Illinois 2023-2024 Regular Session

Illinois House Bill HB3686 Compare Versions

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

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1	1	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3686 Introduced , by Rep. Dave Severin SYNOPSIS AS INTRODUCED: 35 ILCS 5/201 Amends the Illinois Income Tax Act. Provides that the rate of tax on individuals, trusts, and estates is 4.85% (currently, 4.95%). Makes a conforming change concerning the pass-through entity tax. Effective immediately. LRB103 28572 HLH 54953 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3686 Introduced , by Rep. Dave Severin SYNOPSIS AS INTRODUCED: 35 ILCS 5/201 35 ILCS 5/201 Amends the Illinois Income Tax Act. Provides that the rate of tax on individuals, trusts, and estates is 4.85% (currently, 4.95%). Makes a conforming change concerning the pass-through entity tax. Effective immediately. LRB103 28572 HLH 54953 b LRB103 28572 HLH 54953 b A BILL FOR
2	2	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3686 Introduced , by Rep. Dave Severin SYNOPSIS AS INTRODUCED:
3	3	35 ILCS 5/201 35 ILCS 5/201
4	4	35 ILCS 5/201
5	5	Amends the Illinois Income Tax Act. Provides that the rate of tax on individuals, trusts, and estates is 4.85% (currently, 4.95%). Makes a conforming change concerning the pass-through entity tax. Effective immediately.
6	6	LRB103 28572 HLH 54953 b LRB103 28572 HLH 54953 b
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8	8	A BILL FOR
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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 201 as follows:
16	16	6 (35 ILCS 5/201)
17	17	7 Sec. 201. Tax imposed.
18	18	8 (a) In general. A tax measured by net income is hereby
19	19	9 imposed on every individual, corporation, trust and estate for
20	20	10 each taxable year ending after July 31, 1969 on the privilege
21	21	11 of earning or receiving income in or as a resident of this
22	22	12 State. Such tax shall be in addition to all other occupation or
23	23	13 privilege taxes imposed by this State or by any municipal
24	24	14 corporation or political subdivision thereof.
25	25	15 (b) Rates. The tax imposed by subsection (a) of this
26	26	16 Section shall be determined as follows, except as adjusted by
27	27	17 subsection (d-1):
28	28	18 (1) In the case of an individual, trust or estate, for
29	29	19 taxable years ending prior to July 1, 1989, an amount
30	30	20 equal to 2 1/2% of the taxpayer's net income for the
31	31	21 taxable year.
32	32	22 (2) In the case of an individual, trust or estate, for
33	33	23 taxable years beginning prior to July 1, 1989 and ending
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37	37	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3686 Introduced , by Rep. Dave Severin SYNOPSIS AS INTRODUCED:
38	38	35 ILCS 5/201 35 ILCS 5/201
39	39	35 ILCS 5/201
40	40	Amends the Illinois Income Tax Act. Provides that the rate of tax on individuals, trusts, and estates is 4.85% (currently, 4.95%). Makes a conforming change concerning the pass-through entity tax. Effective immediately.
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43	43	A BILL FOR
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68	68	1 after June 30, 1989, an amount equal to the sum of (i) 2
69	69	2 1/2% of the taxpayer's net income for the period prior to
70	70	3 July 1, 1989, as calculated under Section 202.3, and (ii)
71	71	4 3% of the taxpayer's net income for the period after June
72	72	5 30, 1989, as calculated under Section 202.3.
73	73	6 (3) In the case of an individual, trust or estate, for
74	74	7 taxable years beginning after June 30, 1989, and ending
75	75	8 prior to January 1, 2011, an amount equal to 3% of the
76	76	9 taxpayer's net income for the taxable year.
77	77	10 (4) In the case of an individual, trust, or estate,
78	78	11 for taxable years beginning prior to January 1, 2011, and
79	79	12 ending after December 31, 2010, an amount equal to the sum
80	80	13 of (i) 3% of the taxpayer's net income for the period prior
81	81	14 to January 1, 2011, as calculated under Section 202.5, and
82	82	15 (ii) 5% of the taxpayer's net income for the period after
83	83	16 December 31, 2010, as calculated under Section 202.5.
84	84	17 (5) In the case of an individual, trust, or estate,
85	85	18 for taxable years beginning on or after January 1, 2011,
86	86	19 and ending prior to January 1, 2015, an amount equal to 5%
87	87	20 of the taxpayer's net income for the taxable year.
88	88	21 (5.1) In the case of an individual, trust, or estate,
89	89	22 for taxable years beginning prior to January 1, 2015, and
90	90	23 ending after December 31, 2014, an amount equal to the sum
91	91	24 of (i) 5% of the taxpayer's net income for the period prior
92	92	25 to January 1, 2015, as calculated under Section 202.5, and
93	93	26 (ii) 3.75% of the taxpayer's net income for the period
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104	104	1 after December 31, 2014, as calculated under Section
105	105	2 202.5.
106	106	3 (5.2) In the case of an individual, trust, or estate,
107	107	4 for taxable years beginning on or after January 1, 2015,
108	108	5 and ending prior to July 1, 2017, an amount equal to 3.75%
109	109	6 of the taxpayer's net income for the taxable year.
110	110	7 (5.3) In the case of an individual, trust, or estate,
111	111	8 for taxable years beginning prior to July 1, 2017, and
112	112	9 ending after June 30, 2017, an amount equal to the sum of
113	113	10 (i) 3.75% of the taxpayer's net income for the period
114	114	11 prior to July 1, 2017, as calculated under Section 202.5,
115	115	12 and (ii) 4.95% of the taxpayer's net income for the period
116	116	13 after June 30, 2017, as calculated under Section 202.5.
117	117	14 (5.4) In the case of an individual, trust, or estate,
118	118	15 for taxable years beginning on or after July 1, 2017 and
119	119	16 ending prior to January 1, 2024, an amount equal to 4.95%
120	120	17 of the taxpayer's net income for the taxable year.
121	121	18 (5.5) In the case of an individual, trust, or estate,
122	122	19 for taxable years beginning prior to January 1, 2024, and
123	123	20 ending after December 31, 2023, an amount equal to the sum
124	124	21 of (i) 4.95% of the taxpayer's net income for the period
125	125	22 prior to January 1, 2023, as calculated under Section
126	126	23 202.5, and (ii) 4.85% of the taxpayer's net income for the
127	127	24 period after December 31, 2022, as calculated under
128	128	25 Section 202.5.
129	129	26 (5.6) In the case of an individual, trust, or estate,
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140	140	1 for taxable years beginning on or after January 1, 2024,
141	141	2 an amount equal to 4.85% of the taxpayer's net income for
142	142	3 the taxable year.
143	143	4 (6) In the case of a corporation, for taxable years
144	144	5 ending prior to July 1, 1989, an amount equal to 4% of the
145	145	6 taxpayer's net income for the taxable year.
146	146	7 (7) In the case of a corporation, for taxable years
147	147	8 beginning prior to July 1, 1989 and ending after June 30,
148	148	9 1989, an amount equal to the sum of (i) 4% of the
149	149	10 taxpayer's net income for the period prior to July 1,
150	150	11 1989, as calculated under Section 202.3, and (ii) 4.8% of
151	151	12 the taxpayer's net income for the period after June 30,
152	152	13 1989, as calculated under Section 202.3.
153	153	14 (8) In the case of a corporation, for taxable years
154	154	15 beginning after June 30, 1989, and ending prior to January
155	155	16 1, 2011, an amount equal to 4.8% of the taxpayer's net
156	156	17 income for the taxable year.
157	157	18 (9) In the case of a corporation, for taxable years
158	158	19 beginning prior to January 1, 2011, and ending after
159	159	20 December 31, 2010, an amount equal to the sum of (i) 4.8%
160	160	21 of the taxpayer's net income for the period prior to
161	161	22 January 1, 2011, as calculated under Section 202.5, and
162	162	23 (ii) 7% of the taxpayer's net income for the period after
163	163	24 December 31, 2010, as calculated under Section 202.5.
164	164	25 (10) In the case of a corporation, for taxable years
165	165	26 beginning on or after January 1, 2011, and ending prior to
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176	176	1 January 1, 2015, an amount equal to 7% of the taxpayer's
177	177	2 net income for the taxable year.
178	178	3 (11) In the case of a corporation, for taxable years
179	179	4 beginning prior to January 1, 2015, and ending after
180	180	5 December 31, 2014, an amount equal to the sum of (i) 7% of
181	181	6 the taxpayer's net income for the period prior to January
182	182	7 1, 2015, as calculated under Section 202.5, and (ii) 5.25%
183	183	8 of the taxpayer's net income for the period after December
184	184	9 31, 2014, as calculated under Section 202.5.
185	185	10 (12) In the case of a corporation, for taxable years
186	186	11 beginning on or after January 1, 2015, and ending prior to
187	187	12 July 1, 2017, an amount equal to 5.25% of the taxpayer's
188	188	13 net income for the taxable year.
189	189	14 (13) In the case of a corporation, for taxable years
190	190	15 beginning prior to July 1, 2017, and ending after June 30,
191	191	16 2017, an amount equal to the sum of (i) 5.25% of the
192	192	17 taxpayer's net income for the period prior to July 1,
193	193	18 2017, as calculated under Section 202.5, and (ii) 7% of
194	194	19 the taxpayer's net income for the period after June 30,
195	195	20 2017, as calculated under Section 202.5.
196	196	21 (14) In the case of a corporation, for taxable years
197	197	22 beginning on or after July 1, 2017, an amount equal to 7%
198	198	23 of the taxpayer's net income for the taxable year.
199	199	24 The rates under this subsection (b) are subject to the
200	200	25 provisions of Section 201.5.
201	201	26 (b-5) Surcharge; sale or exchange of assets, properties,
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212	212	1 and intangibles of organization gaming licensees. For each of
213	213	2 taxable years 2019 through 2027, a surcharge is imposed on all
214	214	3 taxpayers on income arising from the sale or exchange of
215	215	4 capital assets, depreciable business property, real property
216	216	5 used in the trade or business, and Section 197 intangibles (i)
217	217	6 of an organization licensee under the Illinois Horse Racing
218	218	7 Act of 1975 and (ii) of an organization gaming licensee under
219	219	8 the Illinois Gambling Act. The amount of the surcharge is
220	220	9 equal to the amount of federal income tax liability for the
221	221	10 taxable year attributable to those sales and exchanges. The
222	222	11 surcharge imposed shall not apply if:
223	223	12 (1) the organization gaming license, organization
224	224	13 license, or racetrack property is transferred as a result
225	225	14 of any of the following:
226	226	15 (A) bankruptcy, a receivership, or a debt
227	227	16 adjustment initiated by or against the initial
228	228	17 licensee or the substantial owners of the initial
229	229	18 licensee;
230	230	19 (B) cancellation, revocation, or termination of
231	231	20 any such license by the Illinois Gaming Board or the
232	232	21 Illinois Racing Board;
233	233	22 (C) a determination by the Illinois Gaming Board
234	234	23 that transfer of the license is in the best interests
235	235	24 of Illinois gaming;
236	236	25 (D) the death of an owner of the equity interest in
237	237	26 a licensee;
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248	248	1 (E) the acquisition of a controlling interest in
249	249	2 the stock or substantially all of the assets of a
250	250	3 publicly traded company;
251	251	4 (F) a transfer by a parent company to a wholly
252	252	5 owned subsidiary; or
253	253	6 (G) the transfer or sale to or by one person to
254	254	7 another person where both persons were initial owners
255	255	8 of the license when the license was issued; or
256	256	9 (2) the controlling interest in the organization
257	257	10 gaming license, organization license, or racetrack
258	258	11 property is transferred in a transaction to lineal
259	259	12 descendants in which no gain or loss is recognized or as a
260	260	13 result of a transaction in accordance with Section 351 of
261	261	14 the Internal Revenue Code in which no gain or loss is
262	262	15 recognized; or
263	263	16 (3) live horse racing was not conducted in 2010 at a
264	264	17 racetrack located within 3 miles of the Mississippi River
265	265	18 under a license issued pursuant to the Illinois Horse
266	266	19 Racing Act of 1975.
267	267	20 The transfer of an organization gaming license,
268	268	21 organization license, or racetrack property by a person other
269	269	22 than the initial licensee to receive the organization gaming
270	270	23 license is not subject to a surcharge. The Department shall
271	271	24 adopt rules necessary to implement and administer this
272	272	25 subsection.
273	273	26 (c) Personal Property Tax Replacement Income Tax.
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284	284	1 Beginning on July 1, 1979 and thereafter, in addition to such
285	285	2 income tax, there is also hereby imposed the Personal Property
286	286	3 Tax Replacement Income Tax measured by net income on every
287	287	4 corporation (including Subchapter S corporations), partnership
288	288	5 and trust, for each taxable year ending after June 30, 1979.
289	289	6 Such taxes are imposed on the privilege of earning or
290	290	7 receiving income in or as a resident of this State. The
291	291	8 Personal Property Tax Replacement Income Tax shall be in
292	292	9 addition to the income tax imposed by subsections (a) and (b)
293	293	10 of this Section and in addition to all other occupation or
294	294	11 privilege taxes imposed by this State or by any municipal
295	295	12 corporation or political subdivision thereof.
296	296	13 (d) Additional Personal Property Tax Replacement Income
297	297	14 Tax Rates. The personal property tax replacement income tax
298	298	15 imposed by this subsection and subsection (c) of this Section
299	299	16 in the case of a corporation, other than a Subchapter S
300	300	17 corporation and except as adjusted by subsection (d-1), shall
301	301	18 be an additional amount equal to 2.85% of such taxpayer's net
302	302	19 income for the taxable year, except that beginning on January
303	303	20 1, 1981, and thereafter, the rate of 2.85% specified in this
304	304	21 subsection shall be reduced to 2.5%, and in the case of a
305	305	22 partnership, trust or a Subchapter S corporation shall be an
306	306	23 additional amount equal to 1.5% of such taxpayer's net income
307	307	24 for the taxable year.
308	308	25 (d-1) Rate reduction for certain foreign insurers. In the
309	309	26 case of a foreign insurer, as defined by Section 35A-5 of the
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320	320	1 Illinois Insurance Code, whose state or country of domicile
321	321	2 imposes on insurers domiciled in Illinois a retaliatory tax
322	322	3 (excluding any insurer whose premiums from reinsurance assumed
323	323	4 are 50% or more of its total insurance premiums as determined
324	324	5 under paragraph (2) of subsection (b) of Section 304, except
325	325	6 that for purposes of this determination premiums from
326	326	7 reinsurance do not include premiums from inter-affiliate
327	327	8 reinsurance arrangements), beginning with taxable years ending
328	328	9 on or after December 31, 1999, the sum of the rates of tax
329	329	10 imposed by subsections (b) and (d) shall be reduced (but not
330	330	11 increased) to the rate at which the total amount of tax imposed
331	331	12 under this Act, net of all credits allowed under this Act,
332	332	13 shall equal (i) the total amount of tax that would be imposed
333	333	14 on the foreign insurer's net income allocable to Illinois for
334	334	15 the taxable year by such foreign insurer's state or country of
335	335	16 domicile if that net income were subject to all income taxes
336	336	17 and taxes measured by net income imposed by such foreign
337	337	18 insurer's state or country of domicile, net of all credits
338	338	19 allowed or (ii) a rate of zero if no such tax is imposed on
339	339	20 such income by the foreign insurer's state of domicile. For
340	340	21 the purposes of this subsection (d-1), an inter-affiliate
341	341	22 includes a mutual insurer under common management.
342	342	23 (1) For the purposes of subsection (d-1), in no event
343	343	24 shall the sum of the rates of tax imposed by subsections
344	344	25 (b) and (d) be reduced below the rate at which the sum of:
345	345	26 (A) the total amount of tax imposed on such
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356	356	1 foreign insurer under this Act for a taxable year, net
357	357	2 of all credits allowed under this Act, plus
358	358	3 (B) the privilege tax imposed by Section 409 of
359	359	4 the Illinois Insurance Code, the fire insurance
360	360	5 company tax imposed by Section 12 of the Fire
361	361	6 Investigation Act, and the fire department taxes
362	362	7 imposed under Section 11-10-1 of the Illinois
363	363	8 Municipal Code,
364	364	9 equals 1.25% for taxable years ending prior to December
365	365	10 31, 2003, or 1.75% for taxable years ending on or after
366	366	11 December 31, 2003, of the net taxable premiums written for
367	367	12 the taxable year, as described by subsection (1) of
368	368	13 Section 409 of the Illinois Insurance Code. This paragraph
369	369	14 will in no event increase the rates imposed under
370	370	15 subsections (b) and (d).
371	371	16 (2) Any reduction in the rates of tax imposed by this
372	372	17 subsection shall be applied first against the rates
373	373	18 imposed by subsection (b) and only after the tax imposed
374	374	19 by subsection (a) net of all credits allowed under this
375	375	20 Section other than the credit allowed under subsection (i)
376	376	21 has been reduced to zero, against the rates imposed by
377	377	22 subsection (d).
378	378	23 This subsection (d-1) is exempt from the provisions of
379	379	24 Section 250.
380	380	25 (e) Investment credit. A taxpayer shall be allowed a
381	381	26 credit against the Personal Property Tax Replacement Income
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392	392	1 Tax for investment in qualified property.
393	393	2 (1) A taxpayer shall be allowed a credit equal to .5%
394	394	3 of the basis of qualified property placed in service
395	395	4 during the taxable year, provided such property is placed
396	396	5 in service on or after July 1, 1984. There shall be allowed
397	397	6 an additional credit equal to .5% of the basis of
398	398	7 qualified property placed in service during the taxable
399	399	8 year, provided such property is placed in service on or
400	400	9 after July 1, 1986, and the taxpayer's base employment
401	401	10 within Illinois has increased by 1% or more over the
402	402	11 preceding year as determined by the taxpayer's employment
403	403	12 records filed with the Illinois Department of Employment
404	404	13 Security. Taxpayers who are new to Illinois shall be
405	405	14 deemed to have met the 1% growth in base employment for the
406	406	15 first year in which they file employment records with the
407	407	16 Illinois Department of Employment Security. The provisions
408	408	17 added to this Section by Public Act 85-1200 (and restored
409	409	18 by Public Act 87-895) shall be construed as declaratory of
410	410	19 existing law and not as a new enactment. If, in any year,
411	411	20 the increase in base employment within Illinois over the
412	412	21 preceding year is less than 1%, the additional credit
413	413	22 shall be limited to that percentage times a fraction, the
414	414	23 numerator of which is .5% and the denominator of which is
415	415	24 1%, but shall not exceed .5%. The investment credit shall
416	416	25 not be allowed to the extent that it would reduce a
417	417	26 taxpayer's liability in any tax year below zero, nor may
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428	428	1 any credit for qualified property be allowed for any year
429	429	2 other than the year in which the property was placed in
430	430	3 service in Illinois. For tax years ending on or after
431	431	4 December 31, 1987, and on or before December 31, 1988, the
432	432	5 credit shall be allowed for the tax year in which the
433	433	6 property is placed in service, or, if the amount of the
434	434	7 credit exceeds the tax liability for that year, whether it
435	435	8 exceeds the original liability or the liability as later
436	436	9 amended, such excess may be carried forward and applied to
437	437	10 the tax liability of the 5 taxable years following the
438	438	11 excess credit years if the taxpayer (i) makes investments
439	439	12 which cause the creation of a minimum of 2,000 full-time
440	440	13 equivalent jobs in Illinois, (ii) is located in an
441	441	14 enterprise zone established pursuant to the Illinois
442	442	15 Enterprise Zone Act and (iii) is certified by the
443	443	16 Department of Commerce and Community Affairs (now
444	444	17 Department of Commerce and Economic Opportunity) as
445	445	18 complying with the requirements specified in clause (i)
446	446	19 and (ii) by July 1, 1986. The Department of Commerce and
447	447	20 Community Affairs (now Department of Commerce and Economic
448	448	21 Opportunity) shall notify the Department of Revenue of all
449	449	22 such certifications immediately. For tax years ending
450	450	23 after December 31, 1988, the credit shall be allowed for
451	451	24 the tax year in which the property is placed in service,
452	452	25 or, if the amount of the credit exceeds the tax liability
453	453	26 for that year, whether it exceeds the original liability
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464	464	1 or the liability as later amended, such excess may be
465	465	2 carried forward and applied to the tax liability of the 5
466	466	3 taxable years following the excess credit years. The
467	467	4 credit shall be applied to the earliest year for which
468	468	5 there is a liability. If there is credit from more than one
469	469	6 tax year that is available to offset a liability, earlier
470	470	7 credit shall be applied first.
471	471	8 (2) The term "qualified property" means property
472	472	9 which:
473	473	10 (A) is tangible, whether new or used, including
474	474	11 buildings and structural components of buildings and
475	475	12 signs that are real property, but not including land
476	476	13 or improvements to real property that are not a
477	477	14 structural component of a building such as
478	478	15 landscaping, sewer lines, local access roads, fencing,
479	479	16 parking lots, and other appurtenances;
480	480	17 (B) is depreciable pursuant to Section 167 of the
481	481	18 Internal Revenue Code, except that "3-year property"
482	482	19 as defined in Section 168(c)(2)(A) of that Code is not
483	483	20 eligible for the credit provided by this subsection
484	484	21 (e);
485	485	22 (C) is acquired by purchase as defined in Section
486	486	23 179(d) of the Internal Revenue Code;
487	487	24 (D) is used in Illinois by a taxpayer who is
488	488	25 primarily engaged in manufacturing, or in mining coal
489	489	26 or fluorite, or in retailing, or was placed in service
490	490
491	491
492	492
493	493
494	494
495	495	HB3686 - 13 - LRB103 28572 HLH 54953 b
496	496
497	497
498	498	HB3686- 14 -LRB103 28572 HLH 54953 b HB3686 - 14 - LRB103 28572 HLH 54953 b
499	499	HB3686 - 14 - LRB103 28572 HLH 54953 b
500	500	1 on or after July 1, 2006 in a River Edge Redevelopment
501	501	2 Zone established pursuant to the River Edge
502	502	3 Redevelopment Zone Act; and
503	503	4 (E) has not previously been used in Illinois in
504	504	5 such a manner and by such a person as would qualify for
505	505	6 the credit provided by this subsection (e) or
506	506	7 subsection (f).
507	507	8 (3) For purposes of this subsection (e),
508	508	9 "manufacturing" means the material staging and production
509	509	10 of tangible personal property by procedures commonly
510	510	11 regarded as manufacturing, processing, fabrication, or
511	511	12 assembling which changes some existing material into new
512	512	13 shapes, new qualities, or new combinations. For purposes
513	513	14 of this subsection (e) the term "mining" shall have the
514	514	15 same meaning as the term "mining" in Section 613(c) of the
515	515	16 Internal Revenue Code. For purposes of this subsection
516	516	17 (e), the term "retailing" means the sale of tangible
517	517	18 personal property for use or consumption and not for
518	518	19 resale, or services rendered in conjunction with the sale
519	519	20 of tangible personal property for use or consumption and
520	520	21 not for resale. For purposes of this subsection (e),
521	521	22 "tangible personal property" has the same meaning as when
522	522	23 that term is used in the Retailers' Occupation Tax Act,
523	523	24 and, for taxable years ending after December 31, 2008,
524	524	25 does not include the generation, transmission, or
525	525	26 distribution of electricity.
526	526
527	527
528	528
529	529
530	530
531	531	HB3686 - 14 - LRB103 28572 HLH 54953 b
532	532
533	533
534	534	HB3686- 15 -LRB103 28572 HLH 54953 b HB3686 - 15 - LRB103 28572 HLH 54953 b
535	535	HB3686 - 15 - LRB103 28572 HLH 54953 b
536	536	1 (4) The basis of qualified property shall be the basis
537	537	2 used to compute the depreciation deduction for federal
538	538	3 income tax purposes.
539	539	4 (5) If the basis of the property for federal income
540	540	5 tax depreciation purposes is increased after it has been
541	541	6 placed in service in Illinois by the taxpayer, the amount
542	542	7 of such increase shall be deemed property placed in
543	543	8 service on the date of such increase in basis.
544	544	9 (6) The term "placed in service" shall have the same
545	545	10 meaning as under Section 46 of the Internal Revenue Code.
546	546	11 (7) If during any taxable year, any property ceases to
547	547	12 be qualified property in the hands of the taxpayer within
548	548	13 48 months after being placed in service, or the situs of
549	549	14 any qualified property is moved outside Illinois within 48
550	550	15 months after being placed in service, the Personal
551	551	16 Property Tax Replacement Income Tax for such taxable year
552	552	17 shall be increased. Such increase shall be determined by
553	553	18 (i) recomputing the investment credit which would have
554	554	19 been allowed for the year in which credit for such
555	555	20 property was originally allowed by eliminating such
556	556	21 property from such computation and, (ii) subtracting such
557	557	22 recomputed credit from the amount of credit previously
558	558	23 allowed. For the purposes of this paragraph (7), a
559	559	24 reduction of the basis of qualified property resulting
560	560	25 from a redetermination of the purchase price shall be
561	561	26 deemed a disposition of qualified property to the extent
562	562
563	563
564	564
565	565
566	566
567	567	HB3686 - 15 - LRB103 28572 HLH 54953 b
568	568
569	569
570	570	HB3686- 16 -LRB103 28572 HLH 54953 b HB3686 - 16 - LRB103 28572 HLH 54953 b
571	571	HB3686 - 16 - LRB103 28572 HLH 54953 b
572	572	1 of such reduction.
573	573	2 (8) Unless the investment credit is extended by law,
574	574	3 the basis of qualified property shall not include costs
575	575	4 incurred after December 31, 2018, except for costs
576	576	5 incurred pursuant to a binding contract entered into on or
577	577	6 before December 31, 2018.
578	578	7 (9) Each taxable year ending before December 31, 2000,
579	579	8 a partnership may elect to pass through to its partners
580	580	9 the credits to which the partnership is entitled under
581	581	10 this subsection (e) for the taxable year. A partner may
582	582	11 use the credit allocated to him or her under this
583	583	12 paragraph only against the tax imposed in subsections (c)
584	584	13 and (d) of this Section. If the partnership makes that
585	585	14 election, those credits shall be allocated among the
586	586	15 partners in the partnership in accordance with the rules
587	587	16 set forth in Section 704(b) of the Internal Revenue Code,
588	588	17 and the rules promulgated under that Section, and the
589	589	18 allocated amount of the credits shall be allowed to the
590	590	19 partners for that taxable year. The partnership shall make
591	591	20 this election on its Personal Property Tax Replacement
592	592	21 Income Tax return for that taxable year. The election to
593	593	22 pass through the credits shall be irrevocable.
594	594	23 For taxable years ending on or after December 31,
595	595	24 2000, a partner that qualifies its partnership for a
596	596	25 subtraction under subparagraph (I) of paragraph (2) of
597	597	26 subsection (d) of Section 203 or a shareholder that
598	598
599	599
600	600
601	601
602	602
603	603	HB3686 - 16 - LRB103 28572 HLH 54953 b
604	604
605	605
606	606	HB3686- 17 -LRB103 28572 HLH 54953 b HB3686 - 17 - LRB103 28572 HLH 54953 b
607	607	HB3686 - 17 - LRB103 28572 HLH 54953 b
608	608	1 qualifies a Subchapter S corporation for a subtraction
609	609	2 under subparagraph (S) of paragraph (2) of subsection (b)
610	610	3 of Section 203 shall be allowed a credit under this
611	611	4 subsection (e) equal to its share of the credit earned
612	612	5 under this subsection (e) during the taxable year by the
613	613	6 partnership or Subchapter S corporation, determined in
614	614	7 accordance with the determination of income and
615	615	8 distributive share of income under Sections 702 and 704
616	616	9 and Subchapter S of the Internal Revenue Code. This
617	617	10 paragraph is exempt from the provisions of Section 250.
618	618	11 (f) Investment credit; Enterprise Zone; River Edge
619	619	12 Redevelopment Zone.
620	620	13 (1) A taxpayer shall be allowed a credit against the
621	621	14 tax imposed by subsections (a) and (b) of this Section for
622	622	15 investment in qualified property which is placed in
623	623	16 service in an Enterprise Zone created pursuant to the
624	624	17 Illinois Enterprise Zone Act or, for property placed in
625	625	18 service on or after July 1, 2006, a River Edge
626	626	19 Redevelopment Zone established pursuant to the River Edge
627	627	20 Redevelopment Zone Act. For partners, shareholders of
628	628	21 Subchapter S corporations, and owners of limited liability
629	629	22 companies, if the liability company is treated as a
630	630	23 partnership for purposes of federal and State income
631	631	24 taxation, there shall be allowed a credit under this
632	632	25 subsection (f) to be determined in accordance with the
633	633	26 determination of income and distributive share of income
634	634
635	635
636	636
637	637
638	638
639	639	HB3686 - 17 - LRB103 28572 HLH 54953 b
640	640
641	641
642	642	HB3686- 18 -LRB103 28572 HLH 54953 b HB3686 - 18 - LRB103 28572 HLH 54953 b
643	643	HB3686 - 18 - LRB103 28572 HLH 54953 b
644	644	1 under Sections 702 and 704 and Subchapter S of the
645	645	2 Internal Revenue Code. The credit shall be .5% of the
646	646	3 basis for such property. The credit shall be available
647	647	4 only in the taxable year in which the property is placed in
648	648	5 service in the Enterprise Zone or River Edge Redevelopment
649	649	6 Zone and shall not be allowed to the extent that it would
650	650	7 reduce a taxpayer's liability for the tax imposed by
651	651	8 subsections (a) and (b) of this Section to below zero. For
652	652	9 tax years ending on or after December 31, 1985, the credit
653	653	10 shall be allowed for the tax year in which the property is
654	654	11 placed in service, or, if the amount of the credit exceeds
655	655	12 the tax liability for that year, whether it exceeds the
656	656	13 original liability or the liability as later amended, such
657	657	14 excess may be carried forward and applied to the tax
658	658	15 liability of the 5 taxable years following the excess
659	659	16 credit year. The credit shall be applied to the earliest
660	660	17 year for which there is a liability. If there is credit
661	661	18 from more than one tax year that is available to offset a
662	662	19 liability, the credit accruing first in time shall be
663	663	20 applied first.
664	664	21 (2) The term qualified property means property which:
665	665	22 (A) is tangible, whether new or used, including
666	666	23 buildings and structural components of buildings;
667	667	24 (B) is depreciable pursuant to Section 167 of the
668	668	25 Internal Revenue Code, except that "3-year property"
669	669	26 as defined in Section 168(c)(2)(A) of that Code is not
670	670
671	671
672	672
673	673
674	674
675	675	HB3686 - 18 - LRB103 28572 HLH 54953 b
676	676
677	677
678	678	HB3686- 19 -LRB103 28572 HLH 54953 b HB3686 - 19 - LRB103 28572 HLH 54953 b
679	679	HB3686 - 19 - LRB103 28572 HLH 54953 b
680	680	1 eligible for the credit provided by this subsection
681	681	2 (f);
682	682	3 (C) is acquired by purchase as defined in Section
683	683	4 179(d) of the Internal Revenue Code;
684	684	5 (D) is used in the Enterprise Zone or River Edge
685	685	6 Redevelopment Zone by the taxpayer; and
686	686	7 (E) has not been previously used in Illinois in
687	687	8 such a manner and by such a person as would qualify for
688	688	9 the credit provided by this subsection (f) or
689	689	10 subsection (e).
690	690	11 (3) The basis of qualified property shall be the basis
691	691	12 used to compute the depreciation deduction for federal
692	692	13 income tax purposes.
693	693	14 (4) If the basis of the property for federal income
694	694	15 tax depreciation purposes is increased after it has been
695	695	16 placed in service in the Enterprise Zone or River Edge
696	696	17 Redevelopment Zone by the taxpayer, the amount of such
697	697	18 increase shall be deemed property placed in service on the
698	698	19 date of such increase in basis.
699	699	20 (5) The term "placed in service" shall have the same
700	700	21 meaning as under Section 46 of the Internal Revenue Code.
701	701	22 (6) If during any taxable year, any property ceases to
702	702	23 be qualified property in the hands of the taxpayer within
703	703	24 48 months after being placed in service, or the situs of
704	704	25 any qualified property is moved outside the Enterprise
705	705	26 Zone or River Edge Redevelopment Zone within 48 months
706	706
707	707
708	708
709	709
710	710
711	711	HB3686 - 19 - LRB103 28572 HLH 54953 b
712	712
713	713
714	714	HB3686- 20 -LRB103 28572 HLH 54953 b HB3686 - 20 - LRB103 28572 HLH 54953 b
715	715	HB3686 - 20 - LRB103 28572 HLH 54953 b
716	716	1 after being placed in service, the tax imposed under
717	717	2 subsections (a) and (b) of this Section for such taxable
718	718	3 year shall be increased. Such increase shall be determined
719	719	4 by (i) recomputing the investment credit which would have
720	720	5 been allowed for the year in which credit for such
721	721	6 property was originally allowed by eliminating such
722	722	7 property from such computation, and (ii) subtracting such
723	723	8 recomputed credit from the amount of credit previously
724	724	9 allowed. For the purposes of this paragraph (6), a
725	725	10 reduction of the basis of qualified property resulting
726	726	11 from a redetermination of the purchase price shall be
727	727	12 deemed a disposition of qualified property to the extent
728	728	13 of such reduction.
729	729	14 (7) There shall be allowed an additional credit equal
730	730	15 to 0.5% of the basis of qualified property placed in
731	731	16 service during the taxable year in a River Edge
732	732	17 Redevelopment Zone, provided such property is placed in
733	733	18 service on or after July 1, 2006, and the taxpayer's base
734	734	19 employment within Illinois has increased by 1% or more
735	735	20 over the preceding year as determined by the taxpayer's
736	736	21 employment records filed with the Illinois Department of
737	737	22 Employment Security. Taxpayers who are new to Illinois
738	738	23 shall be deemed to have met the 1% growth in base
739	739	24 employment for the first year in which they file
740	740	25 employment records with the Illinois Department of
741	741	26 Employment Security. If, in any year, the increase in base
742	742
743	743
744	744
745	745
746	746
747	747	HB3686 - 20 - LRB103 28572 HLH 54953 b
748	748
749	749
750	750	HB3686- 21 -LRB103 28572 HLH 54953 b HB3686 - 21 - LRB103 28572 HLH 54953 b
751	751	HB3686 - 21 - LRB103 28572 HLH 54953 b
752	752	1 employment within Illinois over the preceding year is less
753	753	2 than 1%, the additional credit shall be limited to that
754	754	3 percentage times a fraction, the numerator of which is
755	755	4 0.5% and the denominator of which is 1%, but shall not
756	756	5 exceed 0.5%.
757	757	6 (8) For taxable years beginning on or after January 1,
758	758	7 2021, there shall be allowed an Enterprise Zone
759	759	8 construction jobs credit against the taxes imposed under
760	760	9 subsections (a) and (b) of this Section as provided in
761	761	10 Section 13 of the Illinois Enterprise Zone Act.
762	762	11 The credit or credits may not reduce the taxpayer's
763	763	12 liability to less than zero. If the amount of the credit or
764	764	13 credits exceeds the taxpayer's liability, the excess may
765	765	14 be carried forward and applied against the taxpayer's
766	766	15 liability in succeeding calendar years in the same manner
767	767	16 provided under paragraph (4) of Section 211 of this Act.
768	768	17 The credit or credits shall be applied to the earliest
769	769	18 year for which there is a tax liability. If there are
770	770	19 credits from more than one taxable year that are available
771	771	20 to offset a liability, the earlier credit shall be applied
772	772	21 first.
773	773	22 For partners, shareholders of Subchapter S
774	774	23 corporations, and owners of limited liability companies,
775	775	24 if the liability company is treated as a partnership for
776	776	25 the purposes of federal and State income taxation, there
777	777	26 shall be allowed a credit under this Section to be
778	778
779	779
780	780
781	781
782	782
783	783	HB3686 - 21 - LRB103 28572 HLH 54953 b
784	784
785	785
786	786	HB3686- 22 -LRB103 28572 HLH 54953 b HB3686 - 22 - LRB103 28572 HLH 54953 b
787	787	HB3686 - 22 - LRB103 28572 HLH 54953 b
788	788	1 determined in accordance with the determination of income
789	789	2 and distributive share of income under Sections 702 and
790	790	3 704 and Subchapter S of the Internal Revenue Code.
791	791	4 The total aggregate amount of credits awarded under
792	792	5 the Blue Collar Jobs Act (Article 20 of Public Act 101-9)
793	793	6 shall not exceed $20,000,000 in any State fiscal year.
794	794	7 This paragraph (8) is exempt from the provisions of
795	795	8 Section 250.
796	796	9 (g) (Blank).
797	797	10 (h) Investment credit; High Impact Business.
798	798	11 (1) Subject to subsections (b) and (b-5) of Section
799	799	12 5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
800	800	13 be allowed a credit against the tax imposed by subsections
801	801	14 (a) and (b) of this Section for investment in qualified
802	802	15 property which is placed in service by a Department of
803	803	16 Commerce and Economic Opportunity designated High Impact
804	804	17 Business. The credit shall be .5% of the basis for such
805	805	18 property. The credit shall not be available (i) until the
806	806	19 minimum investments in qualified property set forth in
807	807	20 subdivision (a)(3)(A) of Section 5.5 of the Illinois
808	808	21 Enterprise Zone Act have been satisfied or (ii) until the
809	809	22 time authorized in subsection (b-5) of the Illinois
810	810	23 Enterprise Zone Act for entities designated as High Impact
811	811	24 Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
812	812	25 (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
813	813	26 Act, and shall not be allowed to the extent that it would
814	814
815	815
816	816
817	817
818	818
819	819	HB3686 - 22 - LRB103 28572 HLH 54953 b
820	820
821	821
822	822	HB3686- 23 -LRB103 28572 HLH 54953 b HB3686 - 23 - LRB103 28572 HLH 54953 b
823	823	HB3686 - 23 - LRB103 28572 HLH 54953 b
824	824	1 reduce a taxpayer's liability for the tax imposed by
825	825	2 subsections (a) and (b) of this Section to below zero. The
826	826	3 credit applicable to such investments shall be taken in
827	827	4 the taxable year in which such investments have been
828	828	5 completed. The credit for additional investments beyond
829	829	6 the minimum investment by a designated high impact
830	830	7 business authorized under subdivision (a)(3)(A) of Section
831	831	8 5.5 of the Illinois Enterprise Zone Act shall be available
832	832	9 only in the taxable year in which the property is placed in
833	833	10 service and shall not be allowed to the extent that it
834	834	11 would reduce a taxpayer's liability for the tax imposed by
835	835	12 subsections (a) and (b) of this Section to below zero. For
836	836	13 tax years ending on or after December 31, 1987, the credit
837	837	14 shall be allowed for the tax year in which the property is
838	838	15 placed in service, or, if the amount of the credit exceeds
839	839	16 the tax liability for that year, whether it exceeds the
840	840	17 original liability or the liability as later amended, such
841	841	18 excess may be carried forward and applied to the tax
842	842	19 liability of the 5 taxable years following the excess
843	843	20 credit year. The credit shall be applied to the earliest
844	844	21 year for which there is a liability. If there is credit
845	845	22 from more than one tax year that is available to offset a
846	846	23 liability, the credit accruing first in time shall be
847	847	24 applied first.
848	848	25 Changes made in this subdivision (h)(1) by Public Act
849	849	26 88-670 restore changes made by Public Act 85-1182 and
850	850
851	851
852	852
853	853
854	854
855	855	HB3686 - 23 - LRB103 28572 HLH 54953 b
856	856
857	857
858	858	HB3686- 24 -LRB103 28572 HLH 54953 b HB3686 - 24 - LRB103 28572 HLH 54953 b
859	859	HB3686 - 24 - LRB103 28572 HLH 54953 b
860	860	1 reflect existing law.
861	861	2 (2) The term qualified property means property which:
862	862	3 (A) is tangible, whether new or used, including
863	863	4 buildings and structural components of buildings;
864	864	5 (B) is depreciable pursuant to Section 167 of the
865	865	6 Internal Revenue Code, except that "3-year property"
866	866	7 as defined in Section 168(c)(2)(A) of that Code is not
867	867	8 eligible for the credit provided by this subsection
868	868	9 (h);
869	869	10 (C) is acquired by purchase as defined in Section
870	870	11 179(d) of the Internal Revenue Code; and
871	871	12 (D) is not eligible for the Enterprise Zone
872	872	13 Investment Credit provided by subsection (f) of this
873	873	14 Section.
874	874	15 (3) The basis of qualified property shall be the basis
875	875	16 used to compute the depreciation deduction for federal
876	876	17 income tax purposes.
877	877	18 (4) If the basis of the property for federal income
878	878	19 tax depreciation purposes is increased after it has been
879	879	20 placed in service in a federally designated Foreign Trade
880	880	21 Zone or Sub-Zone located in Illinois by the taxpayer, the
881	881	22 amount of such increase shall be deemed property placed in
882	882	23 service on the date of such increase in basis.
883	883	24 (5) The term "placed in service" shall have the same
884	884	25 meaning as under Section 46 of the Internal Revenue Code.
885	885	26 (6) If during any taxable year ending on or before
886	886
887	887
888	888
889	889
890	890
891	891	HB3686 - 24 - LRB103 28572 HLH 54953 b
892	892
893	893
894	894	HB3686- 25 -LRB103 28572 HLH 54953 b HB3686 - 25 - LRB103 28572 HLH 54953 b
895	895	HB3686 - 25 - LRB103 28572 HLH 54953 b
896	896	1 December 31, 1996, any property ceases to be qualified
897	897	2 property in the hands of the taxpayer within 48 months
898	898	3 after being placed in service, or the situs of any
899	899	4 qualified property is moved outside Illinois within 48
900	900	5 months after being placed in service, the tax imposed
901	901	6 under subsections (a) and (b) of this Section for such
902	902	7 taxable year shall be increased. Such increase shall be
903	903	8 determined by (i) recomputing the investment credit which
904	904	9 would have been allowed for the year in which credit for
905	905	10 such property was originally allowed by eliminating such
906	906	11 property from such computation, and (ii) subtracting such
907	907	12 recomputed credit from the amount of credit previously
908	908	13 allowed. For the purposes of this paragraph (6), a
909	909	14 reduction of the basis of qualified property resulting
910	910	15 from a redetermination of the purchase price shall be
911	911	16 deemed a disposition of qualified property to the extent
912	912	17 of such reduction.
913	913	18 (7) Beginning with tax years ending after December 31,
914	914	19 1996, if a taxpayer qualifies for the credit under this
915	915	20 subsection (h) and thereby is granted a tax abatement and
916	916	21 the taxpayer relocates its entire facility in violation of
917	917	22 the explicit terms and length of the contract under
918	918	23 Section 18-183 of the Property Tax Code, the tax imposed
919	919	24 under subsections (a) and (b) of this Section shall be
920	920	25 increased for the taxable year in which the taxpayer
921	921	26 relocated its facility by an amount equal to the amount of
922	922
923	923
924	924
925	925
926	926
927	927	HB3686 - 25 - LRB103 28572 HLH 54953 b
928	928
929	929
930	930	HB3686- 26 -LRB103 28572 HLH 54953 b HB3686 - 26 - LRB103 28572 HLH 54953 b
931	931	HB3686 - 26 - LRB103 28572 HLH 54953 b
932	932	1 credit received by the taxpayer under this subsection (h).
933	933	2 (h-5) High Impact Business construction jobs credit. For
934	934	3 taxable years beginning on or after January 1, 2021, there
935	935	4 shall also be allowed a High Impact Business construction jobs
936	936	5 credit against the tax imposed under subsections (a) and (b)
937	937	6 of this Section as provided in subsections (i) and (j) of
938	938	7 Section 5.5 of the Illinois Enterprise Zone Act.
939	939	8 The credit or credits may not reduce the taxpayer's
940	940	9 liability to less than zero. If the amount of the credit or
941	941	10 credits exceeds the taxpayer's liability, the excess may be
942	942	11 carried forward and applied against the taxpayer's liability
943	943	12 in succeeding calendar years in the manner provided under
944	944	13 paragraph (4) of Section 211 of this Act. The credit or credits
945	945	14 shall be applied to the earliest year for which there is a tax
946	946	15 liability. If there are credits from more than one taxable
947	947	16 year that are available to offset a liability, the earlier
948	948	17 credit shall be applied first.
949	949	18 For partners, shareholders of Subchapter S corporations,
950	950	19 and owners of limited liability companies, if the liability
951	951	20 company is treated as a partnership for the purposes of
952	952	21 federal and State income taxation, there shall be allowed a
953	953	22 credit under this Section to be determined in accordance with
954	954	23 the determination of income and distributive share of income
955	955	24 under Sections 702 and 704 and Subchapter S of the Internal
956	956	25 Revenue Code.
957	957	26 The total aggregate amount of credits awarded under the
958	958
959	959
960	960
961	961
962	962
963	963	HB3686 - 26 - LRB103 28572 HLH 54953 b
964	964
965	965
966	966	HB3686- 27 -LRB103 28572 HLH 54953 b HB3686 - 27 - LRB103 28572 HLH 54953 b
967	967	HB3686 - 27 - LRB103 28572 HLH 54953 b
968	968	1 Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
969	969	2 exceed $20,000,000 in any State fiscal year.
970	970	3 This subsection (h-5) is exempt from the provisions of
971	971	4 Section 250.
972	972	5 (i) Credit for Personal Property Tax Replacement Income
973	973	6 Tax. For tax years ending prior to December 31, 2003, a credit
974	974	7 shall be allowed against the tax imposed by subsections (a)
975	975	8 and (b) of this Section for the tax imposed by subsections (c)
976	976	9 and (d) of this Section. This credit shall be computed by
977	977	10 multiplying the tax imposed by subsections (c) and (d) of this
978	978	11 Section by a fraction, the numerator of which is base income
979	979	12 allocable to Illinois and the denominator of which is Illinois
980	980	13 base income, and further multiplying the product by the tax
981	981	14 rate imposed by subsections (a) and (b) of this Section.
982	982	15 Any credit earned on or after December 31, 1986 under this
983	983	16 subsection which is unused in the year the credit is computed
984	984	17 because it exceeds the tax liability imposed by subsections
985	985	18 (a) and (b) for that year (whether it exceeds the original
986	986	19 liability or the liability as later amended) may be carried
987	987	20 forward and applied to the tax liability imposed by
988	988	21 subsections (a) and (b) of the 5 taxable years following the
989	989	22 excess credit year, provided that no credit may be carried
990	990	23 forward to any year ending on or after December 31, 2003. This
991	991	24 credit shall be applied first to the earliest year for which
992	992	25 there is a liability. If there is a credit under this
993	993	26 subsection from more than one tax year that is available to
994	994
995	995
996	996
997	997
998	998
999	999	HB3686 - 27 - LRB103 28572 HLH 54953 b
1000	1000
1001	1001
1002	1002	HB3686- 28 -LRB103 28572 HLH 54953 b HB3686 - 28 - LRB103 28572 HLH 54953 b
1003	1003	HB3686 - 28 - LRB103 28572 HLH 54953 b
1004	1004	1 offset a liability the earliest credit arising under this
1005	1005	2 subsection shall be applied first.
1006	1006	3 If, during any taxable year ending on or after December
1007	1007	4 31, 1986, the tax imposed by subsections (c) and (d) of this
1008	1008	5 Section for which a taxpayer has claimed a credit under this
1009	1009	6 subsection (i) is reduced, the amount of credit for such tax
1010	1010	7 shall also be reduced. Such reduction shall be determined by
1011	1011	8 recomputing the credit to take into account the reduced tax
1012	1012	9 imposed by subsections (c) and (d). If any portion of the
1013	1013	10 reduced amount of credit has been carried to a different
1014	1014	11 taxable year, an amended return shall be filed for such
1015	1015	12 taxable year to reduce the amount of credit claimed.
1016	1016	13 (j) Training expense credit. Beginning with tax years
1017	1017	14 ending on or after December 31, 1986 and prior to December 31,
1018	1018	15 2003, a taxpayer shall be allowed a credit against the tax
1019	1019	16 imposed by subsections (a) and (b) under this Section for all
1020	1020	17 amounts paid or accrued, on behalf of all persons employed by
1021	1021	18 the taxpayer in Illinois or Illinois residents employed
1022	1022	19 outside of Illinois by a taxpayer, for educational or
1023	1023	20 vocational training in semi-technical or technical fields or
1024	1024	21 semi-skilled or skilled fields, which were deducted from gross
1025	1025	22 income in the computation of taxable income. The credit
1026	1026	23 against the tax imposed by subsections (a) and (b) shall be
1027	1027	24 1.6% of such training expenses. For partners, shareholders of
1028	1028	25 subchapter S corporations, and owners of limited liability
1029	1029	26 companies, if the liability company is treated as a
1030	1030
1031	1031
1032	1032
1033	1033
1034	1034
1035	1035	HB3686 - 28 - LRB103 28572 HLH 54953 b
1036	1036
1037	1037
1038	1038	HB3686- 29 -LRB103 28572 HLH 54953 b HB3686 - 29 - LRB103 28572 HLH 54953 b
1039	1039	HB3686 - 29 - LRB103 28572 HLH 54953 b
1040	1040	1 partnership for purposes of federal and State income taxation,
1041	1041	2 there shall be allowed a credit under this subsection (j) to be
1042	1042	3 determined in accordance with the determination of income and
1043	1043	4 distributive share of income under Sections 702 and 704 and
1044	1044	5 subchapter S of the Internal Revenue Code.
1045	1045	6 Any credit allowed under this subsection which is unused
1046	1046	7 in the year the credit is earned may be carried forward to each
1047	1047	8 of the 5 taxable years following the year for which the credit
1048	1048	9 is first computed until it is used. This credit shall be
1049	1049	10 applied first to the earliest year for which there is a
1050	1050	11 liability. If there is a credit under this subsection from
1051	1051	12 more than one tax year that is available to offset a liability,
1052	1052	13 the earliest credit arising under this subsection shall be
1053	1053	14 applied first. No carryforward credit may be claimed in any
1054	1054	15 tax year ending on or after December 31, 2003.
1055	1055	16 (k) Research and development credit. For tax years ending
1056	1056	17 after July 1, 1990 and prior to December 31, 2003, and
1057	1057	18 beginning again for tax years ending on or after December 31,
1058	1058	19 2004, and ending prior to January 1, 2027, a taxpayer shall be
1059	1059	20 allowed a credit against the tax imposed by subsections (a)
1060	1060	21 and (b) of this Section for increasing research activities in
1061	1061	22 this State. The credit allowed against the tax imposed by
1062	1062	23 subsections (a) and (b) shall be equal to 6 1/2% of the
1063	1063	24 qualifying expenditures for increasing research activities in
1064	1064	25 this State. For partners, shareholders of subchapter S
1065	1065	26 corporations, and owners of limited liability companies, if
1066	1066
1067	1067
1068	1068
1069	1069
1070	1070
1071	1071	HB3686 - 29 - LRB103 28572 HLH 54953 b
1072	1072
1073	1073
1074	1074	HB3686- 30 -LRB103 28572 HLH 54953 b HB3686 - 30 - LRB103 28572 HLH 54953 b
1075	1075	HB3686 - 30 - LRB103 28572 HLH 54953 b
1076	1076	1 the liability company is treated as a partnership for purposes
1077	1077	2 of federal and State income taxation, there shall be allowed a
1078	1078	3 credit under this subsection to be determined in accordance
1079	1079	4 with the determination of income and distributive share of
1080	1080	5 income under Sections 702 and 704 and subchapter S of the
1081	1081	6 Internal Revenue Code.
1082	1082	7 For purposes of this subsection, "qualifying expenditures"
1083	1083	8 means the qualifying expenditures as defined for the federal
1084	1084	9 credit for increasing research activities which would be
1085	1085	10 allowable under Section 41 of the Internal Revenue Code and
1086	1086	11 which are conducted in this State, "qualifying expenditures
1087	1087	12 for increasing research activities in this State" means the
1088	1088	13 excess of qualifying expenditures for the taxable year in
1089	1089	14 which incurred over qualifying expenditures for the base
1090	1090	15 period, "qualifying expenditures for the base period" means
1091	1091	16 the average of the qualifying expenditures for each year in
1092	1092	17 the base period, and "base period" means the 3 taxable years
1093	1093	18 immediately preceding the taxable year for which the
1094	1094	19 determination is being made.
1095	1095	20 Any credit in excess of the tax liability for the taxable
1096	1096	21 year may be carried forward. A taxpayer may elect to have the
1097	1097	22 unused credit shown on its final completed return carried over
1098	1098	23 as a credit against the tax liability for the following 5
1099	1099	24 taxable years or until it has been fully used, whichever
1100	1100	25 occurs first; provided that no credit earned in a tax year
1101	1101	26 ending prior to December 31, 2003 may be carried forward to any
1102	1102
1103	1103
1104	1104
1105	1105
1106	1106
1107	1107	HB3686 - 30 - LRB103 28572 HLH 54953 b
1108	1108
1109	1109
1110	1110	HB3686- 31 -LRB103 28572 HLH 54953 b HB3686 - 31 - LRB103 28572 HLH 54953 b
1111	1111	HB3686 - 31 - LRB103 28572 HLH 54953 b
1112	1112	1 year ending on or after December 31, 2003.
1113	1113	2 If an unused credit is carried forward to a given year from
1114	1114	3 2 or more earlier years, that credit arising in the earliest
1115	1115	4 year will be applied first against the tax liability for the
1116	1116	5 given year. If a tax liability for the given year still
1117	1117	6 remains, the credit from the next earliest year will then be
1118	1118	7 applied, and so on, until all credits have been used or no tax
1119	1119	8 liability for the given year remains. Any remaining unused
1120	1120	9 credit or credits then will be carried forward to the next
1121	1121	10 following year in which a tax liability is incurred, except
1122	1122	11 that no credit can be carried forward to a year which is more
1123	1123	12 than 5 years after the year in which the expense for which the
1124	1124	13 credit is given was incurred.
1125	1125	14 No inference shall be drawn from Public Act 91-644 in
1126	1126	15 construing this Section for taxable years beginning before
1127	1127	16 January 1, 1999.
1128	1128	17 It is the intent of the General Assembly that the research
1129	1129	18 and development credit under this subsection (k) shall apply
1130	1130	19 continuously for all tax years ending on or after December 31,
1131	1131	20 2004 and ending prior to January 1, 2027, including, but not
1132	1132	21 limited to, the period beginning on January 1, 2016 and ending
1133	1133	22 on July 6, 2017 (the effective date of Public Act 100-22). All
1134	1134	23 actions taken in reliance on the continuation of the credit
1135	1135	24 under this subsection (k) by any taxpayer are hereby
1136	1136	25 validated.
1137	1137	26 (l) Environmental Remediation Tax Credit.
1138	1138
1139	1139
1140	1140
1141	1141
1142	1142
1143	1143	HB3686 - 31 - LRB103 28572 HLH 54953 b
1144	1144
1145	1145
1146	1146	HB3686- 32 -LRB103 28572 HLH 54953 b HB3686 - 32 - LRB103 28572 HLH 54953 b
1147	1147	HB3686 - 32 - LRB103 28572 HLH 54953 b
1148	1148	1 (i) For tax years ending after December 31, 1997 and
1149	1149	2 on or before December 31, 2001, a taxpayer shall be
1150	1150	3 allowed a credit against the tax imposed by subsections
1151	1151	4 (a) and (b) of this Section for certain amounts paid for
1152	1152	5 unreimbursed eligible remediation costs, as specified in
1153	1153	6 this subsection. For purposes of this Section,
1154	1154	7 "unreimbursed eligible remediation costs" means costs
1155	1155	8 approved by the Illinois Environmental Protection Agency
1156	1156	9 ("Agency") under Section 58.14 of the Environmental
1157	1157	10 Protection Act that were paid in performing environmental
1158	1158	11 remediation at a site for which a No Further Remediation
1159	1159	12 Letter was issued by the Agency and recorded under Section
1160	1160	13 58.10 of the Environmental Protection Act. The credit must
1161	1161	14 be claimed for the taxable year in which Agency approval
1162	1162	15 of the eligible remediation costs is granted. The credit
1163	1163	16 is not available to any taxpayer if the taxpayer or any
1164	1164	17 related party caused or contributed to, in any material
1165	1165	18 respect, a release of regulated substances on, in, or
1166	1166	19 under the site that was identified and addressed by the
1167	1167	20 remedial action pursuant to the Site Remediation Program
1168	1168	21 of the Environmental Protection Act. After the Pollution
1169	1169	22 Control Board rules are adopted pursuant to the Illinois
1170	1170	23 Administrative Procedure Act for the administration and
1171	1171	24 enforcement of Section 58.9 of the Environmental
1172	1172	25 Protection Act, determinations as to credit availability
1173	1173	26 for purposes of this Section shall be made consistent with
1174	1174
1175	1175
1176	1176
1177	1177
1178	1178
1179	1179	HB3686 - 32 - LRB103 28572 HLH 54953 b
1180	1180
1181	1181
1182	1182	HB3686- 33 -LRB103 28572 HLH 54953 b HB3686 - 33 - LRB103 28572 HLH 54953 b
1183	1183	HB3686 - 33 - LRB103 28572 HLH 54953 b
1184	1184	1 those rules. For purposes of this Section, "taxpayer"
1185	1185	2 includes a person whose tax attributes the taxpayer has
1186	1186	3 succeeded to under Section 381 of the Internal Revenue
1187	1187	4 Code and "related party" includes the persons disallowed a
1188	1188	5 deduction for losses by paragraphs (b), (c), and (f)(1) of
1189	1189	6 Section 267 of the Internal Revenue Code by virtue of
1190	1190	7 being a related taxpayer, as well as any of its partners.
1191	1191	8 The credit allowed against the tax imposed by subsections
1192	1192	9 (a) and (b) shall be equal to 25% of the unreimbursed
1193	1193	10 eligible remediation costs in excess of $100,000 per site,
1194	1194	11 except that the $100,000 threshold shall not apply to any
1195	1195	12 site contained in an enterprise zone as determined by the
1196	1196	13 Department of Commerce and Community Affairs (now
1197	1197	14 Department of Commerce and Economic Opportunity). The
1198	1198	15 total credit allowed shall not exceed $40,000 per year
1199	1199	16 with a maximum total of $150,000 per site. For partners
1200	1200	17 and shareholders of subchapter S corporations, there shall
1201	1201	18 be allowed a credit under this subsection to be determined
1202	1202	19 in accordance with the determination of income and
1203	1203	20 distributive share of income under Sections 702 and 704
1204	1204	21 and subchapter S of the Internal Revenue Code.
1205	1205	22 (ii) A credit allowed under this subsection that is
1206	1206	23 unused in the year the credit is earned may be carried
1207	1207	24 forward to each of the 5 taxable years following the year
1208	1208	25 for which the credit is first earned until it is used. The
1209	1209	26 term "unused credit" does not include any amounts of
1210	1210
1211	1211
1212	1212
1213	1213
1214	1214
1215	1215	HB3686 - 33 - LRB103 28572 HLH 54953 b
1216	1216
1217	1217
1218	1218	HB3686- 34 -LRB103 28572 HLH 54953 b HB3686 - 34 - LRB103 28572 HLH 54953 b
1219	1219	HB3686 - 34 - LRB103 28572 HLH 54953 b
1220	1220	1 unreimbursed eligible remediation costs in excess of the
1221	1221	2 maximum credit per site authorized under paragraph (i).
1222	1222	3 This credit shall be applied first to the earliest year
1223	1223	4 for which there is a liability. If there is a credit under
1224	1224	5 this subsection from more than one tax year that is
1225	1225	6 available to offset a liability, the earliest credit
1226	1226	7 arising under this subsection shall be applied first. A
1227	1227	8 credit allowed under this subsection may be sold to a
1228	1228	9 buyer as part of a sale of all or part of the remediation
1229	1229	10 site for which the credit was granted. The purchaser of a
1230	1230	11 remediation site and the tax credit shall succeed to the
1231	1231	12 unused credit and remaining carry-forward period of the
1232	1232	13 seller. To perfect the transfer, the assignor shall record
1233	1233	14 the transfer in the chain of title for the site and provide
1234	1234	15 written notice to the Director of the Illinois Department
1235	1235	16 of Revenue of the assignor's intent to sell the
1236	1236	17 remediation site and the amount of the tax credit to be
1237	1237	18 transferred as a portion of the sale. In no event may a
1238	1238	19 credit be transferred to any taxpayer if the taxpayer or a
1239	1239	20 related party would not be eligible under the provisions
1240	1240	21 of subsection (i).
1241	1241	22 (iii) For purposes of this Section, the term "site"
1242	1242	23 shall have the same meaning as under Section 58.2 of the
1243	1243	24 Environmental Protection Act.
1244	1244	25 (m) Education expense credit. Beginning with tax years
1245	1245	26 ending after December 31, 1999, a taxpayer who is the
1246	1246
1247	1247
1248	1248
1249	1249
1250	1250
1251	1251	HB3686 - 34 - LRB103 28572 HLH 54953 b
1252	1252
1253	1253
1254	1254	HB3686- 35 -LRB103 28572 HLH 54953 b HB3686 - 35 - LRB103 28572 HLH 54953 b
1255	1255	HB3686 - 35 - LRB103 28572 HLH 54953 b
1256	1256	1 custodian of one or more qualifying pupils shall be allowed a
1257	1257	2 credit against the tax imposed by subsections (a) and (b) of
1258	1258	3 this Section for qualified education expenses incurred on
1259	1259	4 behalf of the qualifying pupils. The credit shall be equal to
1260	1260	5 25% of qualified education expenses, but in no event may the
1261	1261	6 total credit under this subsection claimed by a family that is
1262	1262	7 the custodian of qualifying pupils exceed (i) $500 for tax
1263	1263	8 years ending prior to December 31, 2017, and (ii) $750 for tax
1264	1264	9 years ending on or after December 31, 2017. In no event shall a
1265	1265	10 credit under this subsection reduce the taxpayer's liability
1266	1266	11 under this Act to less than zero. Notwithstanding any other
1267	1267	12 provision of law, for taxable years beginning on or after
1268	1268	13 January 1, 2017, no taxpayer may claim a credit under this
1269	1269	14 subsection (m) if the taxpayer's adjusted gross income for the
1270	1270	15 taxable year exceeds (i) $500,000, in the case of spouses
1271	1271	16 filing a joint federal tax return or (ii) $250,000, in the case
1272	1272	17 of all other taxpayers. This subsection is exempt from the
1273	1273	18 provisions of Section 250 of this Act.
1274	1274	19 For purposes of this subsection:
1275	1275	20 "Qualifying pupils" means individuals who (i) are
1276	1276	21 residents of the State of Illinois, (ii) are under the age of
1277	1277	22 21 at the close of the school year for which a credit is
1278	1278	23 sought, and (iii) during the school year for which a credit is
1279	1279	24 sought were full-time pupils enrolled in a kindergarten
1280	1280	25 through twelfth grade education program at any school, as
1281	1281	26 defined in this subsection.
1282	1282
1283	1283
1284	1284
1285	1285
1286	1286
1287	1287	HB3686 - 35 - LRB103 28572 HLH 54953 b
1288	1288
1289	1289
1290	1290	HB3686- 36 -LRB103 28572 HLH 54953 b HB3686 - 36 - LRB103 28572 HLH 54953 b
1291	1291	HB3686 - 36 - LRB103 28572 HLH 54953 b
1292	1292	1 "Qualified education expense" means the amount incurred on
1293	1293	2 behalf of a qualifying pupil in excess of $250 for tuition,
1294	1294	3 book fees, and lab fees at the school in which the pupil is
1295	1295	4 enrolled during the regular school year.
1296	1296	5 "School" means any public or nonpublic elementary or
1297	1297	6 secondary school in Illinois that is in compliance with Title
1298	1298	7 VI of the Civil Rights Act of 1964 and attendance at which
1299	1299	8 satisfies the requirements of Section 26-1 of the School Code,
1300	1300	9 except that nothing shall be construed to require a child to
1301	1301	10 attend any particular public or nonpublic school to qualify
1302	1302	11 for the credit under this Section.
1303	1303	12 "Custodian" means, with respect to qualifying pupils, an
1304	1304	13 Illinois resident who is a parent, the parents, a legal
1305	1305	14 guardian, or the legal guardians of the qualifying pupils.
1306	1306	15 (n) River Edge Redevelopment Zone site remediation tax
1307	1307	16 credit.
1308	1308	17 (i) For tax years ending on or after December 31,
1309	1309	18 2006, a taxpayer shall be allowed a credit against the tax
1310	1310	19 imposed by subsections (a) and (b) of this Section for
1311	1311	20 certain amounts paid for unreimbursed eligible remediation
1312	1312	21 costs, as specified in this subsection. For purposes of
1313	1313	22 this Section, "unreimbursed eligible remediation costs"
1314	1314	23 means costs approved by the Illinois Environmental
1315	1315	24 Protection Agency ("Agency") under Section 58.14a of the
1316	1316	25 Environmental Protection Act that were paid in performing
1317	1317	26 environmental remediation at a site within a River Edge
1318	1318
1319	1319
1320	1320
1321	1321
1322	1322
1323	1323	HB3686 - 36 - LRB103 28572 HLH 54953 b
1324	1324
1325	1325
1326	1326	HB3686- 37 -LRB103 28572 HLH 54953 b HB3686 - 37 - LRB103 28572 HLH 54953 b
1327	1327	HB3686 - 37 - LRB103 28572 HLH 54953 b
1328	1328	1 Redevelopment Zone for which a No Further Remediation
1329	1329	2 Letter was issued by the Agency and recorded under Section
1330	1330	3 58.10 of the Environmental Protection Act. The credit must
1331	1331	4 be claimed for the taxable year in which Agency approval
1332	1332	5 of the eligible remediation costs is granted. The credit
1333	1333	6 is not available to any taxpayer if the taxpayer or any
1334	1334	7 related party caused or contributed to, in any material
1335	1335	8 respect, a release of regulated substances on, in, or
1336	1336	9 under the site that was identified and addressed by the
1337	1337	10 remedial action pursuant to the Site Remediation Program
1338	1338	11 of the Environmental Protection Act. Determinations as to
1339	1339	12 credit availability for purposes of this Section shall be
1340	1340	13 made consistent with rules adopted by the Pollution
1341	1341	14 Control Board pursuant to the Illinois Administrative
1342	1342	15 Procedure Act for the administration and enforcement of
1343	1343	16 Section 58.9 of the Environmental Protection Act. For
1344	1344	17 purposes of this Section, "taxpayer" includes a person
1345	1345	18 whose tax attributes the taxpayer has succeeded to under
1346	1346	19 Section 381 of the Internal Revenue Code and "related
1347	1347	20 party" includes the persons disallowed a deduction for
1348	1348	21 losses by paragraphs (b), (c), and (f)(1) of Section 267
1349	1349	22 of the Internal Revenue Code by virtue of being a related
1350	1350	23 taxpayer, as well as any of its partners. The credit
1351	1351	24 allowed against the tax imposed by subsections (a) and (b)
1352	1352	25 shall be equal to 25% of the unreimbursed eligible
1353	1353	26 remediation costs in excess of $100,000 per site.
1354	1354
1355	1355
1356	1356
1357	1357
1358	1358
1359	1359	HB3686 - 37 - LRB103 28572 HLH 54953 b
1360	1360
1361	1361
1362	1362	HB3686- 38 -LRB103 28572 HLH 54953 b HB3686 - 38 - LRB103 28572 HLH 54953 b
1363	1363	HB3686 - 38 - LRB103 28572 HLH 54953 b
1364	1364	1 (ii) A credit allowed under this subsection that is
1365	1365	2 unused in the year the credit is earned may be carried
1366	1366	3 forward to each of the 5 taxable years following the year
1367	1367	4 for which the credit is first earned until it is used. This
1368	1368	5 credit shall be applied first to the earliest year for
1369	1369	6 which there is a liability. If there is a credit under this
1370	1370	7 subsection from more than one tax year that is available
1371	1371	8 to offset a liability, the earliest credit arising under
1372	1372	9 this subsection shall be applied first. A credit allowed
1373	1373	10 under this subsection may be sold to a buyer as part of a
1374	1374	11 sale of all or part of the remediation site for which the
1375	1375	12 credit was granted. The purchaser of a remediation site
1376	1376	13 and the tax credit shall succeed to the unused credit and
1377	1377	14 remaining carry-forward period of the seller. To perfect
1378	1378	15 the transfer, the assignor shall record the transfer in
1379	1379	16 the chain of title for the site and provide written notice
1380	1380	17 to the Director of the Illinois Department of Revenue of
1381	1381	18 the assignor's intent to sell the remediation site and the
1382	1382	19 amount of the tax credit to be transferred as a portion of
1383	1383	20 the sale. In no event may a credit be transferred to any
1384	1384	21 taxpayer if the taxpayer or a related party would not be
1385	1385	22 eligible under the provisions of subsection (i).
1386	1386	23 (iii) For purposes of this Section, the term "site"
1387	1387	24 shall have the same meaning as under Section 58.2 of the
1388	1388	25 Environmental Protection Act.
1389	1389	26 (o) For each of taxable years during the Compassionate Use
1390	1390
1391	1391
1392	1392
1393	1393
1394	1394
1395	1395	HB3686 - 38 - LRB103 28572 HLH 54953 b
1396	1396
1397	1397
1398	1398	HB3686- 39 -LRB103 28572 HLH 54953 b HB3686 - 39 - LRB103 28572 HLH 54953 b
1399	1399	HB3686 - 39 - LRB103 28572 HLH 54953 b
1400	1400	1 of Medical Cannabis Program, a surcharge is imposed on all
1401	1401	2 taxpayers on income arising from the sale or exchange of
1402	1402	3 capital assets, depreciable business property, real property
1403	1403	4 used in the trade or business, and Section 197 intangibles of
1404	1404	5 an organization registrant under the Compassionate Use of
1405	1405	6 Medical Cannabis Program Act. The amount of the surcharge is
1406	1406	7 equal to the amount of federal income tax liability for the
1407	1407	8 taxable year attributable to those sales and exchanges. The
1408	1408	9 surcharge imposed does not apply if:
1409	1409	10 (1) the medical cannabis cultivation center
1410	1410	11 registration, medical cannabis dispensary registration, or
1411	1411	12 the property of a registration is transferred as a result
1412	1412	13 of any of the following:
1413	1413	14 (A) bankruptcy, a receivership, or a debt
1414	1414	15 adjustment initiated by or against the initial
1415	1415	16 registration or the substantial owners of the initial
1416	1416	17 registration;
1417	1417	18 (B) cancellation, revocation, or termination of
1418	1418	19 any registration by the Illinois Department of Public
1419	1419	20 Health;
1420	1420	21 (C) a determination by the Illinois Department of
1421	1421	22 Public Health that transfer of the registration is in
1422	1422	23 the best interests of Illinois qualifying patients as
1423	1423	24 defined by the Compassionate Use of Medical Cannabis
1424	1424	25 Program Act;
1425	1425	26 (D) the death of an owner of the equity interest in
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1436	1436	1 a registrant;
1437	1437	2 (E) the acquisition of a controlling interest in
1438	1438	3 the stock or substantially all of the assets of a
1439	1439	4 publicly traded company;
1440	1440	5 (F) a transfer by a parent company to a wholly
1441	1441	6 owned subsidiary; or
1442	1442	7 (G) the transfer or sale to or by one person to
1443	1443	8 another person where both persons were initial owners
1444	1444	9 of the registration when the registration was issued;
1445	1445	10 or
1446	1446	11 (2) the cannabis cultivation center registration,
1447	1447	12 medical cannabis dispensary registration, or the
1448	1448	13 controlling interest in a registrant's property is
1449	1449	14 transferred in a transaction to lineal descendants in
1450	1450	15 which no gain or loss is recognized or as a result of a
1451	1451	16 transaction in accordance with Section 351 of the Internal
1452	1452	17 Revenue Code in which no gain or loss is recognized.
1453	1453	18 (p) Pass-through entity tax.
1454	1454	19 (1) For taxable years ending on or after December 31,
1455	1455	20 2021 and beginning prior to January 1, 2026, a partnership
1456	1456	21 (other than a publicly traded partnership under Section
1457	1457	22 7704 of the Internal Revenue Code) or Subchapter S
1458	1458	23 corporation may elect to apply the provisions of this
1459	1459	24 subsection. A separate election shall be made for each
1460	1460	25 taxable year. Such election shall be made at such time,
1461	1461	26 and in such form and manner as prescribed by the
1462	1462
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1472	1472	1 Department, and, once made, is irrevocable.
1473	1473	2 (2) Entity-level tax. A partnership or Subchapter S
1474	1474	3 corporation electing to apply the provisions of this
1475	1475	4 subsection shall be subject to a tax for the privilege of
1476	1476	5 earning or receiving income in this State in an amount
1477	1477	6 equal to a percentage 4.95% of the taxpayer's net income
1478	1478	7 for the taxable year. For the purposes of this
1479	1479	8 subparagraph (p), that percentage shall be the tax rate
1480	1480	9 imposed on individuals, trusts, and estates under
1481	1481	10 subsection (b) of this Section.
1482	1482	11 (3) Net income defined.
1483	1483	12 (A) In general. For purposes of paragraph (2), the
1484	1484	13 term net income has the same meaning as defined in
1485	1485	14 Section 202 of this Act, except that the following
1486	1486	15 provisions shall not apply:
1487	1487	16 (i) the standard exemption allowed under
1488	1488	17 Section 204;
1489	1489	18 (ii) the deduction for net losses allowed
1490	1490	19 under Section 207;
1491	1491	20 (iii) in the case of an S corporation, the
1492	1492	21 modification under Section 203(b)(2)(S); and
1493	1493	22 (iv) in the case of a partnership, the
1494	1494	23 modifications under Section 203(d)(2)(H) and
1495	1495	24 Section 203(d)(2)(I).
1496	1496	25 (B) Special rule for tiered partnerships. If a
1497	1497	26 taxpayer making the election under paragraph (1) is a
1498	1498
1499	1499
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1508	1508	1 partner of another taxpayer making the election under
1509	1509	2 paragraph (1), net income shall be computed as
1510	1510	3 provided in subparagraph (A), except that the taxpayer
1511	1511	4 shall subtract its distributive share of the net
1512	1512	5 income of the electing partnership (including its
1513	1513	6 distributive share of the net income of the electing
1514	1514	7 partnership derived as a distributive share from
1515	1515	8 electing partnerships in which it is a partner).
1516	1516	9 (4) Credit for entity level tax. Each partner or
1517	1517	10 shareholder of a taxpayer making the election under this
1518	1518	11 Section shall be allowed a credit against the tax imposed
1519	1519	12 under subsections (a) and (b) of Section 201 of this Act
1520	1520	13 for the taxable year of the partnership or Subchapter S
1521	1521	14 corporation for which an election is in effect ending
1522	1522	15 within or with the taxable year of the partner or
1523	1523	16 shareholder in an amount equal to 4.95% times the partner
1524	1524	17 or shareholder's distributive share of the net income of
1525	1525	18 the electing partnership or Subchapter S corporation, but
1526	1526	19 not to exceed the partner's or shareholder's share of the
1527	1527	20 tax imposed under paragraph (1) which is actually paid by
1528	1528	21 the partnership or Subchapter S corporation. If the
1529	1529	22 taxpayer is a partnership or Subchapter S corporation that
1530	1530	23 is itself a partner of a partnership making the election
1531	1531	24 under paragraph (1), the credit under this paragraph shall
1532	1532	25 be allowed to the taxpayer's partners or shareholders (or
1533	1533	26 if the partner is a partnership or Subchapter S
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1544	1544	1 corporation then its partners or shareholders) in
1545	1545	2 accordance with the determination of income and
1546	1546	3 distributive share of income under Sections 702 and 704
1547	1547	4 and Subchapter S of the Internal Revenue Code. If the
1548	1548	5 amount of the credit allowed under this paragraph exceeds
1549	1549	6 the partner's or shareholder's liability for tax imposed
1550	1550	7 under subsections (a) and (b) of Section 201 of this Act
1551	1551	8 for the taxable year, such excess shall be treated as an
1552	1552	9 overpayment for purposes of Section 909 of this Act.
1553	1553	10 (5) Nonresidents. A nonresident individual who is a
1554	1554	11 partner or shareholder of a partnership or Subchapter S
1555	1555	12 corporation for a taxable year for which an election is in
1556	1556	13 effect under paragraph (1) shall not be required to file
1557	1557	14 an income tax return under this Act for such taxable year
1558	1558	15 if the only source of net income of the individual (or the
1559	1559	16 individual and the individual's spouse in the case of a
1560	1560	17 joint return) is from an entity making the election under
1561	1561	18 paragraph (1) and the credit allowed to the partner or
1562	1562	19 shareholder under paragraph (4) equals or exceeds the
1563	1563	20 individual's liability for the tax imposed under
1564	1564	21 subsections (a) and (b) of Section 201 of this Act for the
1565	1565	22 taxable year.
1566	1566	23 (6) Liability for tax. Except as provided in this
1567	1567	24 paragraph, a partnership or Subchapter S making the
1568	1568	25 election under paragraph (1) is liable for the
1569	1569	26 entity-level tax imposed under paragraph (2). If the
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1580	1580	1 electing partnership or corporation fails to pay the full
1581	1581	2 amount of tax deemed assessed under paragraph (2), the
1582	1582	3 partners or shareholders shall be liable to pay the tax
1583	1583	4 assessed (including penalties and interest). Each partner
1584	1584	5 or shareholder shall be liable for the unpaid assessment
1585	1585	6 based on the ratio of the partner's or shareholder's share
1586	1586	7 of the net income of the partnership over the total net
1587	1587	8 income of the partnership. If the partnership or
1588	1588	9 Subchapter S corporation fails to pay the tax assessed
1589	1589	10 (including penalties and interest) and thereafter an
1590	1590	11 amount of such tax is paid by the partners or
1591	1591	12 shareholders, such amount shall not be collected from the
1592	1592	13 partnership or corporation.
1593	1593	14 (7) Foreign tax. For purposes of the credit allowed
1594	1594	15 under Section 601(b)(3) of this Act, tax paid by a
1595	1595	16 partnership or Subchapter S corporation to another state
1596	1596	17 which, as determined by the Department, is substantially
1597	1597	18 similar to the tax imposed under this subsection, shall be
1598	1598	19 considered tax paid by the partner or shareholder to the
1599	1599	20 extent that the partner's or shareholder's share of the
1600	1600	21 income of the partnership or Subchapter S corporation
1601	1601	22 allocated and apportioned to such other state bears to the
1602	1602	23 total income of the partnership or Subchapter S
1603	1603	24 corporation allocated or apportioned to such other state.
1604	1604	25 (8) Suspension of withholding. The provisions of
1605	1605	26 Section 709.5 of this Act shall not apply to a partnership
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1616	1616	1 or Subchapter S corporation for the taxable year for which
1617	1617	2 an election under paragraph (1) is in effect.
1618	1618	3 (9) Requirement to pay estimated tax. For each taxable
1619	1619	4 year for which an election under paragraph (1) is in
1620	1620	5 effect, a partnership or Subchapter S corporation is
1621	1621	6 required to pay estimated tax for such taxable year under
1622	1622	7 Sections 803 and 804 of this Act if the amount payable as
1623	1623	8 estimated tax can reasonably be expected to exceed $500.
1624	1624	9 (10) The provisions of this subsection shall apply
1625	1625	10 only with respect to taxable years for which the
1626	1626	11 limitation on individual deductions applies under Section
1627	1627	12 164(b)(6) of the Internal Revenue Code.
1628	1628	13 (Source: P.A. 101-9, eff. 6-5-19; 101-31, eff. 6-28-19;
1629	1629	14 101-207, eff. 8-2-19; 101-363, eff. 8-9-19; 102-558, eff.
1630	1630	15 8-20-21; 102-658, eff. 8-27-21.)
1631	1631	16 Section 99. Effective date. This Act takes effect upon
1632	1632	17 becoming law.
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