ILLINOIS INCOME TAX ACT AS AMENDED THROUGH PUBLIC ACT 99-0423

143 Pages·2016·1.02 MB·English

AS AMENDED THROUGH PUBLIC ACT 100-555

Sec. 101. Short Title. .................................... 1 Sec. 217. Credit for wages paid to
qualified veterans. ....................... 47
Sec. 102. Construction. ................................. 1
Sec. 217.1. Credit for wages paid to
Sec. 103. Renumbered Internal Revenue
qualified unemployed veterans. .. 47
Code Provisions. ........................... 1
Sec. 218. Credit for student-assistance
Sec. 201. Tax Imposed. ................................. 1
contributions. .............................. 48
Sec. 201.5. State spending limitation and
Sec. 219. Historic preservation credit. ........ 48
tax reduction. ............................... 11
Sec. 220. Angel investment credit. ............. 48
Sec. 202. Net Income Defined. ................... 13
Sec. 221. Rehabilitation costs; qualified
Sec. 202.3. Net Income Attributable To
historic properties; River Edge
The Period Prior To July 1,
Redevelopment Zone. ................. 52
1989 And Net Income
Attributable To The Period Sec. 222. Live theater production credit. .... 52
After June 30, 1989. .................... 13
Sec. 223. Hospital credit. ............................ 53
Sec. 202.4. Net Income Attributable To
Sec. 224. Invest in Kids credit. ................... 53
The Period Prior To July 1,
1993 And Net Income Sec. 225. Credit for instructional
Attributable To The Period materials and supplies. ................ 53
After June 30, 1993. .................... 13
Sec. 226. Natural disaster credit. ................ 54
Sec. 202.5. Net income attributable to the
Sec. 250. Sunset Of Exemptions, Credits,
period beginning prior to the
And Deductions. ......................... 54
first day of a month and ending
after the last day of the Sec. 301. General Rule. .............................. 55
preceding month. ......................... 13 Sec. 302. Compensation Paid To
Sec. 203. Base income defined. .................. 14 Nonresidents. .............................. 55
Sec. 204. Standard Exemption. ................... 39 Sec. 303. Non-Business Income Of
Persons Other Than Residents. ... 55
Sec. 205. Exempt organizations. ................. 40
Sec. 304. Business income of persons
Sec. 206. Tax Credits For Coal Research
other than residents. .................... 57
And Coal Utilization
Equipment. .................................. 41 Sec. 305. Allocation Of Partnership
Income By Partnerships And
Sec. 207. Net Losses. .................................. 41
Partners Other Than Residents. ... 69
Sec. 208. Tax Credit For Residential Real
Sec. 306. Allocation Or Apportionment
Property Taxes. ........................... 42
Of Income By Estates And Trusts.
Sec. 208.1. Homeowners’ Tax Relief Rebate. .................................................... 70
.................................................... 42
Sec. 307. Allocation Of Income By Estate
Sec. 209. Tax Credit for "TECH-PREP" Or Trust Beneficiaries Other
youth vocational programs. ......... 43 Than Residents. ........................... 70
Sec. 210. Dependent Care Assistance Sec. 308. Allocation Of Subchapter S
Program Tax Credit. .................... 43 Corporation Income By
Subchapter S Corporations
Sec. 210.5. Tax credit for employee child care.
And Shareholders Other Than
.................................................... 43
Residents. .................................... 70
Sec. 211. Economic Development for a
Sec. 401. Taxable Year. .............................. 71
Growing Economy Tax Credit. ... 44
Sec. 402. Methods Of Accounting. ............. 71
Sec. 212. Earned income tax credit. ............ 45
Sec. 403. Effect Of Determination For
Sec. 213. Film production services credit. .. 45
Federal Purposes. ........................ 71
Sec. 214. Tax credit for affordable
Sec. 404. Reallocation Of Items. ................ 71
housing donations. ...................... 45
Sec. 405 Carryovers in Certain Acquisitions.
Sec. 216. Credit for wages paid to ex-felons.
.................................................... 72
.................................................... 46
i
As Amended Through Public Act 100-555
Sec. 501. Notice Or Regulations Sec. 507R. Mental Health Research Fund
Requiring Records, Statements Checkoff. ..................................... 81
And Special Returns.................... 72
Sec. 507S. Children’s Cancer Fund Checkoff.
Sec. 502. Returns and notices. .................... 73 .................................................... 81
Sec. 502.1. Use tax. ....................................... 76 Sec. 507T. American Diabetes Association
Checkoff. ..................................... 82
Sec. 503. Signing Of Returns And
Notices. ....................................... 76 Sec. 507U. Prostate Cancer Research Fund
checkoff....................................... 82
Sec. 504. Verification. ................................ 77
Sec. 507V. National World War II
Sec. 505. Time And Place For Filing Returns.
Memorial Fund checkoff. ............ 82
.................................................... 77
Sec. 507W. Korean War Veterans National
Sec. 506. Federal Returns. .......................... 78
Museum and Library Fund
Sec. 506.5. Returns Based On Substitute checkoff....................................... 82
W-2 Forms. ................................. 78
Sec. 507X. The Multiple Sclerosis
Sec. 507. Child Abuse Prevention Fund Assistance Fund checkoff. .......... 82
Checkoff. ..................................... 78
Sec. 507Y. The Illinois Military Family
Sec. 507A. Community Health Center Care Relief checkoff. ........................... 82
Fund Checkoff. ........................... 79
Sec. 507Z. World War II Illinois Veterans
Sec. 507B. Child Care Expansion Program Memorial Fund checkoff. ............ 83
Fund Checkoff. ........................... 79
Sec. 507AA. The Lou Gehrig's Disease
Sec. 507C. Youth Drug Abuse Prevention (ALS) Research Fund checkoff.
Fund Checkoff. ........................... 79 (PA 93-0036) .............................. 83
Sec. 507E. Assistive Technology For Sec. 507BB. Asthma and Lung Research
Persons With Disabilities Fund checkoff. (PA 93-0292) ............... 83
Checkoff. ..................................... 79
Sec. 507CC. The Leukemia Treatment and
Sec. 507F. Domestic Violence Shelter And Education checkoff. (PA 93-0324)
Service Fund Checkoff. ............... 79 .................................................... 83
Sec. 507G. United States Olympians Sec. 507DD. The Illinois Veterans' Homes
Assistance Fund Checkoff........... 79 Fund checkoff. ............................ 83
Sec. 507H. Persian Gulf Conflict Veterans Sec. 507EE. Pet Population Control Fund
Fund Checkoff. ........................... 80 checkoff....................................... 83
Sec. 507I. Literacy Advancement Fund Sec. 507FF. Epilepsy Treatment and
Checkoff. ..................................... 80 Education Grants-in-Aid Fund
checkoff....................................... 84
Sec. 507J. Ryan White Pediatric And
Adult AIDS Fund Checkoff. ....... 80 Sec. 507GG. Diabetes Research Checkoff
Fund checkoff. ............................ 84
Sec. 507K. Illinois Special Olympics Checkoff.
.................................................... 80 Sec. 507HH. Sarcoidosis Research Fund
checkoff....................................... 84
Sec. 507L. Penny Severns Breast, Cervical,
and Ovarian Cancer Research Sec. 507II. The Vince Demuzio Memorial
Fund Checkoff. ........................... 80 Colon Cancer Fund checkoff. ..... 84
Sec. 507M. Meals On Wheels Fund Checkoff. Sec. 507JJ. The Autism Research Checkoff
.................................................... 80 Fund checkoff. ............................ 84
Sec. 507N. Korean War Memorial Fund Sec. 507KK. Blindness Prevention Fund
Checkoff. ..................................... 81 checkoff....................................... 85
Sec. 507O. Heart Disease Treatment And Sec. 507LL. The Illinois Brain Tumor
Prevention Fund Checkoff. ......... 81 Research checkoff. ...................... 85
Sec. 507P. Hemophilia Treatment Fund Sec. 507MM. Supplemental Low-Income
Checkoff. ..................................... 81 Energy Assistance Fund checkoff.
.................................................... 85
Sec. 507Q. Women In Military Service
Memorial Fund Checkoff. ........... 81 Sec. 507NN. The Heartsaver AED Fund
checkoff. (P.A. 94-876) ............... 85
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As Amended Through Public Act 100-0047
Sec. 507PP. The lung cancer research Sec. 603. Credit Of Overpayments For
checkoff. (Public Act 95-434) ..... 85 Taxpayers That Are Members
Of A Unitary Business Group. .... 92
Sec. 507QQ. The autoimmune disease
research checkoff. (Public Act Sec. 604. Payments Not Payable To
95-435) ........................................ 85 Department. ................................. 92
Sec. 507RR. The Healthy Smiles Fund checkoff. Sec. 605. Payments By Credit Card. ........... 92
.................................................... 86
Sec. 606. EDGE payment. .......................... 92
Sec. 507SS. The hunger relief checkoff. ......... 86
Sec. 701. Requirement and Amount of
Sec. 507TT. The crisis nursery checkoff. ........ 86 Withholding. ............................... 92
Sec. 507UU. The Illinois Route 66 checkoff. ... 86 Sec. 702. Amount Exempt From
Withholding. ............................... 93
Sec. 507VV. Habitat for Humanity Fund
checkoff....................................... 86 Sec. 703. Information Statement. ................ 93
Sec. 507WW. The State parks checkoff. ............ 86 Sec. 704. Employer's Return and Payment
of Tax Withheld. ......................... 93
Sec. 507XX. The property tax relief checkoff
for veterans with disabilities. ...... 86 Sec. 704A. Employer's return and payment
of tax withheld. ........................... 94
Sec. 507YY. Crime Stoppers checkoff. ............ 87
Sec. 705. Employer's Liability For
Sec. 507ZZ. After-School Rescue Fund
Withheld Taxes. .......................... 96
checkoff....................................... 87
Sec. 706. Employer's Failure To
Sec. 507AAA. The Childhood Cancer
Withhold. .................................... 96
Research Fund checkoff. ............. 87
Sec. 707. Governmental Employers............ 96
Sec. 507BBB. The Children's Wellness Charities
Fund checkoff. ............................ 87 Sec. 709.5. Withholding by partnerships,
Subchapter S corporations, and
Sec. 507CCC. The Housing for Families Fund
trusts. ........................................... 96
checkoff....................................... 87
Sec. 710. Withholding From Lottery
Sec. 507DDD. Special Olympics Illinois and
Winnings. .................................... 97
Special Children's Checkoff. ....... 87
Sec. 711. Payor's Return and Payment of
Sec. 507EEE. U.S.S. Illinois Commissioning
Tax Withheld. ............................. 98
Fund checkoff. ............................ 88
Sec. 712. Payor's Liability For Withheld
Sec. 507FFF. Autism Care Fund checkoff. ....... 88
Taxes. .......................................... 98
Sec. 507GGG. Thriving Youth checkoff. ............ 88
Sec. 713. Payor's Failure To Withhold. ...... 98
Sec. 507HHH. Illinois Police Memorial checkoff.
Sec. 803. Payment Of Estimated Tax. ........ 98
.................................................... 88
Sec. 804. Failure To Pay Estimated Tax. .... 99
Sec. 508. Transfer Of Checkoff Funds. ...... 89
Sec. 806. Exemption from penalty ............ 101
Sec. 509. Tax checkoff explanations. ......... 89
Sec. 807. EDGE payment. ........................ 101
Sec. 509.1. Removal of excess tax
checkoff funds. ............................ 89 Sec. 901. Collection Authority. ................ 101
Sec. 510. Determination of amounts Sec. 902. Notice And Demand.................. 105
contributed. ................................. 89
Sec. 903. Assessment. ............................... 106
Sec. 511. Refunds. ...................................... 89
Sec. 904. Deficiencies And Overpayments.
Sec. 512. School District Information......... 90 .................................................. 106
Sec. 516. Assistance To The Homeless Fund. Sec. 905. Limitations on Notices of
.................................................... 90 Deficiency. ................................ 107
Sec. 601. Payment on Due Date of Sec. 906. Further Notices Of Deficiency
Return. ......................................... 90 Restricted. ................................. 109
Sec. 601.1. Payment by electronic funds Sec. 907. Waiver Of Restrictions On
transfer. ....................................... 91 Assessment. ............................... 109
Sec. 602. Tentative Payments. .................... 92 Sec. 908. Procedure On Protest. ............... 110
Sec. 909. Credits And Refunds. ................ 110
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As Amended Through Public Act 100-0047
Sec. 910. Procedure On Denial Of Claim Sec. 1110. Redemption By State. ............... 127
For Refund. ............................... 111
Sec. 1201. Administrative Review Law
Sec. 911. Limitations on Claims for Refund. Illinois Independent Tax
.................................................. 112 Tribunal Act of 2012. ................ 127
Sec. 911.1 114 Sec. 1202. Venue. ....................................... 127
Sec. 911.2. Refunds withheld; tax claims Sec. 1203. Service, Certification And
of other states. ........................... 114 Dismissal. .................................. 127
Sec. 911.3. Refunds withheld; order of Sec. 1204. Modification Of Assessment. .... 128
honoring requests. ..................... 115
Sec. 1301. Willful And Fraudulent Acts. .... 128
Sec. 912. Recovery Of Erroneous Refund.
Sec. 1302. Willful Failure To Pay Over. .... 128
.................................................. 116
Sec. 1401. Promulgation Of Rules And
Sec. 913. Access To Books And Records. 116
Regulations. .............................. 128
Sec. 914. Conduct Of Investigations
Sec. 1402. Notice. ....................................... 129
And Hearings. ........................... 116
Sec. 1403. Substitution Of Parties. ............. 129
Sec. 915. Immunity Of Witnesses. ........... 116
Sec. 1404. Appointment Of Secretary Of
Sec. 916. Production Of Witnesses And
State As Agent For Service Of
Records. .................................... 116
Process. ..................................... 129
Sec. 917. Confidentiality and
Sec. 1405. Transferees. ............................... 129
information sharing. .................. 117
Sec. 1405.1. Information Reports: ................. 129
Sec. 918. Place Of Hearings. .................... 118
Sec. 1405.2. Information Reports For
Sec. 1001. Failure to File Tax Returns. ...... 119
Payments Made Under
Sec. 1002. Failure To Pay Tax. ................... 119 Contracts For Personal Services:
.................................................. 130
Sec. 1003. Interest On Deficiencies. ........... 120
Sec. 1405.3. Information Reports For
Sec. 1004. Failure To File Withholding
Payments Made For Prizes
Returns Or Annual Transmittal
And Awards. ............................. 131
Forms For Wage And Tax
Statements. ................................ 120 Sec. 1405.4. Tax Refund Inquiries; Response.
.................................................. 131
Sec. 1005. Penalty For Underpayment Of Tax.
.................................................. 120 Sec. 1405.5. Registration of tax shelters. ....... 131
Sec. 1006. Frivolous Returns. ..................... 122 Sec. 1405.6. Investor lists. ............................. 132
Sec. 1007. Failure to register tax shelter Sec. 1406. Identifying Numbers. ................ 132
or maintain list. ......................... 123
Sec. 1407. Amounts Less Than $1. ............ 132
Sec. 1008. Promoting tax shelters. .............. 123
Sec. 1408. Administrative Procedure
Sec. 1101. Lien For Tax. ............................ 123 Act - Application. ...................... 132
Sec. 1102. Jeopardy Assessments. .............. 124 Sec. 1501. Definitions................................. 133
Sec. 1103. Filing and Priority of Liens. ...... 124 Sec. 1502. Arrangement And Captions....... 140
Sec. 1104. Duration Of Lien. ...................... 125 Sec. 1601. Severability. .............................. 140
Sec. 1105. Release of Liens. ....................... 125 Sec. 1701. Effective Date. .......................... 140
Sec. 1106. Nonliability For Costs. .............. 125
Sec. 1107. Claim To Property. .................... 125
Sec. 1108. Foreclosure On Real Property. .. 126
Sec. 1109. Demand And Seizure. ............... 126
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As Amended Through Public Act 100-0047
AN ACT to impose a tax on the privilege of earning (1) In the case of an individual, trust or
or receiving income in or as a resident of the State estate, for taxable years ending prior to July 1, 1989,
of Illinois. an amount equal to 2 1/2% of the taxpayer's net
income for the taxable year.
(35 ILCS 5/101 et seq.) (from Ch. 120, par. 1-101 et
seq.) (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
Cite: 35 ILCS 5/101 et seq. From: Ch. 120, par. 1- equal to the sum of (i) 2 1/2% of the taxpayer's net
101 et seq. Source: P.A. 76-261. Date: Approved income for the period prior to July 1, 1989, as
July 1, 1969. Short title: Illinois Income Tax Act. calculated under Section 202.3, and (ii) 3% of the
taxpayer's net income for the period after June 30,
ARTICLE 1. SHORT TITLE AND
1989, as calculated under Section 202.3.
CONSTRUCTION.
(3) In the case of an individual, trust or
Sec. 101. Short Title.
estate, for taxable years beginning after June 30,
This Act shall be known and may be cited 1989, and ending prior to January 1, 2011, an
as the "Illinois Income Tax Act." (Source: P.A. 76- amount equal to 3% of the taxpayer's net income for
261.) the taxable year.
Sec. 102. Construction. (4) In the case of an individual, trust, or
estate, for taxable years beginning prior to January
Except as otherwise expressly provided or
1, 2011, and ending after December 31, 2010, an
clearly appearing from the context, any term used in
amount equal to the sum of (i) 3% of the taxpayer's
this Act shall have the same meaning as when used
net income for the period prior to January 1, 2011,
in a comparable context in the United States Internal
as calculated under Section 202.5, and (ii) 5% of the
Revenue Code of 1954 or any successor law or laws
taxpayer's net income for the period after December
relating to federal income taxes and other provisions
31, 2010, as calculated under Section 202.5.
of the statutes of the United States relating to federal
income taxes as such Code, laws and statutes are in (5) In the case of an individual, trust, or
effect for the taxable year. (Source: P.A. 77-726.) estate, for taxable years beginning on or after
January 1, 2011, and ending prior to January 1,
Sec. 103. Renumbered Internal Revenue
2015, an amount equal to 5% of the taxpayer's net
Code Provisions.
income for the taxable year.
If a provision of the United States Internal
(5.1) In the case of an individual, trust, or
Revenue Code is specifically mentioned by number
estate, for taxable years beginning prior to January
in a provision of this Act and if after the effective
1, 2015, and ending after December 31, 2014, an
date of the legislation that established such reference
amount equal to the sum of (i) 5% of the taxpayer's
the Internal Revenue Code provision thus referred to
net income for the period prior to January 1, 2015,
is, by amendment, renumbered without any other
as calculated under Section 202.5, and (ii) 3.75% of
change whatever being made to it, then the provision
the taxpayer's net income for the period after
of this Act containing such reference shall be
December 31, 2014, as calculated under Section
construed as though the renumbering of the
202.5.
provision of the United States Internal Revenue
Code had not occurred. (Source: P.A. 86-678.) (5.2) In the case of an individual, trust, or
estate, for taxable years beginning on or after
ARTICLE 2. TAX IMPOSED
January 1, 2015, and ending prior to July 1, 2017, an
Sec. 201. Tax Imposed. amount equal to 3.75% of the taxpayer's net income
for the taxable year.
(a) In general. A tax measured by net
income is hereby imposed on every individual, (5.3) In the case of an individual, trust, or
corporation, trust and estate for each taxable year estate, for taxable years beginning prior to July 1,
ending after July 31, 1969 on the privilege of 2017, and ending after June 30, 2017, an amount
earning or receiving income in or as a resident of equal to the sum of (i) 3.75% of the taxpayer's net
this State. Such tax shall be in addition to all other income for the period prior to July 1, 2017, as
occupation or privilege taxes imposed by this State calculated under Section 202.5, and (ii) 4.95% of the
or by any municipal corporation or political taxpayer's net income for the period after June 30,
subdivision thereof. 2017, as calculated under Section 202.5.
(b) Rates. The tax imposed by subsection (5.4) In the case of an individual, trust, or
(a) of this Section shall be determined as follows, estate, for taxable years beginning on or after July 1,
except as adjusted by subsection (d-1): 2017, an amount equal to 4.95% of the taxpayer's
net income for the taxable year.
1
As Amended Through Public Act 100-555
(6) In the case of a corporation, for taxable amount equal to 7% of the taxpayer's net income for
years ending prior to July 1, 1989, an amount equal the taxable year.
to 4% of the taxpayer's net income for the taxable
The rates under this subsection (b) are
year.
subject to the provisions of Section 201.5.
(7) In the case of a corporation, for taxable
(c) Personal Property Tax Replacement
years beginning prior to July 1, 1989 and ending
Income Tax. Beginning on July 1, 1979 and
after June 30, 1989, an amount equal to the sum of
thereafter, in addition to such income tax, there is
(i) 4% of the taxpayer's net income for the period
also hereby imposed the Personal Property Tax
prior to July 1, 1989, as calculated under Section
Replacement Income Tax measured by net income
202.3, and (ii) 4.8% of the taxpayer's net income for
on every corporation (including Subchapter S
the period after June 30, 1989, as calculated under
corporations), partnership and trust, for each taxable
Section 202.3.
year ending after June 30, 1979. Such taxes are
(8) In the case of a corporation, for taxable imposed on the privilege of earning or receiving
years beginning after June 30, 1989, and ending income in or as a resident of this State. The Personal
prior to January 1, 2011, an amount equal to 4.8% Property Tax Replacement Income Tax shall be in
of the taxpayer's net income for the taxable year. addition to the income tax imposed by subsections
(a) and (b) of this Section and in addition to all other
(9) In the case of a corporation, for taxable
occupation or privilege taxes imposed by this State
years beginning prior to January 1, 2011, and ending
or by any municipal corporation or political
after December 31, 2010, an amount equal to the
subdivision thereof.
sum of (i) 4.8% of the taxpayer's net income for the
period prior to January 1, 2011, as calculated under (d) Additional Personal Property Tax
Section 202.5, and (ii) 7% of the taxpayer's net Replacement Income Tax Rates. The personal
income for the period after December 31, 2010, as property tax replacement income tax imposed by
calculated under Section 202.5. this subsection and subsection (c) of this Section in
the case of a corporation, other than a Subchapter S
(10) In the case of a corporation, for
corporation and except as adjusted by subsection (d-
taxable years beginning on or after January 1, 2011,
1), shall be an additional amount equal to 2.85% of
and ending prior to January 1, 2015, an amount
such taxpayer's net income for the taxable year,
equal to 7% of the taxpayer's net income for the
except that beginning on January 1, 1981, and
taxable year.
thereafter, the rate of 2.85% specified in this
(11) In the case of a corporation, for subsection shall be reduced to 2.5%, and in the case
taxable years beginning prior to January 1, 2015, of a partnership, trust or a Subchapter S corporation
and ending after December 31, 2014, an amount shall be an additional amount equal to 1.5% of such
equal to the sum of (i) 7% of the taxpayer's net taxpayer's net income for the taxable year.
income for the period prior to January 1, 2015, as
(d-1) Rate reduction for certain foreign
calculated under Section 202.5, and (ii) 5.25% of the
insurers. In the case of a foreign insurer, as defined
taxpayer's net income for the period after December
by Section 35A-5 of the Illinois Insurance Code,
31, 2014, as calculated under Section 202.5.
whose state or country of domicile imposes on
(12) In the case of a corporation, for insurers domiciled in Illinois a retaliatory tax
taxable years beginning on or after January 1, 2015, (excluding any insurer whose premiums from
and ending prior to July 1, 2017, an amount equal to reinsurance assumed are 50% or more of its total
5.25% of the taxpayer's net income for the taxable insurance premiums as determined under paragraph
year. (2) of subsection (b) of Section 304, except that for
purposes of this determination premiums from
(13) In the case of a corporation, for
reinsurance do not include premiums from inter-
taxable years beginning prior to July 1, 2017, and
affiliate reinsurance arrangements), beginning with
ending after June 30, 2017, an amount equal to the
taxable years ending on or after December 31, 1999,
sum of (i) 5.25% of the taxpayer's net income for the
the sum of the rates of tax imposed by subsections
period prior to July 1, 2017, as calculated under
(b) and (d) shall be reduced (but not increased) to
Section 202.5, and (ii) 7% of the taxpayer's net
the rate at which the total amount of tax imposed
income for the period after June 30, 2017, as
under this Act, net of all credits allowed under this
calculated under Section 202.5.
Act, shall equal (i) the total amount of tax that would
(14) In the case of a corporation, for be imposed on the foreign insurer's net income
taxable years beginning on or after July 1, 2017, an allocable to Illinois for the taxable year by such
2
As Amended Through Public Act 100-555
foreign insurer's state or country of domicile if that as determined by the taxpayer's employment records
net income were subject to all income taxes and filed with the Illinois Department of Employment
taxes measured by net income imposed by such Security. Taxpayers who are new to Illinois shall be
foreign insurer's state or country of domicile, net of deemed to have met the 1% growth in base
all credits allowed or (ii) a rate of zero if no such tax employment for the first year in which they file
is imposed on such income by the foreign insurer's employment records with the Illinois Department of
state of domicile. For the purposes of this subsection Employment Security. The provisions added to this
(d-1), an inter-affiliate includes a mutual insurer Section by Public Act 85-1200 (and restored by
under common management. Public Act 87-895) shall be construed as declaratory
of existing law and not as a new enactment. If, in
(1) For the purposes of subsection (d-1), in
any year, the increase in base employment within
no event shall the sum of the rates of tax imposed by
Illinois over the preceding year is less than 1%, the
subsections (b) and (d) be reduced below the rate at
additional credit shall be limited to that percentage
which the sum of:
times a fraction, the numerator of which is .5% and
(A) the total amount of tax imposed on the denominator of which is 1%, but shall not
such foreign insurer under this Act for a taxable exceed .5%. The investment credit shall not be
year, net of all credits allowed under this Act, plus allowed to the extent that it would reduce a
taxpayer's liability in any tax year below zero, nor
(B) the privilege tax imposed by Section
may any credit for qualified property be allowed for
409 of the Illinois Insurance Code, the fire insurance
any year other than the year in which the property
company tax imposed by Section 12 of the Fire
was placed in service in Illinois. For tax years
Investigation Act, and the fire department taxes
ending on or after December 31, 1987, and on or
imposed under Section 11-10-1 of the Illinois
before December 31, 1988, the credit shall be
Municipal Code, equals 1.25% for taxable years
allowed for the tax year in which the property is
ending prior to December 31, 2003, or 1.75% for
placed in service, or, if the amount of the credit
taxable years ending on or after December 31, 2003,
exceeds the tax liability for that year, whether it
of the net taxable premiums written for the taxable
exceeds the original liability or the liability as later
year, as described by subsection (1) of Section 409
amended, such excess may be carried forward and
of the Illinois Insurance Code. This paragraph will
applied to the tax liability of the 5 taxable years
in no event increase the rates imposed under
following the excess credit years if the taxpayer (i)
subsections (b) and (d).
makes investments which cause the creation of a
(2) Any reduction in the rates of tax minimum of 2,000 full-time equivalent jobs in
imposed by this subsection shall be applied first Illinois, (ii) is located in an enterprise zone
against the rates imposed by subsection (b) and only established pursuant to the Illinois Enterprise Zone
after the tax imposed by subsection (a) net of all Act and (iii) is certified by the Department of
credits allowed under this Section other than the Commerce and Community Affairs (now
credit allowed under subsection (i) has been reduced Department of Commerce and Economic
to zero, against the rates imposed by subsection (d). Opportunity) as complying with the requirements
specified in clause (i) and (ii) by July 1, 1986. The
This subsection (d-1) is exempt from the
Department of Commerce and Community Affairs
provisions of Section 250.
(now Department of Commerce and Economic
(e) Investment credit. A taxpayer shall be Opportunity) shall notify the Department of
allowed a credit against the Personal Property Tax Revenue of all such certifications immediately. For
Replacement Income Tax for investment in tax years ending after December 31, 1988, the credit
qualified property. shall be allowed for the tax year in which the
property is placed in service, or, if the amount of the
(1) A taxpayer shall be allowed a credit
credit exceeds the tax liability for that year, whether
equal to .5% of the basis of qualified property placed
it exceeds the original liability or the liability as later
in service during the taxable year, provided such
amended, such excess may be carried forward and
property is placed in service on or after July 1, 1984.
applied to the tax liability of the 5 taxable years
There shall be allowed an additional credit equal to
following the excess credit years. The credit shall be
.5% of the basis of qualified property placed in
applied to the earliest year for which there is a
service during the taxable year, provided such
liability. If there is credit from more than one tax
property is placed in service on or after July 1, 1986,
year that is available to offset a liability, earlier
and the taxpayer's base employment within Illinois
credit shall be applied first.
has increased by 1% or more over the preceding year
3
As Amended Through Public Act 100-555
(2) The term "qualified property" means it has been placed in service in Illinois by the
property which: taxpayer, the amount of such increase shall be
deemed property placed in service on the date of
(A) is tangible, whether new or used,
such increase in basis.
including buildings and structural components of
buildings and signs that are real property, but not (6) The term "placed in service" shall have
including land or improvements to real property that the same meaning as under Section 46 of the Internal
are not a structural component of a building such as Revenue Code.
landscaping, sewer lines, local access roads,
(7) If during any taxable year, any property
fencing, parking lots, and other appurtenances;
ceases to be qualified property in the hands of the
(B) is depreciable pursuant to Section 167 taxpayer within 48 months after being placed in
of the Internal Revenue Code, except that "3-year service, or the situs of any qualified property is
property" as defined in Section 168(c)(2)(A) of that moved outside Illinois within 48 months after being
Code is not eligible for the credit provided by this placed in service, the Personal Property Tax
subsection (e); Replacement Income Tax for such taxable year shall
be increased. Such increase shall be determined by
(C) is acquired by purchase as defined in
(i) recomputing the investment credit which would
Section 179(d) of the Internal Revenue Code;
have been allowed for the year in which credit for
(D) is used in Illinois by a taxpayer who is such property was originally allowed by eliminating
primarily engaged in manufacturing, or in mining such property from such computation and, (ii)
coal or fluorite, or in retailing, or was placed in subtracting such recomputed credit from the amount
service on or after July 1, 2006 in a River Edge of credit previously allowed. For the purposes of this
Redevelopment Zone established pursuant to the paragraph (7), a reduction of the basis of qualified
River Edge Redevelopment Zone Act; and property resulting from a redetermination of the
purchase price shall be deemed a disposition of
(E) has not previously been used in Illinois
qualified property to the extent of such reduction.
in such a manner and by such a person as would
qualify for the credit provided by this subsection (e) (8) Unless the investment credit is
or subsection (f). extended by law, the basis of qualified property shall
not include costs incurred after December 31, 2018,
(3) For purposes of this subsection (e),
except for costs incurred pursuant to a binding
"manufacturing" means the material staging and
contract entered into on or before December 31,
production of tangible personal property by
2018.
procedures commonly regarded as manufacturing,
processing, fabrication, or assembling which (9) Each taxable year ending before
changes some existing material into new shapes, December 31, 2000, a partnership may elect to pass
new qualities, or new combinations. For purposes of through to its partners the credits to which the
this subsection (e) the term "mining" shall have the partnership is entitled under this subsection (e) for
same meaning as the term "mining" in Section the taxable year. A partner may use the credit
613(c) of the Internal Revenue Code. For purposes allocated to him or her under this paragraph only
of this subsection (e), the term "retailing" means the against the tax imposed in subsections (c) and (d) of
sale of tangible personal property for use or this Section. If the partnership makes that election,
consumption and not for resale, or services rendered those credits shall be allocated among the partners
in conjunction with the sale of tangible personal in the partnership in accordance with the rules set
property for use or consumption and not for resale. forth in Section 704(b) of the Internal Revenue
For purposes of this subsection (e), "tangible Code, and the rules promulgated under that Section,
personal property" has the same meaning as when and the allocated amount of the credits shall be
that term is used in the Retailers' Occupation Tax allowed to the partners for that taxable year. The
Act, and, for taxable years ending after December partnership shall make this election on its Personal
31, 2008, does not include the generation, Property Tax Replacement Income Tax return for
transmission, or distribution of electricity. that taxable year. The election to pass through the
credits shall be irrevocable.
(4) The basis of qualified property shall be
the basis used to compute the depreciation deduction For taxable years ending on or after
for federal income tax purposes. December 31, 2000, a partner that qualifies its
partnership for a subtraction under subparagraph (I)
(5) If the basis of the property for federal
of paragraph (2) of subsection (d) of Section 203 or
income tax depreciation purposes is increased after
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As Amended Through Public Act 100-555
a shareholder that qualifies a Subchapter S (A) is tangible, whether new or used,
corporation for a subtraction under subparagraph (S) including buildings and structural components of
of paragraph (2) of subsection (b) of Section 203 buildings;
shall be allowed a credit under this subsection (e)
(B) is depreciable pursuant to Section 167
equal to its share of the credit earned under this
of the Internal Revenue Code, except that "3-year
subsection (e) during the taxable year by the
property" as defined in Section 168(c)(2)(A) of that
partnership or Subchapter S corporation, determined
Code is not eligible for the credit provided by this
in accordance with the determination of income and
subsection (f);
distributive share of income under Sections 702 and
704 and Subchapter S of the Internal Revenue Code. (C) is acquired by purchase as defined in
This paragraph is exempt from the provisions of Section 179(d) of the Internal Revenue Code;
Section 250.
(D) is used in the Enterprise Zone or River
(f) Investment credit; Enterprise Zone; Edge Redevelopment Zone by the taxpayer; and
River Edge Redevelopment Zone.
(E) has not been previously used in Illinois
(1) A taxpayer shall be allowed a credit in such a manner and by such a person as would
against the tax imposed by subsections (a) and (b) of qualify for the credit provided by this subsection (f)
this Section for investment in qualified property or subsection (e).
which is placed in service in an Enterprise Zone
(3) The basis of qualified property shall be
created pursuant to the Illinois Enterprise Zone Act
the basis used to compute the depreciation deduction
or, for property placed in service on or after July 1,
for federal income tax purposes.
2006, a River Edge Redevelopment Zone
established pursuant to the River Edge (4) If the basis of the property for federal
Redevelopment Zone Act. For partners, income tax depreciation purposes is increased after
shareholders of Subchapter S corporations, and it has been placed in service in the Enterprise Zone
owners of limited liability companies, if the liability or River Edge Redevelopment Zone by the taxpayer,
company is treated as a partnership for purposes of the amount of such increase shall be deemed
federal and State income taxation, there shall be property placed in service on the date of such
allowed a credit under this subsection (f) to be increase in basis.
determined in accordance with the determination of
(5) The term "placed in service" shall have
income and distributive share of income under
the same meaning as under Section 46 of the Internal
Sections 702 and 704 and Subchapter S of the
Revenue Code.
Internal Revenue Code. The credit shall be .5% of
the basis for such property. The credit shall be (6) If during any taxable year, any property
available only in the taxable year in which the ceases to be qualified property in the hands of the
property is placed in service in the Enterprise Zone taxpayer within 48 months after being placed in
or River Edge Redevelopment Zone and shall not be service, or the situs of any qualified property is
allowed to the extent that it would reduce a moved outside the Enterprise Zone or River Edge
taxpayer's liability for the tax imposed by Redevelopment Zone within 48 months after being
subsections (a) and (b) of this Section to below zero. placed in service, the tax imposed under subsections
For tax years ending on or after December 31, 1985, (a) and (b) of this Section for such taxable year shall
the credit shall be allowed for the tax year in which be increased. Such increase shall be determined by
the property is placed in service, or, if the amount of (i) recomputing the investment credit which would
the credit exceeds the tax liability for that year, have been allowed for the year in which credit for
whether it exceeds the original liability or the such property was originally allowed by eliminating
liability as later amended, such excess may be such property from such computation, and (ii)
carried forward and applied to the tax liability of the subtracting such recomputed credit from the amount
5 taxable years following the excess credit year. The of credit previously allowed. For the purposes of this
credit shall be applied to the earliest year for which paragraph (6), a reduction of the basis of qualified
there is a liability. If there is credit from more than property resulting from a redetermination of the
one tax year that is available to offset a liability, the purchase price shall be deemed a disposition of
credit accruing first in time shall be applied first. qualified property to the extent of such reduction.
(2) The term qualified property means (7) There shall be allowed an additional
property which: credit equal to 0.5% of the basis of qualified
property placed in service during the taxable year in
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As Amended Through Public Act 100-555
a River Edge Redevelopment Zone, provided such tax liability for that year, whether it exceeds the
property is placed in service on or after July 1, 2006, original liability or the liability as later amended,
and the taxpayer's base employment within Illinois such excess may be carried forward and applied to
has increased by 1% or more over the preceding year the tax liability of the 5 taxable years following the
as determined by the taxpayer's employment records excess credit year. The credit shall be applied to the
filed with the Illinois Department of Employment earliest year for which there is a liability. If there is
Security. Taxpayers who are new to Illinois shall be credit from more than one tax year that is available
deemed to have met the 1% growth in base to offset a liability, the credit accruing first in time
employment for the first year in which they file shall be applied first.
employment records with the Illinois Department of
Changes made in this subdivision (h)(1) by
Employment Security. If, in any year, the increase
Public Act 88-670 restore changes made by Public
in base employment within Illinois over the
Act 85-1182 and reflect existing law.
preceding year is less than 1%, the additional credit
shall be limited to that percentage times a fraction, (2) The term qualified property means
the numerator of which is 0.5% and the denominator property which:
of which is 1%, but shall not exceed 0.5%.
(A) is tangible, whether new or used,
(g) (Blank) including buildings and structural components of
buildings;
(h) Investment credit; High Impact
Business. (B) is depreciable pursuant to Section 167
of the Internal Revenue Code, except that "3-year
(1) Subject to subsections (b) and (b-5) of
property" as defined in Section 168(c)(2)(A) of that
Section 5.5 of the Illinois Enterprise Zone Act, a
Code is not eligible for the credit provided by this
taxpayer shall be allowed a credit against the tax
subsection (h);
imposed by subsections (a) and (b) of this Section
for investment in qualified property which is placed (C) is acquired by purchase as defined in
in service by a Department of Commerce and Section 179(d) of the Internal Revenue Code; and
Economic Opportunity designated High Impact
(D) is not eligible for the Enterprise Zone
Business. The credit shall be .5% of the basis for
Investment Credit provided by subsection (f) of this
such property. The credit shall not be available (i)
Section.
until the minimum investments in qualified property
set forth in subdivision (a)(3)(A) of Section 5.5 of (3) The basis of qualified property shall be
the Illinois Enterprise Zone Act have been satisfied the basis used to compute the depreciation deduction
or (ii) until the time authorized in subsection (b-5) for federal income tax purposes.
of the Illinois Enterprise Zone Act for entities
(4) If the basis of the property for federal
designated as High Impact Businesses under
income tax depreciation purposes is increased after
subdivisions (a)(3)(B), (a)(3)(C), and (a)(3)(D) of
it has been placed in service in a federally
Section 5.5 of the Illinois Enterprise Zone Act, and
designated Foreign Trade Zone or Sub-Zone located
shall not be allowed to the extent that it would
in Illinois by the taxpayer, the amount of such
reduce a taxpayer's liability for the tax imposed by
increase shall be deemed property placed in service
subsections (a) and (b) of this Section to below zero.
on the date of such increase in basis.
The credit applicable to such investments shall be
taken in the taxable year in which such investments (5) The term "placed in service" shall have
have been completed. The credit for additional the same meaning as under Section 46 of the Internal
investments beyond the minimum investment by a Revenue Code.
designated high impact business authorized under
(6) If during any taxable year ending on or
subdivision (a)(3)(A) of Section 5.5 of the Illinois
before December 31, 1996, any property ceases to
Enterprise Zone Act shall be available only in the
be qualified property in the hands of the taxpayer
taxable year in which the property is placed in
within 48 months after being placed in service, or
service and shall not be allowed to the extent that it
the situs of any qualified property is moved outside
would reduce a taxpayer's liability for the tax
Illinois within 48 months after being placed in
imposed by subsections (a) and (b) of this Section to
service, the tax imposed under subsections (a) and
below zero. For tax years ending on or after
(b) of this Section for such taxable year shall be
December 31, 1987, the credit shall be allowed for
increased. Such increase shall be determined by (i)
the tax year in which the property is placed in
recomputing the investment credit which would
service, or, if the amount of the credit exceeds the
have been allowed for the year in which credit for
6
As Amended Through Public Act 100-555