Illinois 2023-2024 Regular Session

Illinois House Bill HB2237 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB2237 Introduced , by Rep. Kelly M. Burke SYNOPSIS AS INTRODUCED: 35 ILCS 5/1501 from Ch. 120, par. 15-1501 Amends the Illinois Income Tax Act. Makes changes to the definition of investment partnership to provide that a dealer in qualifying investment securities may be considered an investment partnership. Allows a partnership interest to be considered a qualified security if the interest qualifies as a security within the meaning of the federal Securities Act of 1933. In provisions requiring that no less than 90% of the investment partnership's gross income shall consist of interest, dividends, and gains from the sale or exchange of qualifying investment securities, provides that that includes the distributive share of partnership income from lower-tier partnership interests and does not include income from partnerships that are operating at a federal taxable loss. Effective immediately. LRB103 25752 HLH 53937 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB2237 Introduced , by Rep. Kelly M. Burke SYNOPSIS AS INTRODUCED: 35 ILCS 5/1501 from Ch. 120, par. 15-1501 35 ILCS 5/1501 from Ch. 120, par. 15-1501 Amends the Illinois Income Tax Act. Makes changes to the definition of investment partnership to provide that a dealer in qualifying investment securities may be considered an investment partnership. Allows a partnership interest to be considered a qualified security if the interest qualifies as a security within the meaning of the federal Securities Act of 1933. In provisions requiring that no less than 90% of the investment partnership's gross income shall consist of interest, dividends, and gains from the sale or exchange of qualifying investment securities, provides that that includes the distributive share of partnership income from lower-tier partnership interests and does not include income from partnerships that are operating at a federal taxable loss. Effective immediately. LRB103 25752 HLH 53937 b LRB103 25752 HLH 53937 b A BILL FOR
2	2	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB2237 Introduced , by Rep. Kelly M. Burke SYNOPSIS AS INTRODUCED:
3	3	35 ILCS 5/1501 from Ch. 120, par. 15-1501 35 ILCS 5/1501 from Ch. 120, par. 15-1501
4	4	35 ILCS 5/1501 from Ch. 120, par. 15-1501
5	5	Amends the Illinois Income Tax Act. Makes changes to the definition of investment partnership to provide that a dealer in qualifying investment securities may be considered an investment partnership. Allows a partnership interest to be considered a qualified security if the interest qualifies as a security within the meaning of the federal Securities Act of 1933. In provisions requiring that no less than 90% of the investment partnership's gross income shall consist of interest, dividends, and gains from the sale or exchange of qualifying investment securities, provides that that includes the distributive share of partnership income from lower-tier partnership interests and does not include income from partnerships that are operating at a federal taxable loss. Effective immediately.
6	6	LRB103 25752 HLH 53937 b LRB103 25752 HLH 53937 b
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8	8	A BILL FOR
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10	10	HB2237 LRB103 25752 HLH 53937 b
11	11	1 AN ACT concerning revenue.
12	12	2 Be it enacted by the People of the State of Illinois,
13	13	3 represented in the General Assembly:
14	14	4 Section 5. The Illinois Income Tax Act is amended by
15	15	5 changing Section 1501 as follows:
16	16	6 (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
17	17	7 Sec. 1501. Definitions.
18	18	8 (a) In general. When used in this Act, where not otherwise
19	19	9 distinctly expressed or manifestly incompatible with the
20	20	10 intent thereof:
21	21	11 (1) Business income. The term "business income" means
22	22	12 all income that may be treated as apportionable business
23	23	13 income under the Constitution of the United States.
24	24	14 Business income is net of the deductions allocable
25	25	15 thereto. Such term does not include compensation or the
26	26	16 deductions allocable thereto. For each taxable year
27	27	17 beginning on or after January 1, 2003, a taxpayer may
28	28	18 elect to treat all income other than compensation as
29	29	19 business income. This election shall be made in accordance
30	30	20 with rules adopted by the Department and, once made, shall
31	31	21 be irrevocable.
32	32	22 (1.5) Captive real estate investment trust:
33	33	23 (A) The term "captive real estate investment
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37	37	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB2237 Introduced , by Rep. Kelly M. Burke SYNOPSIS AS INTRODUCED:
38	38	35 ILCS 5/1501 from Ch. 120, par. 15-1501 35 ILCS 5/1501 from Ch. 120, par. 15-1501
39	39	35 ILCS 5/1501 from Ch. 120, par. 15-1501
40	40	Amends the Illinois Income Tax Act. Makes changes to the definition of investment partnership to provide that a dealer in qualifying investment securities may be considered an investment partnership. Allows a partnership interest to be considered a qualified security if the interest qualifies as a security within the meaning of the federal Securities Act of 1933. In provisions requiring that no less than 90% of the investment partnership's gross income shall consist of interest, dividends, and gains from the sale or exchange of qualifying investment securities, provides that that includes the distributive share of partnership income from lower-tier partnership interests and does not include income from partnerships that are operating at a federal taxable loss. Effective immediately.
41	41	LRB103 25752 HLH 53937 b LRB103 25752 HLH 53937 b
42	42	LRB103 25752 HLH 53937 b
43	43	A BILL FOR
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49	49	35 ILCS 5/1501 from Ch. 120, par. 15-1501
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68	68	1 trust" means a corporation, trust, or association:
69	69	2 (i) that is considered a real estate
70	70	3 investment trust for the taxable year under
71	71	4 Section 856 of the Internal Revenue Code;
72	72	5 (ii) the certificates of beneficial interest
73	73	6 or shares of which are not regularly traded on an
74	74	7 established securities market; and
75	75	8 (iii) of which more than 50% of the voting
76	76	9 power or value of the beneficial interest or
77	77	10 shares, at any time during the last half of the
78	78	11 taxable year, is owned or controlled, directly,
79	79	12 indirectly, or constructively, by a single
80	80	13 corporation.
81	81	14 (B) The term "captive real estate investment
82	82	15 trust" does not include:
83	83	16 (i) a real estate investment trust of which
84	84	17 more than 50% of the voting power or value of the
85	85	18 beneficial interest or shares is owned or
86	86	19 controlled, directly, indirectly, or
87	87	20 constructively, by:
88	88	21 (a) a real estate investment trust, other
89	89	22 than a captive real estate investment trust;
90	90	23 (b) a person who is exempt from taxation
91	91	24 under Section 501 of the Internal Revenue
92	92	25 Code, and who is not required to treat income
93	93	26 received from the real estate investment trust
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104	104	1 as unrelated business taxable income under
105	105	2 Section 512 of the Internal Revenue Code;
106	106	3 (c) a listed Australian property trust, if
107	107	4 no more than 50% of the voting power or value
108	108	5 of the beneficial interest or shares of that
109	109	6 trust, at any time during the last half of the
110	110	7 taxable year, is owned or controlled, directly
111	111	8 or indirectly, by a single person;
112	112	9 (d) an entity organized as a trust,
113	113	10 provided a listed Australian property trust
114	114	11 described in subparagraph (c) owns or
115	115	12 controls, directly or indirectly, or
116	116	13 constructively, 75% or more of the voting
117	117	14 power or value of the beneficial interests or
118	118	15 shares of such entity; or
119	119	16 (e) an entity that is organized outside of
120	120	17 the laws of the United States and that
121	121	18 satisfies all of the following criteria:
122	122	19 (1) at least 75% of the entity's total
123	123	20 asset value at the close of its taxable
124	124	21 year is represented by real estate assets
125	125	22 (as defined in Section 856(c)(5)(B) of the
126	126	23 Internal Revenue Code, thereby including
127	127	24 shares or certificates of beneficial
128	128	25 interest in any real estate investment
129	129	26 trust), cash and cash equivalents, and
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140	140	1 U.S. Government securities;
141	141	2 (2) the entity is not subject to tax
142	142	3 on amounts that are distributed to its
143	143	4 beneficial owners or is exempt from
144	144	5 entity-level taxation;
145	145	6 (3) the entity distributes at least
146	146	7 85% of its taxable income (as computed in
147	147	8 the jurisdiction in which it is organized)
148	148	9 to the holders of its shares or
149	149	10 certificates of beneficial interest on an
150	150	11 annual basis;
151	151	12 (4) either (i) the shares or
152	152	13 beneficial interests of the entity are
153	153	14 regularly traded on an established
154	154	15 securities market or (ii) not more than
155	155	16 10% of the voting power or value in the
156	156	17 entity is held, directly, indirectly, or
157	157	18 constructively, by a single entity or
158	158	19 individual; and
159	159	20 (5) the entity is organized in a
160	160	21 country that has entered into a tax treaty
161	161	22 with the United States; or
162	162	23 (ii) during its first taxable year for which
163	163	24 it elects to be treated as a real estate
164	164	25 investment trust under Section 856(c)(1) of the
165	165	26 Internal Revenue Code, a real estate investment
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176	176	1 trust the certificates of beneficial interest or
177	177	2 shares of which are not regularly traded on an
178	178	3 established securities market, but only if the
179	179	4 certificates of beneficial interest or shares of
180	180	5 the real estate investment trust are regularly
181	181	6 traded on an established securities market prior
182	182	7 to the earlier of the due date (including
183	183	8 extensions) for filing its return under this Act
184	184	9 for that first taxable year or the date it
185	185	10 actually files that return.
186	186	11 (C) For the purposes of this subsection (1.5), the
187	187	12 constructive ownership rules prescribed under Section
188	188	13 318(a) of the Internal Revenue Code, as modified by
189	189	14 Section 856(d)(5) of the Internal Revenue Code, apply
190	190	15 in determining the ownership of stock, assets, or net
191	191	16 profits of any person.
192	192	17 (D) For the purposes of this item (1.5), for
193	193	18 taxable years ending on or after August 16, 2007, the
194	194	19 voting power or value of the beneficial interest or
195	195	20 shares of a real estate investment trust does not
196	196	21 include any voting power or value of beneficial
197	197	22 interest or shares in a real estate investment trust
198	198	23 held directly or indirectly in a segregated asset
199	199	24 account by a life insurance company (as described in
200	200	25 Section 817 of the Internal Revenue Code) to the
201	201	26 extent such voting power or value is for the benefit of
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212	212	1 entities or persons who are either immune from
213	213	2 taxation or exempt from taxation under subtitle A of
214	214	3 the Internal Revenue Code.
215	215	4 (2) Commercial domicile. The term "commercial
216	216	5 domicile" means the principal place from which the trade
217	217	6 or business of the taxpayer is directed or managed.
218	218	7 (3) Compensation. The term "compensation" means wages,
219	219	8 salaries, commissions and any other form of remuneration
220	220	9 paid to employees for personal services.
221	221	10 (4) Corporation. The term "corporation" includes
222	222	11 associations, joint-stock companies, insurance companies
223	223	12 and cooperatives. Any entity, including a limited
224	224	13 liability company formed under the Illinois Limited
225	225	14 Liability Company Act, shall be treated as a corporation
226	226	15 if it is so classified for federal income tax purposes.
227	227	16 (5) Department. The term "Department" means the
228	228	17 Department of Revenue of this State.
229	229	18 (6) Director. The term "Director" means the Director
230	230	19 of Revenue of this State.
231	231	20 (7) Fiduciary. The term "fiduciary" means a guardian,
232	232	21 trustee, executor, administrator, receiver, or any person
233	233	22 acting in any fiduciary capacity for any person.
234	234	23 (8) Financial organization.
235	235	24 (A) The term "financial organization" means any
236	236	25 bank, bank holding company, trust company, savings
237	237	26 bank, industrial bank, land bank, safe deposit
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248	248	1 company, private banker, savings and loan association,
249	249	2 building and loan association, credit union, currency
250	250	3 exchange, cooperative bank, small loan company, sales
251	251	4 finance company, investment company, or any person
252	252	5 which is owned by a bank or bank holding company. For
253	253	6 the purpose of this Section a "person" will include
254	254	7 only those persons which a bank holding company may
255	255	8 acquire and hold an interest in, directly or
256	256	9 indirectly, under the provisions of the Bank Holding
257	257	10 Company Act of 1956 (12 U.S.C. 1841, et seq.), except
258	258	11 where interests in any person must be disposed of
259	259	12 within certain required time limits under the Bank
260	260	13 Holding Company Act of 1956.
261	261	14 (B) For purposes of subparagraph (A) of this
262	262	15 paragraph, the term "bank" includes (i) any entity
263	263	16 that is regulated by the Comptroller of the Currency
264	264	17 under the National Bank Act, or by the Federal Reserve
265	265	18 Board, or by the Federal Deposit Insurance Corporation
266	266	19 and (ii) any federally or State chartered bank
267	267	20 operating as a credit card bank.
268	268	21 (C) For purposes of subparagraph (A) of this
269	269	22 paragraph, the term "sales finance company" has the
270	270	23 meaning provided in the following item (i) or (ii):
271	271	24 (i) A person primarily engaged in one or more
272	272	25 of the following businesses: the business of
273	273	26 purchasing customer receivables, the business of
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284	284	1 making loans upon the security of customer
285	285	2 receivables, the business of making loans for the
286	286	3 express purpose of funding purchases of tangible
287	287	4 personal property or services by the borrower, or
288	288	5 the business of finance leasing. For purposes of
289	289	6 this item (i), "customer receivable" means:
290	290	7 (a) a retail installment contract or
291	291	8 retail charge agreement within the meaning of
292	292	9 the Sales Finance Agency Act, the Retail
293	293	10 Installment Sales Act, or the Motor Vehicle
294	294	11 Retail Installment Sales Act;
295	295	12 (b) an installment, charge, credit, or
296	296	13 similar contract or agreement arising from the
297	297	14 sale of tangible personal property or services
298	298	15 in a transaction involving a deferred payment
299	299	16 price payable in one or more installments
300	300	17 subsequent to the sale; or
301	301	18 (c) the outstanding balance of a contract
302	302	19 or agreement described in provisions (a) or
303	303	20 (b) of this item (i).
304	304	21 A customer receivable need not provide for
305	305	22 payment of interest on deferred payments. A sales
306	306	23 finance company may purchase a customer receivable
307	307	24 from, or make a loan secured by a customer
308	308	25 receivable to, the seller in the original
309	309	26 transaction or to a person who purchased the
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320	320	1 customer receivable directly or indirectly from
321	321	2 that seller.
322	322	3 (ii) A corporation meeting each of the
323	323	4 following criteria:
324	324	5 (a) the corporation must be a member of an
325	325	6 "affiliated group" within the meaning of
326	326	7 Section 1504(a) of the Internal Revenue Code,
327	327	8 determined without regard to Section 1504(b)
328	328	9 of the Internal Revenue Code;
329	329	10 (b) more than 50% of the gross income of
330	330	11 the corporation for the taxable year must be
331	331	12 interest income derived from qualifying loans.
332	332	13 A "qualifying loan" is a loan made to a member
333	333	14 of the corporation's affiliated group that
334	334	15 originates customer receivables (within the
335	335	16 meaning of item (i)) or to whom customer
336	336	17 receivables originated by a member of the
337	337	18 affiliated group have been transferred, to the
338	338	19 extent the average outstanding balance of
339	339	20 loans from that corporation to members of its
340	340	21 affiliated group during the taxable year do
341	341	22 not exceed the limitation amount for that
342	342	23 corporation. The "limitation amount" for a
343	343	24 corporation is the average outstanding
344	344	25 balances during the taxable year of customer
345	345	26 receivables (within the meaning of item (i))
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356	356	1 originated by all members of the affiliated
357	357	2 group. If the average outstanding balances of
358	358	3 the loans made by a corporation to members of
359	359	4 its affiliated group exceed the limitation
360	360	5 amount, the interest income of that
361	361	6 corporation from qualifying loans shall be
362	362	7 equal to its interest income from loans to
363	363	8 members of its affiliated groups times a
364	364	9 fraction equal to the limitation amount
365	365	10 divided by the average outstanding balances of
366	366	11 the loans made by that corporation to members
367	367	12 of its affiliated group;
368	368	13 (c) the total of all shareholder's equity
369	369	14 (including, without limitation, paid-in
370	370	15 capital on common and preferred stock and
371	371	16 retained earnings) of the corporation plus the
372	372	17 total of all of its loans, advances, and other
373	373	18 obligations payable or owed to members of its
374	374	19 affiliated group may not exceed 20% of the
375	375	20 total assets of the corporation at any time
376	376	21 during the tax year; and
377	377	22 (d) more than 50% of all interest-bearing
378	378	23 obligations of the affiliated group payable to
379	379	24 persons outside the group determined in
380	380	25 accordance with generally accepted accounting
381	381	26 principles must be obligations of the
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392	392	1 corporation.
393	393	2 This amendatory Act of the 91st General Assembly
394	394	3 is declaratory of existing law.
395	395	4 (D) Subparagraphs (B) and (C) of this paragraph
396	396	5 are declaratory of existing law and apply
397	397	6 retroactively, for all tax years beginning on or
398	398	7 before December 31, 1996, to all original returns, to
399	399	8 all amended returns filed no later than 30 days after
400	400	9 the effective date of this amendatory Act of 1996, and
401	401	10 to all notices issued on or before the effective date
402	402	11 of this amendatory Act of 1996 under subsection (a) of
403	403	12 Section 903, subsection (a) of Section 904, subsection
404	404	13 (e) of Section 909, or Section 912. A taxpayer that is
405	405	14 a "financial organization" that engages in any
406	406	15 transaction with an affiliate shall be a "financial
407	407	16 organization" for all purposes of this Act.
408	408	17 (E) For all tax years beginning on or before
409	409	18 December 31, 1996, a taxpayer that falls within the
410	410	19 definition of a "financial organization" under
411	411	20 subparagraphs (B) or (C) of this paragraph, but who
412	412	21 does not fall within the definition of a "financial
413	413	22 organization" under the Proposed Regulations issued by
414	414	23 the Department of Revenue on July 19, 1996, may
415	415	24 irrevocably elect to apply the Proposed Regulations
416	416	25 for all of those years as though the Proposed
417	417	26 Regulations had been lawfully promulgated, adopted,
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428	428	1 and in effect for all of those years. For purposes of
429	429	2 applying subparagraphs (B) or (C) of this paragraph to
430	430	3 all of those years, the election allowed by this
431	431	4 subparagraph applies only to the taxpayer making the
432	432	5 election and to those members of the taxpayer's
433	433	6 unitary business group who are ordinarily required to
434	434	7 apportion business income under the same subsection of
435	435	8 Section 304 of this Act as the taxpayer making the
436	436	9 election. No election allowed by this subparagraph
437	437	10 shall be made under a claim filed under subsection (d)
438	438	11 of Section 909 more than 30 days after the effective
439	439	12 date of this amendatory Act of 1996.
440	440	13 (F) Finance Leases. For purposes of this
441	441	14 subsection, a finance lease shall be treated as a loan
442	442	15 or other extension of credit, rather than as a lease,
443	443	16 regardless of how the transaction is characterized for
444	444	17 any other purpose, including the purposes of any
445	445	18 regulatory agency to which the lessor is subject. A
446	446	19 finance lease is any transaction in the form of a lease
447	447	20 in which the lessee is treated as the owner of the
448	448	21 leased asset entitled to any deduction for
449	449	22 depreciation allowed under Section 167 of the Internal
450	450	23 Revenue Code.
451	451	24 (9) Fiscal year. The term "fiscal year" means an
452	452	25 accounting period of 12 months ending on the last day of
453	453	26 any month other than December.
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464	464	1 (9.5) Fixed place of business. The term "fixed place
465	465	2 of business" has the same meaning as that term is given in
466	466	3 Section 864 of the Internal Revenue Code and the related
467	467	4 Treasury regulations.
468	468	5 (10) Includes and including. The terms "includes" and
469	469	6 "including" when used in a definition contained in this
470	470	7 Act shall not be deemed to exclude other things otherwise
471	471	8 within the meaning of the term defined.
472	472	9 (11) Internal Revenue Code. The term "Internal Revenue
473	473	10 Code" means the United States Internal Revenue Code of
474	474	11 1954 or any successor law or laws relating to federal
475	475	12 income taxes in effect for the taxable year.
476	476	13 (11.5) Investment partnership.
477	477	14 (A) For tax years ending before January 1, 2023,
478	478	15 the The term "investment partnership" means any entity
479	479	16 that is treated as a partnership for federal income
480	480	17 tax purposes that meets the following requirements:
481	481	18 (i) no less than 90% of the partnership's cost
482	482	19 of its total assets consists of qualifying
483	483	20 investment securities, deposits at banks or other
484	484	21 financial institutions, and office space and
485	485	22 equipment reasonably necessary to carry on its
486	486	23 activities as an investment partnership;
487	487	24 (ii) no less than 90% of its gross income
488	488	25 consists of interest, dividends, and gains from
489	489	26 the sale or exchange of qualifying investment
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499	499	HB2237 - 14 - LRB103 25752 HLH 53937 b
500	500	1 securities; and
501	501	2 (iii) the partnership is not a dealer in
502	502	3 qualifying investment securities.
503	503	4 (A-5) For tax years ending on or after January 1,
504	504	5 2023, the term "investment partnership" means any
505	505	6 entity that is treated as a partnership for federal
506	506	7 income tax purposes that meets the following
507	507	8 requirements:
508	508	9 (i) no less than 90% of the partnership's cost
509	509	10 of its total assets consists of qualifying
510	510	11 investment securities, deposits at banks or other
511	511	12 financial institutions, and office space and
512	512	13 equipment reasonably necessary to carry on its
513	513	14 activities as an investment partnership; and
514	514	15 (ii) no less than 90% of its gross income
515	515	16 consists of interest, dividends, gains from the
516	516	17 sale or exchange of qualifying investment
517	517	18 securities, and the distributive share of
518	518	19 partnership income from lower-tier partnership
519	519	20 interests meeting the definition of qualifying
520	520	21 investment security under subparagraph (B)(xiii);
521	521	22 gross income does not include income from
522	522	23 partnerships that are operating at a federal
523	523	24 taxable loss.
524	524	25 (B) For purposes of this paragraph (11.5), the
525	525	26 term "qualifying investment securities" (other than,
526	526
527	527
528	528
529	529
530	530
531	531	HB2237 - 14 - LRB103 25752 HLH 53937 b
532	532
533	533
534	534	HB2237- 15 -LRB103 25752 HLH 53937 b HB2237 - 15 - LRB103 25752 HLH 53937 b
535	535	HB2237 - 15 - LRB103 25752 HLH 53937 b
536	536	1 for tax years ending on or after January 1, 2022,
537	537	2 securities with respect to which the taxpayer is
538	538	3 required to apply the rules of Internal Revenue Code
539	539	4 Section 475(a)) includes all of the following:
540	540	5 (i) common stock, including preferred or debt
541	541	6 securities convertible into common stock, and
542	542	7 preferred stock;
543	543	8 (ii) bonds, debentures, and other debt
544	544	9 securities;
545	545	10 (iii) foreign and domestic currency deposits
546	546	11 secured by federal, state, or local governmental
547	547	12 agencies;
548	548	13 (iv) mortgage or asset-backed securities
549	549	14 secured by federal, state, or local governmental
550	550	15 agencies;
551	551	16 (v) repurchase agreements and loan
552	552	17 participations;
553	553	18 (vi) foreign currency exchange contracts and
554	554	19 forward and futures contracts on foreign
555	555	20 currencies;
556	556	21 (vii) stock and bond index securities and
557	557	22 futures contracts and other similar financial
558	558	23 securities and futures contracts on those
559	559	24 securities;
560	560	25 (viii) options for the purchase or sale of any
561	561	26 of the securities, currencies, contracts, or
562	562
563	563
564	564
565	565
566	566
567	567	HB2237 - 15 - LRB103 25752 HLH 53937 b
568	568
569	569
570	570	HB2237- 16 -LRB103 25752 HLH 53937 b HB2237 - 16 - LRB103 25752 HLH 53937 b
571	571	HB2237 - 16 - LRB103 25752 HLH 53937 b
572	572	1 financial instruments described in items (i) to
573	573	2 (vii), inclusive;
574	574	3 (ix) regulated futures contracts;
575	575	4 (x) commodities (not described in Section
576	576	5 1221(a)(1) of the Internal Revenue Code) or
577	577	6 futures, forwards, and options with respect to
578	578	7 such commodities, provided, however, that any item
579	579	8 of a physical commodity to which title is actually
580	580	9 acquired in the partnership's capacity as a dealer
581	581	10 in such commodity shall not be a qualifying
582	582	11 investment security;
583	583	12 (xi) derivatives; and
584	584	13 (xii) a partnership interest in another
585	585	14 partnership that is an investment partnership; and
586	586	15 .
587	587	16 (xiii) for tax years ending on or after
588	588	17 January 1, 2023, a partnership interest which, in
589	589	18 the hands of the partnership, qualifies as a
590	590	19 security within the meaning of subsection (a)(1)
591	591	20 of Subchapter 77b of Chapter 2A of Title 15 of the
592	592	21 United States Code.
593	593	22 (12) Mathematical error. The term "mathematical error"
594	594	23 includes the following types of errors, omissions, or
595	595	24 defects in a return filed by a taxpayer which prevents
596	596	25 acceptance of the return as filed for processing:
597	597	26 (A) arithmetic errors or incorrect computations on
598	598
599	599
600	600
601	601
602	602
603	603	HB2237 - 16 - LRB103 25752 HLH 53937 b
604	604
605	605
606	606	HB2237- 17 -LRB103 25752 HLH 53937 b HB2237 - 17 - LRB103 25752 HLH 53937 b
607	607	HB2237 - 17 - LRB103 25752 HLH 53937 b
608	608	1 the return or supporting schedules;
609	609	2 (B) entries on the wrong lines;
610	610	3 (C) omission of required supporting forms or
611	611	4 schedules or the omission of the information in whole
612	612	5 or in part called for thereon; and
613	613	6 (D) an attempt to claim, exclude, deduct, or
614	614	7 improperly report, in a manner directly contrary to
615	615	8 the provisions of the Act and regulations thereunder
616	616	9 any item of income, exemption, deduction, or credit.
617	617	10 (13) Nonbusiness income. The term "nonbusiness income"
618	618	11 means all income other than business income or
619	619	12 compensation.
620	620	13 (14) Nonresident. The term "nonresident" means a
621	621	14 person who is not a resident.
622	622	15 (15) Paid, incurred and accrued. The terms "paid",
623	623	16 "incurred" and "accrued" shall be construed according to
624	624	17 the method of accounting upon the basis of which the
625	625	18 person's base income is computed under this Act.
626	626	19 (16) Partnership and partner. The term "partnership"
627	627	20 includes a syndicate, group, pool, joint venture or other
628	628	21 unincorporated organization, through or by means of which
629	629	22 any business, financial operation, or venture is carried
630	630	23 on, and which is not, within the meaning of this Act, a
631	631	24 trust or estate or a corporation; and the term "partner"
632	632	25 includes a member in such syndicate, group, pool, joint
633	633	26 venture or organization.
634	634
635	635
636	636
637	637
638	638
639	639	HB2237 - 17 - LRB103 25752 HLH 53937 b
640	640
641	641
642	642	HB2237- 18 -LRB103 25752 HLH 53937 b HB2237 - 18 - LRB103 25752 HLH 53937 b
643	643	HB2237 - 18 - LRB103 25752 HLH 53937 b
644	644	1 The term "partnership" includes any entity, including
645	645	2 a limited liability company formed under the Illinois
646	646	3 Limited Liability Company Act, classified as a partnership
647	647	4 for federal income tax purposes.
648	648	5 The term "partnership" does not include a syndicate,
649	649	6 group, pool, joint venture, or other unincorporated
650	650	7 organization established for the sole purpose of playing
651	651	8 the Illinois State Lottery.
652	652	9 (17) Part-year resident. The term "part-year resident"
653	653	10 means an individual who became a resident during the
654	654	11 taxable year or ceased to be a resident during the taxable
655	655	12 year. Under Section 1501(a)(20)(A)(i) residence commences
656	656	13 with presence in this State for other than a temporary or
657	657	14 transitory purpose and ceases with absence from this State
658	658	15 for other than a temporary or transitory purpose. Under
659	659	16 Section 1501(a)(20)(A)(ii) residence commences with the
660	660	17 establishment of domicile in this State and ceases with
661	661	18 the establishment of domicile in another State.
662	662	19 (18) Person. The term "person" shall be construed to
663	663	20 mean and include an individual, a trust, estate,
664	664	21 partnership, association, firm, company, corporation,
665	665	22 limited liability company, or fiduciary. For purposes of
666	666	23 Section 1301 and 1302 of this Act, a "person" means (i) an
667	667	24 individual, (ii) a corporation, (iii) an officer, agent,
668	668	25 or employee of a corporation, (iv) a member, agent or
669	669	26 employee of a partnership, or (v) a member, manager,
670	670
671	671
672	672
673	673
674	674
675	675	HB2237 - 18 - LRB103 25752 HLH 53937 b
676	676
677	677
678	678	HB2237- 19 -LRB103 25752 HLH 53937 b HB2237 - 19 - LRB103 25752 HLH 53937 b
679	679	HB2237 - 19 - LRB103 25752 HLH 53937 b
680	680	1 employee, officer, director, or agent of a limited
681	681	2 liability company who in such capacity commits an offense
682	682	3 specified in Section 1301 and 1302.
683	683	4 (18A) Records. The term "records" includes all data
684	684	5 maintained by the taxpayer, whether on paper, microfilm,
685	685	6 microfiche, or any type of machine-sensible data
686	686	7 compilation.
687	687	8 (19) Regulations. The term "regulations" includes
688	688	9 rules promulgated and forms prescribed by the Department.
689	689	10 (20) Resident. The term "resident" means:
690	690	11 (A) an individual (i) who is in this State for
691	691	12 other than a temporary or transitory purpose during
692	692	13 the taxable year; or (ii) who is domiciled in this
693	693	14 State but is absent from the State for a temporary or
694	694	15 transitory purpose during the taxable year;
695	695	16 (B) The estate of a decedent who at his or her
696	696	17 death was domiciled in this State;
697	697	18 (C) A trust created by a will of a decedent who at
698	698	19 his death was domiciled in this State; and
699	699	20 (D) An irrevocable trust, the grantor of which was
700	700	21 domiciled in this State at the time such trust became
701	701	22 irrevocable. For purpose of this subparagraph, a trust
702	702	23 shall be considered irrevocable to the extent that the
703	703	24 grantor is not treated as the owner thereof under
704	704	25 Sections 671 through 678 of the Internal Revenue Code.
705	705	26 (21) Sales. The term "sales" means all gross receipts
706	706
707	707
708	708
709	709
710	710
711	711	HB2237 - 19 - LRB103 25752 HLH 53937 b
712	712
713	713
714	714	HB2237- 20 -LRB103 25752 HLH 53937 b HB2237 - 20 - LRB103 25752 HLH 53937 b
715	715	HB2237 - 20 - LRB103 25752 HLH 53937 b
716	716	1 of the taxpayer not allocated under Sections 301, 302 and
717	717	2 303.
718	718	3 (22) State. The term "state" when applied to a
719	719	4 jurisdiction other than this State means any state of the
720	720	5 United States, the District of Columbia, the Commonwealth
721	721	6 of Puerto Rico, any Territory or Possession of the United
722	722	7 States, and any foreign country, or any political
723	723	8 subdivision of any of the foregoing. For purposes of the
724	724	9 foreign tax credit under Section 601, the term "state"
725	725	10 means any state of the United States, the District of
726	726	11 Columbia, the Commonwealth of Puerto Rico, and any
727	727	12 territory or possession of the United States, or any
728	728	13 political subdivision of any of the foregoing, effective
729	729	14 for tax years ending on or after December 31, 1989.
730	730	15 (23) Taxable year. The term "taxable year" means the
731	731	16 calendar year, or the fiscal year ending during such
732	732	17 calendar year, upon the basis of which the base income is
733	733	18 computed under this Act. "Taxable year" means, in the case
734	734	19 of a return made for a fractional part of a year under the
735	735	20 provisions of this Act, the period for which such return
736	736	21 is made.
737	737	22 (24) Taxpayer. The term "taxpayer" means any person
738	738	23 subject to the tax imposed by this Act.
739	739	24 (25) International banking facility. The term
740	740	25 international banking facility shall have the same meaning
741	741	26 as is set forth in the Illinois Banking Act or as is set
742	742
743	743
744	744
745	745
746	746
747	747	HB2237 - 20 - LRB103 25752 HLH 53937 b
748	748
749	749
750	750	HB2237- 21 -LRB103 25752 HLH 53937 b HB2237 - 21 - LRB103 25752 HLH 53937 b
751	751	HB2237 - 21 - LRB103 25752 HLH 53937 b
752	752	1 forth in the laws of the United States or regulations of
753	753	2 the Board of Governors of the Federal Reserve System.
754	754	3 (26) Income Tax Return Preparer.
755	755	4 (A) The term "income tax return preparer" means
756	756	5 any person who prepares for compensation, or who
757	757	6 employs one or more persons to prepare for
758	758	7 compensation, any return of tax imposed by this Act or
759	759	8 any claim for refund of tax imposed by this Act. The
760	760	9 preparation of a substantial portion of a return or
761	761	10 claim for refund shall be treated as the preparation
762	762	11 of that return or claim for refund.
763	763	12 (B) A person is not an income tax return preparer
764	764	13 if all he or she does is
765	765	14 (i) furnish typing, reproducing, or other
766	766	15 mechanical assistance;
767	767	16 (ii) prepare returns or claims for refunds for
768	768	17 the employer by whom he or she is regularly and
769	769	18 continuously employed;
770	770	19 (iii) prepare as a fiduciary returns or claims
771	771	20 for refunds for any person; or
772	772	21 (iv) prepare claims for refunds for a taxpayer
773	773	22 in response to any notice of deficiency issued to
774	774	23 that taxpayer or in response to any waiver of
775	775	24 restriction after the commencement of an audit of
776	776	25 that taxpayer or of another taxpayer if a
777	777	26 determination in the audit of the other taxpayer
778	778
779	779
780	780
781	781
782	782
783	783	HB2237 - 21 - LRB103 25752 HLH 53937 b
784	784
785	785
786	786	HB2237- 22 -LRB103 25752 HLH 53937 b HB2237 - 22 - LRB103 25752 HLH 53937 b
787	787	HB2237 - 22 - LRB103 25752 HLH 53937 b
788	788	1 directly or indirectly affects the tax liability
789	789	2 of the taxpayer whose claims he or she is
790	790	3 preparing.
791	791	4 (27) Unitary business group.
792	792	5 (A) The term "unitary business group" means a
793	793	6 group of persons related through common ownership
794	794	7 whose business activities are integrated with,
795	795	8 dependent upon and contribute to each other. The group
796	796	9 will not include those members whose business activity
797	797	10 outside the United States is 80% or more of any such
798	798	11 member's total business activity; for purposes of this
799	799	12 paragraph and clause (a)(3)(B)(ii) of Section 304,
800	800	13 business activity within the United States shall be
801	801	14 measured by means of the factors ordinarily applicable
802	802	15 under subsections (a), (b), (c), (d), or (h) of
803	803	16 Section 304 except that, in the case of members
804	804	17 ordinarily required to apportion business income by
805	805	18 means of the 3 factor formula of property, payroll and
806	806	19 sales specified in subsection (a) of Section 304,
807	807	20 including the formula as weighted in subsection (h) of
808	808	21 Section 304, such members shall not use the sales
809	809	22 factor in the computation and the results of the
810	810	23 property and payroll factor computations of subsection
811	811	24 (a) of Section 304 shall be divided by 2 (by one if
812	812	25 either the property or payroll factor has a
813	813	26 denominator of zero). The computation required by the
814	814
815	815
816	816
817	817
818	818
819	819	HB2237 - 22 - LRB103 25752 HLH 53937 b
820	820
821	821
822	822	HB2237- 23 -LRB103 25752 HLH 53937 b HB2237 - 23 - LRB103 25752 HLH 53937 b
823	823	HB2237 - 23 - LRB103 25752 HLH 53937 b
824	824	1 preceding sentence shall, in each case, involve the
825	825	2 division of the member's property, payroll, or revenue
826	826	3 miles in the United States, insurance premiums on
827	827	4 property or risk in the United States, or financial
828	828	5 organization business income from sources within the
829	829	6 United States, as the case may be, by the respective
830	830	7 worldwide figures for such items. Common ownership in
831	831	8 the case of corporations is the direct or indirect
832	832	9 control or ownership of more than 50% of the
833	833	10 outstanding voting stock of the persons carrying on
834	834	11 unitary business activity. Unitary business activity
835	835	12 can ordinarily be illustrated where the activities of
836	836	13 the members are: (1) in the same general line (such as
837	837	14 manufacturing, wholesaling, retailing of tangible
838	838	15 personal property, insurance, transportation or
839	839	16 finance); or (2) are steps in a vertically structured
840	840	17 enterprise or process (such as the steps involved in
841	841	18 the production of natural resources, which might
842	842	19 include exploration, mining, refining, and marketing);
843	843	20 and, in either instance, the members are functionally
844	844	21 integrated through the exercise of strong centralized
845	845	22 management (where, for example, authority over such
846	846	23 matters as purchasing, financing, tax compliance,
847	847	24 product line, personnel, marketing and capital
848	848	25 investment is not left to each member).
849	849	26 (B) In no event, for taxable years ending prior to
850	850
851	851
852	852
853	853
854	854
855	855	HB2237 - 23 - LRB103 25752 HLH 53937 b
856	856
857	857
858	858	HB2237- 24 -LRB103 25752 HLH 53937 b HB2237 - 24 - LRB103 25752 HLH 53937 b
859	859	HB2237 - 24 - LRB103 25752 HLH 53937 b
860	860	1 December 31, 2017, shall any unitary business group
861	861	2 include members which are ordinarily required to
862	862	3 apportion business income under different subsections
863	863	4 of Section 304 except that for tax years ending on or
864	864	5 after December 31, 1987 this prohibition shall not
865	865	6 apply to a holding company that would otherwise be a
866	866	7 member of a unitary business group with taxpayers that
867	867	8 apportion business income under any of subsections
868	868	9 (b), (c), (c-1), or (d) of Section 304. If a unitary
869	869	10 business group would, but for the preceding sentence,
870	870	11 include members that are ordinarily required to
871	871	12 apportion business income under different subsections
872	872	13 of Section 304, then for each subsection of Section
873	873	14 304 for which there are two or more members, there
874	874	15 shall be a separate unitary business group composed of
875	875	16 such members. For purposes of the preceding two
876	876	17 sentences, a member is "ordinarily required to
877	877	18 apportion business income" under a particular
878	878	19 subsection of Section 304 if it would be required to
879	879	20 use the apportionment method prescribed by such
880	880	21 subsection except for the fact that it derives
881	881	22 business income solely from Illinois. As used in this
882	882	23 paragraph, for taxable years ending before December
883	883	24 31, 2017, the phrase "United States" means only the 50
884	884	25 states and the District of Columbia, but does not
885	885	26 include any territory or possession of the United
886	886
887	887
888	888
889	889
890	890
891	891	HB2237 - 24 - LRB103 25752 HLH 53937 b
892	892
893	893
894	894	HB2237- 25 -LRB103 25752 HLH 53937 b HB2237 - 25 - LRB103 25752 HLH 53937 b
895	895	HB2237 - 25 - LRB103 25752 HLH 53937 b
896	896	1 States or any area over which the United States has
897	897	2 asserted jurisdiction or claimed exclusive rights with
898	898	3 respect to the exploration for or exploitation of
899	899	4 natural resources. For taxable years ending on or
900	900	5 after December 31, 2017, the phrase "United States",
901	901	6 as used in this paragraph, means only the 50 states,
902	902	7 the District of Columbia, and any area over which the
903	903	8 United States has asserted jurisdiction or claimed
904	904	9 exclusive rights with respect to the exploration for
905	905	10 or exploitation of natural resources, but does not
906	906	11 include any territory or possession of the United
907	907	12 States.
908	908	13 (C) Holding companies.
909	909	14 (i) For purposes of this subparagraph, a
910	910	15 "holding company" is a corporation (other than a
911	911	16 corporation that is a financial organization under
912	912	17 paragraph (8) of this subsection (a) of Section
913	913	18 1501 because it is a bank holding company under
914	914	19 the provisions of the Bank Holding Company Act of
915	915	20 1956 (12 U.S.C. 1841, et seq.) or because it is
916	916	21 owned by a bank or a bank holding company) that
917	917	22 owns a controlling interest in one or more other
918	918	23 taxpayers ("controlled taxpayers"); that, during
919	919	24 the period that includes the taxable year and the
920	920	25 2 immediately preceding taxable years or, if the
921	921	26 corporation was formed during the current or
922	922
923	923
924	924
925	925
926	926
927	927	HB2237 - 25 - LRB103 25752 HLH 53937 b
928	928
929	929
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931	931	HB2237 - 26 - LRB103 25752 HLH 53937 b
932	932	1 immediately preceding taxable year, the taxable
933	933	2 years in which the corporation has been in
934	934	3 existence, derived substantially all its gross
935	935	4 income from dividends, interest, rents, royalties,
936	936	5 fees or other charges received from controlled
937	937	6 taxpayers for the provision of services, and gains
938	938	7 on the sale or other disposition of interests in
939	939	8 controlled taxpayers or in property leased or
940	940	9 licensed to controlled taxpayers or used by the
941	941	10 taxpayer in providing services to controlled
942	942	11 taxpayers; and that incurs no substantial expenses
943	943	12 other than expenses (including interest and other
944	944	13 costs of borrowing) incurred in connection with
945	945	14 the acquisition and holding of interests in
946	946	15 controlled taxpayers and in the provision of
947	947	16 services to controlled taxpayers or in the leasing
948	948	17 or licensing of property to controlled taxpayers.
949	949	18 (ii) The income of a holding company which is
950	950	19 a member of more than one unitary business group
951	951	20 shall be included in each unitary business group
952	952	21 of which it is a member on a pro rata basis, by
953	953	22 including in each unitary business group that
954	954	23 portion of the base income of the holding company
955	955	24 that bears the same proportion to the total base
956	956	25 income of the holding company as the gross
957	957	26 receipts of the unitary business group bears to
958	958
959	959
960	960
961	961
962	962
963	963	HB2237 - 26 - LRB103 25752 HLH 53937 b
964	964
965	965
966	966	HB2237- 27 -LRB103 25752 HLH 53937 b HB2237 - 27 - LRB103 25752 HLH 53937 b
967	967	HB2237 - 27 - LRB103 25752 HLH 53937 b
968	968	1 the combined gross receipts of all unitary
969	969	2 business groups (in both cases without regard to
970	970	3 the holding company) or on any other reasonable
971	971	4 basis, consistently applied.
972	972	5 (iii) A holding company shall apportion its
973	973	6 business income under the subsection of Section
974	974	7 304 used by the other members of its unitary
975	975	8 business group. The apportionment factors of a
976	976	9 holding company which would be a member of more
977	977	10 than one unitary business group shall be included
978	978	11 with the apportionment factors of each unitary
979	979	12 business group of which it is a member on a pro
980	980	13 rata basis using the same method used in clause
981	981	14 (ii).
982	982	15 (iv) The provisions of this subparagraph (C)
983	983	16 are intended to clarify existing law.
984	984	17 (D) If including the base income and factors of a
985	985	18 holding company in more than one unitary business
986	986	19 group under subparagraph (C) does not fairly reflect
987	987	20 the degree of integration between the holding company
988	988	21 and one or more of the unitary business groups, the
989	989	22 dependence of the holding company and one or more of
990	990	23 the unitary business groups upon each other, or the
991	991	24 contributions between the holding company and one or
992	992	25 more of the unitary business groups, the holding
993	993	26 company may petition the Director, under the
994	994
995	995
996	996
997	997
998	998
999	999	HB2237 - 27 - LRB103 25752 HLH 53937 b
1000	1000
1001	1001
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1003	1003	HB2237 - 28 - LRB103 25752 HLH 53937 b
1004	1004	1 procedures provided under Section 304(f), for
1005	1005	2 permission to include all base income and factors of
1006	1006	3 the holding company only with members of a unitary
1007	1007	4 business group apportioning their business income
1008	1008	5 under one subsection of subsections (a), (b), (c), or
1009	1009	6 (d) of Section 304. If the petition is granted, the
1010	1010	7 holding company shall be included in a unitary
1011	1011	8 business group only with persons apportioning their
1012	1012	9 business income under the selected subsection of
1013	1013	10 Section 304 until the Director grants a petition of
1014	1014	11 the holding company either to be included in more than
1015	1015	12 one unitary business group under subparagraph (C) or
1016	1016	13 to include its base income and factors only with
1017	1017	14 members of a unitary business group apportioning their
1018	1018	15 business income under a different subsection of
1019	1019	16 Section 304.
1020	1020	17 (E) If the unitary business group members'
1021	1021	18 accounting periods differ, the common parent's
1022	1022	19 accounting period or, if there is no common parent,
1023	1023	20 the accounting period of the member that is expected
1024	1024	21 to have, on a recurring basis, the greatest Illinois
1025	1025	22 income tax liability must be used to determine whether
1026	1026	23 to use the apportionment method provided in subsection
1027	1027	24 (a) or subsection (h) of Section 304. The prohibition
1028	1028	25 against membership in a unitary business group for
1029	1029	26 taxpayers ordinarily required to apportion income
1030	1030
1031	1031
1032	1032
1033	1033
1034	1034
1035	1035	HB2237 - 28 - LRB103 25752 HLH 53937 b
1036	1036
1037	1037
1038	1038	HB2237- 29 -LRB103 25752 HLH 53937 b HB2237 - 29 - LRB103 25752 HLH 53937 b
1039	1039	HB2237 - 29 - LRB103 25752 HLH 53937 b
1040	1040	1 under different subsections of Section 304 does not
1041	1041	2 apply to taxpayers required to apportion income under
1042	1042	3 subsection (a) and subsection (h) of Section 304. The
1043	1043	4 provisions of this amendatory Act of 1998 apply to tax
1044	1044	5 years ending on or after December 31, 1998.
1045	1045	6 (28) Subchapter S corporation. The term "Subchapter S
1046	1046	7 corporation" means a corporation for which there is in
1047	1047	8 effect an election under Section 1362 of the Internal
1048	1048	9 Revenue Code, or for which there is a federal election to
1049	1049	10 opt out of the provisions of the Subchapter S Revision Act
1050	1050	11 of 1982 and have applied instead the prior federal
1051	1051	12 Subchapter S rules as in effect on July 1, 1982.
1052	1052	13 (30) Foreign person. The term "foreign person" means
1053	1053	14 any person who is a nonresident individual who is a
1054	1054	15 national or citizen of a country other than the United
1055	1055	16 States and any nonindividual entity, regardless of where
1056	1056	17 created or organized, whose business activity outside the
1057	1057	18 United States is 80% or more of the entity's total
1058	1058	19 business activity.
1059	1059	20 (b) Other definitions.
1060	1060	21 (1) Words denoting number, gender, and so forth, when
1061	1061	22 used in this Act, where not otherwise distinctly expressed
1062	1062	23 or manifestly incompatible with the intent thereof:
1063	1063	24 (A) Words importing the singular include and apply
1064	1064	25 to several persons, parties or things;
1065	1065	26 (B) Words importing the plural include the
1066	1066
1067	1067
1068	1068
1069	1069
1070	1070
1071	1071	HB2237 - 29 - LRB103 25752 HLH 53937 b
1072	1072
1073	1073
1074	1074	HB2237- 30 -LRB103 25752 HLH 53937 b HB2237 - 30 - LRB103 25752 HLH 53937 b
1075	1075	HB2237 - 30 - LRB103 25752 HLH 53937 b
1076	1076	1 singular; and
1077	1077	2 (C) Words importing the masculine gender include
1078	1078	3 the feminine as well.
1079	1079	4 (2) "Company" or "association" as including successors
1080	1080	5 and assigns. The word "company" or "association", when
1081	1081	6 used in reference to a corporation, shall be deemed to
1082	1082	7 embrace the words "successors and assigns of such company
1083	1083	8 or association", and in like manner as if these last-named
1084	1084	9 words, or words of similar import, were expressed.
1085	1085	10 (3) Other terms. Any term used in any Section of this
1086	1086	11 Act with respect to the application of, or in connection
1087	1087	12 with, the provisions of any other Section of this Act
1088	1088	13 shall have the same meaning as in such other Section.
1089	1089	14 (Source: P.A. 102-1030, eff. 5-27-22.)
1090	1090	15 Section 99. Effective date. This Act takes effect upon
1091	1091	16 becoming law.
1092	1092
1093	1093
1094	1094
1095	1095
1096	1096
1097	1097	HB2237 - 30 - LRB103 25752 HLH 53937 b