed by subsections (a) and
(b) of Section 201 of this Act upon corporations during the
preceding month. Beginning February 1, 2025, the Treasurer
shall transfer each month from the General Revenue Fund to the
Local Government Distributive Fund an amount equal to the sum
of (i) 9.23% (10% of the ratio of the 3% individual income tax
rate prior to 2011 to the 3.25% individual income tax rate
after 2024) of the net revenue realized from the tax imposed by
subsections (a) and (b) of Section 201 of this Act upon
individuals, trusts, and estates during the preceding month and
(ii) 10% of the net revenue realized from the tax imposed by
subsections (a) and (b) of Section 201 of this Act upon
corporations during the preceding month. Net revenue realized

SB2505 Enrolled - 63 - LRB096 16340 HLH 31604 b
for a month shall be defined as the revenue from the tax
imposed by subsections (a) and (b) of Section 201 of this Act
which is deposited in the General Revenue Fund, the Education
Educational Assistance Fund, and the Income Tax Surcharge Local
Government Distributive Fund, the Fund for the Advancement of
Education, and the Commitment to Human Services Fund during the
month minus the amount paid out of the General Revenue Fund in
State warrants during that same month as refunds to taxpayers
for overpayment of liability under the tax imposed by
subsections (a) and (b) of Section 201 of this Act.
(c) Deposits Into Income Tax Refund Fund.
(1) Beginning on January 1, 1989 and thereafter, the
Department shall deposit a percentage of the amounts
collected pursuant to subsections (a) and (b)(1), (2), and
(3), of Section 201 of this Act into a fund in the State
treasury known as the Income Tax Refund Fund. The
Department shall deposit 6% of such amounts during the
period beginning January 1, 1989 and ending on June 30,
1989. Beginning with State fiscal year 1990 and for each
fiscal year thereafter, the percentage deposited into the
Income Tax Refund Fund during a fiscal year shall be the
Annual Percentage. For fiscal years 1999 through 2001, the
Annual Percentage shall be 7.1%. For fiscal year 2003, the
Annual Percentage shall be 8%. For fiscal year 2004, the
Annual Percentage shall be 11.7%. Upon the effective date
of this amendatory Act of the 93rd General Assembly, the

SB2505 Enrolled - 64 - LRB096 16340 HLH 31604 b
Annual Percentage shall be 10% for fiscal year 2005. For
fiscal year 2006, the Annual Percentage shall be 9.75%. For
fiscal year 2007, the Annual Percentage shall be 9.75%. For
fiscal year 2008, the Annual Percentage shall be 7.75%. For
fiscal year 2009, the Annual Percentage shall be 9.75%. For
fiscal year 2010, the Annual Percentage shall be 9.75%. For
fiscal year 2011, the Annual Percentage shall be 8.75%. For
all other fiscal years, the Annual Percentage shall be
calculated as a fraction, the numerator of which shall be
the amount of refunds approved for payment by the
Department during the preceding fiscal year as a result of
overpayment of tax liability under subsections (a) and
(b)(1), (2), and (3) of Section 201 of this Act plus the
amount of such refunds remaining approved but unpaid at the
end of the preceding fiscal year, minus the amounts
transferred into the Income Tax Refund Fund from the
Tobacco Settlement Recovery Fund, and the denominator of
which shall be the amounts which will be collected pursuant
to subsections (a) and (b)(1), (2), and (3) of Section 201
of this Act during the preceding fiscal year; except that
in State fiscal year 2002, the Annual Percentage shall in
no event exceed 7.6%. The Director of Revenue shall certify
the Annual Percentage to the Comptroller on the last
business day of the fiscal year immediately preceding the
fiscal year for which it is to be effective.
(2) Beginning on January 1, 1989 and thereafter, the

SB2505 Enrolled - 65 - LRB096 16340 HLH 31604 b
Department shall deposit a percentage of the amounts
collected pursuant to subsections (a) and (b)(6), (7), and
(8), (c) and (d) of Section 201 of this Act into a fund in
the State treasury known as the Income Tax Refund Fund. The
Department shall deposit 18% of such amounts during the
period beginning January 1, 1989 and ending on June 30,
1989. Beginning with State fiscal year 1990 and for each
fiscal year thereafter, the percentage deposited into the
Income Tax Refund Fund during a fiscal year shall be the
Annual Percentage. For fiscal years 1999, 2000, and 2001,
the Annual Percentage shall be 19%. For fiscal year 2003,
the Annual Percentage shall be 27%. For fiscal year 2004,
the Annual Percentage shall be 32%. Upon the effective date
of this amendatory Act of the 93rd General Assembly, the
Annual Percentage shall be 24% for fiscal year 2005. For
fiscal year 2006, the Annual Percentage shall be 20%. For
fiscal year 2007, the Annual Percentage shall be 17.5%. For
fiscal year 2008, the Annual Percentage shall be 15.5%. For
fiscal year 2009, the Annual Percentage shall be 17.5%. For
fiscal year 2010, the Annual Percentage shall be 17.5%. For
fiscal year 2011, the Annual Percentage shall be 17.5%. For
all other fiscal years, the Annual Percentage shall be
calculated as a fraction, the numerator of which shall be
the amount of refunds approved for payment by the
Department during the preceding fiscal year as a result of
overpayment of tax liability under subsections (a) and

SB2505 Enrolled - 66 - LRB096 16340 HLH 31604 b
(b)(6), (7), and (8), (c) and (d) of Section 201 of this
Act plus the amount of such refunds remaining approved but
unpaid at the end of the preceding fiscal year, and the
denominator of which shall be the amounts which will be
collected pursuant to subsections (a) and (b)(6), (7), and
(8), (c) and (d) of Section 201 of this Act during the
preceding fiscal year; except that in State fiscal year
2002, the Annual Percentage shall in no event exceed 23%.
The Director of Revenue shall certify the Annual Percentage
to the Comptroller on the last business day of the fiscal
year immediately preceding the fiscal year for which it is
to be effective.
(3) The Comptroller shall order transferred and the
Treasurer shall transfer from the Tobacco Settlement
Recovery Fund to the Income Tax Refund Fund (i) $35,000,000
in January, 2001, (ii) $35,000,000 in January, 2002, and
(iii) $35,000,000 in January, 2003.
(d) Expenditures from Income Tax Refund Fund.
(1) Beginning January 1, 1989, money in the Income Tax
Refund Fund shall be expended exclusively for the purpose
of paying refunds resulting from overpayment of tax
liability under Section 201 of this Act, for paying rebates
under Section 208.1 in the event that the amounts in the
Homeowners' Tax Relief Fund are insufficient for that
purpose, and for making transfers pursuant to this
subsection (d).

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(2) The Director shall order payment of refunds
resulting from overpayment of tax liability under Section
201 of this Act from the Income Tax Refund Fund only to the
extent that amounts collected pursuant to Section 201 of
this Act and transfers pursuant to this subsection (d) and
item (3) of subsection (c) have been deposited and retained
in the Fund.
(3) As soon as possible after the end of each fiscal
year, the Director shall order transferred and the State
Treasurer and State Comptroller shall transfer from the
Income Tax Refund Fund to the Personal Property Tax
Replacement Fund an amount, certified by the Director to
the Comptroller, equal to the excess of the amount
collected pursuant to subsections (c) and (d) of Section
201 of this Act deposited into the Income Tax Refund Fund
during the fiscal year over the amount of refunds resulting
from overpayment of tax liability under subsections (c) and
(d) of Section 201 of this Act paid from the Income Tax
Refund Fund during the fiscal year.
(4) As soon as possible after the end of each fiscal
year, the Director shall order transferred and the State
Treasurer and State Comptroller shall transfer from the
Personal Property Tax Replacement Fund to the Income Tax
Refund Fund an amount, certified by the Director to the
Comptroller, equal to the excess of the amount of refunds
resulting from overpayment of tax liability under

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subsections (c) and (d) of Section 201 of this Act paid
from the Income Tax Refund Fund during the fiscal year over
the amount collected pursuant to subsections (c) and (d) of
Section 201 of this Act deposited into the Income Tax
Refund Fund during the fiscal year.
(4.5) As soon as possible after the end of fiscal year
1999 and of each fiscal year thereafter, the Director shall
order transferred and the State Treasurer and State
Comptroller shall transfer from the Income Tax Refund Fund
to the General Revenue Fund any surplus remaining in the
Income Tax Refund Fund as of the end of such fiscal year;
excluding for fiscal years 2000, 2001, and 2002 amounts
attributable to transfers under item (3) of subsection (c)
less refunds resulting from the earned income tax credit.
(5) This Act shall constitute an irrevocable and
continuing appropriation from the Income Tax Refund Fund
for the purpose of paying refunds upon the order of the
Director in accordance with the provisions of this Section.
(e) Deposits into the Education Assistance Fund and the
Income Tax Surcharge Local Government Distributive Fund.
On July 1, 1991, and thereafter, of the amounts collected
pursuant to subsections (a) and (b) of Section 201 of this Act,
minus deposits into the Income Tax Refund Fund, the Department
shall deposit 7.3% into the Education Assistance Fund in the
State Treasury. Beginning July 1, 1991, and continuing through
January 31, 1993, of the amounts collected pursuant to

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subsections (a) and (b) of Section 201 of the Illinois Income
Tax Act, minus deposits into the Income Tax Refund Fund, the
Department shall deposit 3.0% into the Income Tax Surcharge
Local Government Distributive Fund in the State Treasury.
Beginning February 1, 1993 and continuing through June 30,
1993, of the amounts collected pursuant to subsections (a) and
(b) of Section 201 of the Illinois Income Tax Act, minus
deposits into the Income Tax Refund Fund, the Department shall
deposit 4.4% into the Income Tax Surcharge Local Government
Distributive Fund in the State Treasury. Beginning July 1,
1993, and continuing through June 30, 1994, of the amounts
collected under subsections (a) and (b) of Section 201 of this
Act, minus deposits into the Income Tax Refund Fund, the
Department shall deposit 1.475% into the Income Tax Surcharge
Local Government Distributive Fund in the State Treasury.
(f) Deposits into the Fund for the Advancement of
Education. Beginning February 1, 2015, the Department shall
deposit the following portions of the revenue realized from the
tax imposed upon individuals, trusts, and estates by
subsections (a) and (b) of Section 201 of this Act during the
preceding month, minus deposits into the Income Tax Refund
Fund, into the Fund for the Advancement of Education:
(1) beginning February 1, 2015, and prior to February
1, 2025, 1/30; and
(2) beginning February 1, 2025, 1/26.
If the rate of tax imposed by subsection (a) and (b) of

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Section 201 is reduced pursuant to Section 201.5 of this Act,
the Department shall not make the deposits required by this
subsection (f) on or after the effective date of the reduction.
(g) Deposits into the Commitment to Human Services Fund.
Beginning February 1, 2015, the Department shall deposit the
following portions of the revenue realized from the tax imposed
upon individuals, trusts, and estates by subsections (a) and
(b) of Section 201 of this Act during the preceding month,
minus deposits into the Income Tax Refund Fund, into the
Commitment to Human Services Fund:
(1) beginning February 1, 2015, and prior to February
1, 2025, 1/30; and
(2) beginning February 1, 2025, 1/26.
If the rate of tax imposed by subsection (a) and (b) of
Section 201 is reduced pursuant to Section 201.5 of this Act,
the Department shall not make the deposits required by this
subsection (g) on or after the effective date of the reduction.
(Source: P.A. 95-707, eff. 1-11-08; 95-744, eff. 7-18-08;
96-45, eff. 7-15-09; 96-328, eff. 8-11-09; 96-959, eff.
7-1-10.)
Section 25. The Illinois Estate and Generation-Skipping
Transfer Tax Act is amended by changing Section 2 as follows:
(35 ILCS 405/2) (from Ch. 120, par. 405A-2)
Sec. 2. Definitions.

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"Federal estate tax" means the tax due to the United States
with respect to a taxable transfer under Chapter 11 of the
Internal Revenue Code.
"Federal generation-skipping transfer tax" means the tax
due to the United States with respect to a taxable transfer
under Chapter 13 of the Internal Revenue Code.
"Federal return" means the federal estate tax return with
respect to the federal estate tax and means the federal
generation-skipping transfer tax return with respect to the
federal generation-skipping transfer tax.
"Federal transfer tax" means the federal estate tax or the
federal generation-skipping transfer tax.
"Illinois estate tax" means the tax due to this State with
respect to a taxable transfer.
"Illinois generation-skipping transfer tax" means the tax
due to this State with respect to a taxable transfer that gives
rise to a federal generation-skipping transfer tax.
"Illinois transfer tax" means the Illinois estate tax or
the Illinois generation-skipping transfer tax.
"Internal Revenue Code" means, unless otherwise provided,
the Internal Revenue Code of 1986, as amended from time to
time.
"Non-resident trust" means a trust that is not a resident
of this State for purposes of the Illinois Income Tax Act, as
amended from time to time.
"Person" means and includes any individual, trust, estate,

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partnership, association, company or corporation.
"Qualified heir" means a qualified heir as defined in
Section 2032A(e)(1) of the Internal Revenue Code.
"Resident trust" means a trust that is a resident of this
State for purposes of the Illinois Income Tax Act, as amended
from time to time.
"State" means any state, territory or possession of the
United States and the District of Columbia.
"State tax credit" means:
(a) For persons dying on or after January 1, 2003 and
through December 31, 2005, an amount equal to the full credit
calculable under Section 2011 or Section 2604 of the Internal
Revenue Code as the credit would have been computed and allowed
under the Internal Revenue Code as in effect on December 31,
2001, without the reduction in the State Death Tax Credit as
provided in Section 2011(b)(2) or the termination of the State
Death Tax Credit as provided in Section 2011(f) as enacted by
the Economic Growth and Tax Relief Reconciliation Act of 2001,
but recognizing the increased applicable exclusion amount
through December 31, 2005.
(b) For persons dying after December 31, 2005 and on or
before December 31, 2009, and for persons dying after December
31, 2010, an amount equal to the full credit calculable under
Section 2011 or 2604 of the Internal Revenue Code as the credit
would have been computed and allowed under the Internal Revenue
Code as in effect on December 31, 2001, without the reduction

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in the State Death Tax Credit as provided in Section 2011(b)(2)
or the termination of the State Death Tax Credit as provided in
Section 2011(f) as enacted by the Economic Growth and Tax
Relief Reconciliation Act of 2001, but recognizing the
exclusion amount of only $2,000,000, and with reduction to the
adjusted taxable estate for any qualified terminable interest
property election as defined in subsection (b-1) of this
Section.
(b-1) The person required to file the Illinois return may
elect on a timely filed Illinois return a marital deduction for
qualified terminable interest property under Section
2056(b)(7) of the Internal Revenue Code for purposes of the
Illinois estate tax that is separate and independent of any
qualified terminable interest property election for federal
estate tax purposes. For purposes of the Illinois estate tax,
the inclusion of property in the gross estate of a surviving
spouse is the same as under Section 2044 of the Internal
Revenue Code.
In the case of any trust for which a State or federal
qualified terminable interest property election is made, the
trustee may not retain non-income producing assets for more
than a reasonable amount of time without the consent of the
surviving spouse.
(c) For persons dying after December 31, 2009, the credit
for state tax allowable under Section 2011 or Section 2604 of
the Internal Revenue Code.

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"Taxable transfer" means an event that gives rise to a
state tax credit, including any credit as a result of the
imposition of an additional tax under Section 2032A(c) of the
Internal Revenue Code.
"Transferee" means a transferee within the meaning of
Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
Code.
"Transferred property" means:
(1) With respect to a taxable transfer occurring at the
death of an individual, the deceased individual's gross
estate as defined in Section 2031 of the Internal Revenue
Code.
(2) With respect to a taxable transfer occurring as a
result of a taxable termination as defined in Section
2612(a) of the Internal Revenue Code, the taxable amount
determined under Section 2622(a) of the Internal Revenue
Code.
(3) With respect to a taxable transfer occurring as a
result of a taxable distribution as defined in Section
2612(b) of the Internal Revenue Code, the taxable amount
determined under Section 2621(a) of the Internal Revenue
Code.
(4) With respect to an event which causes the
imposition of an additional estate tax under Section
2032A(c) of the Internal Revenue Code, the qualified real
property that was disposed of or which ceased to be used

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for the qualified use, within the meaning of Section
2032A(c)(1) of the Internal Revenue Code.
"Trust" includes a trust as defined in Section 2652(b)(1)
of the Internal Revenue Code.
(Source: P.A. 96-789, eff. 9-8-09.)
Section 99. Effective date. This Act takes effect upon
becoming law.