HB0750sam001 93RD GENERAL ASSEMBLY

Sen. James T. Meeks

Filed: 4/21/2004

09300HB0750sam001 LRB093 05402 BDD 49902 a

AMENDMENT TO HOUSE BILL 750

AMENDMENT NO. ______. Amend House Bill 750 by replacing everything after the enacting clause with the following:

4		"Section 5. The State Finance Act is amended by adding
5		Sections 5.625 and 6z-65 as follows:
6		(30 ILCS 105/5.625 new)
7		Sec. 5.625. The School District Property Tax Relief Fund.
8		(30 ILCS 105/6z-65 new)
9		Sec. 6z-65. School District Property Tax Relief Fund.
10		(a) The School District property Tax Relief Fund is created
11		as a special Fund in the State treasury. All interest earned on
12		moneys in the Fund shall be deposited into the Fund.
13		(b) As used in this Section:
14		"Department" means the Department of Revenue.
15		"Minimum property tax relief grant" means the minimum
16		amount of property tax relief that will be distributed to each
17		school district from the School District Property Tax Relief
18		Fund in each fiscal year.
19		"High property tax effort school district" means each
20		school district that has a total tax rate that is in the top
21		25% of all total tax rates of all school districts.
22		"Supplemental percentage" means the average daily head
23		count of a particular high property tax effort school district

1		in a fiscal year, divided by the head count total for that
2		fiscal year.
3		"Head count total" means the aggregate average daily
4		attendance of all high property tax effort school districts in
5		the applicable fiscal year.
6		"Supplemental property tax relief grant" means the amount
7		of property tax relief granted to each high property tax effort
8		school district in each fiscal year that is in addition to the
9		minimum property tax relief grant that the district receives.
10		(c) Beginning in fiscal year 2006, the General Assembly
11		shall appropriate $2.4 billion from the education
12		appropriation minimum, as defined in Section 18-25 of the
13		School Code, to the School District Property Tax Relief Fund.
14		In each fiscal year thereafter, the General Assembly shall
15		appropriate an amount from the education appropriation
16		minimum, to the School District Property Tax Relief Fund equal
17		to the amount appropriated to the School District Property Tax
18		Relief Fund in the immediately preceding fiscal year, increased
19		by the Employment Cost Index ("ECI") published by the U.S.
20		Bureau of Labor Statistics for the immediately preceding fiscal
21		year.
22		(d) Between November 15 and 17 beginning in fiscal year
23		2006 and for every year thereafter, the Department must
24		certify, no earlier than November 15 and no later than November
25		17, the total amount of property tax relief each school
26		district will receive from the School District Property Tax
27		Relief Fund. The relief shall be determined as follows:
28		(1) In each fiscal year commencing with fiscal year
29		2006, the General Assembly shall appropriate 80% of the
30		total amount appropriated to the School District Property
31		Tax Relief Fund for that fiscal year to fund the aggregate
32		amount of minimum property tax relief grants that will be
33		distributed to all school districts. The Department then
34		shall calculate the amount of minimum property tax relief

1		grant to be distributed to each school district in each
2		fiscal year as follows:
3		(A) for fiscal year 2006, each school district
4		shall receive a minimum property tax relief grant in an
5		amount equal to 20% of the total property taxes
6		reported as payable for that school district in fiscal
7		year 2002; and
8		(B) for each fiscal year thereafter, the minimum
9		property tax relief grant for each school district must
10		be increased by the percentage increase, if any, in the
11		ECI published for the prior fiscal year.
12		(2) In each fiscal year commencing with fiscal year
13		2006, the General Assembly shall appropriate 20% of the
14		total amount appropriated to the School District Property
15		Tax Relief Fund for that fiscal year to fund the aggregate
16		amount of supplemental property tax relief grants that will
17		be distributed to all high property tax effort school
18		districts. The Department shall calculate the amount of
19		supplemental property tax relief grants payable to a
20		particular high property tax effort school district in each
21		fiscal year commencing in fiscal year 2006 and continuing
22		in each fiscal year thereafter by multiplying the
23		Supplemental Percentage of that high property tax effort
24		school district for that fiscal year by the total amount
25		appropriated to fund all the supplemental property tax
26		relief grants in that fiscal year.

27		Section 10. The Illinois Income Tax Act is amended by
28		changing Sections 201 and 203 and by adding Section 247 as
29		follows:
30		(35 ILCS 5/201) (from Ch. 120, par. 2-201)
31		Sec. 201. Tax Imposed.
32		(a) In general. A tax measured by net income is hereby

1		imposed on every individual, corporation, trust and estate for
2		each taxable year ending after July 31, 1969 on the privilege
3		of earning or receiving income in or as a resident of this
4		State. Such tax shall be in addition to all other occupation or
5		privilege taxes imposed by this State or by any municipal
6		corporation or political subdivision thereof.
7		(b) Rates. The tax imposed by subsection (a) of this
8		Section shall be determined as follows, except as adjusted by
9		subsection (d-1):
10		(1) In the case of an individual, trust or estate, for
11		taxable years ending prior to July 1, 1989, an amount equal
12		to 2 1/2% of the taxpayer's net income for the taxable
13		year.
14		(2) In the case of an individual, trust or estate, for
15		taxable years beginning prior to July 1, 1989 and ending
16		after June 30, 1989, an amount equal to the sum of (i) 2
17		1/2% of the taxpayer's net income for the period prior to
18		July 1, 1989, as calculated under Section 202.3, and (ii)
19		3% of the taxpayer's net income for the period after June
20		30, 1989, as calculated under Section 202.3.
21		(3) In the case of an individual, trust or estate, for
22		taxable years beginning after June 30, 1989 and beginning
23		on or before January 1, 2005, an amount equal to 3% of the
24		taxpayer's net income for the taxable year.
25		(4) In the case of an individual, trust or estate, for
26		taxable years beginning after January 1, 2005, an amount
27		equal to 5% of the taxpayer's net income for the taxable
28		year (Blank).
29		(5) (Blank).
30		(6) In the case of a corporation, for taxable years
31		ending prior to July 1, 1989, an amount equal to 4% of the
32		taxpayer's net income for the taxable year.
33		(7) In the case of a corporation, for taxable years
34		beginning prior to July 1, 1989 and ending after June 30,

1		1989, an amount equal to the sum of (i) 4% of the
2		taxpayer's net income for the period prior to July 1, 1989,
3		as calculated under Section 202.3, and (ii) 4.8% of the
4		taxpayer's net income for the period after June 30, 1989,
5		as calculated under Section 202.3.
6		(8) In the case of a corporation, for taxable years
7		beginning after June 30, 1989 and beginning on or before
8		January 1, 2005, an amount equal to 4.8% of the taxpayer's
9		net income for the taxable year.
10		(9) In the case of a corporation, for taxable years
11		beginning after January 1, 2005, an amount equal to 8% of
12		the taxpayer's net income for the taxable year.
13		(c) Personal Property Tax Replacement Income Tax.
14		Beginning on July 1, 1979 and thereafter, in addition to such
15		income tax, there is also hereby imposed the Personal Property
16		Tax Replacement Income Tax measured by net income on every
17		corporation (including Subchapter S corporations), partnership
18		and trust, for each taxable year ending after June 30, 1979.
19		Such taxes are imposed on the privilege of earning or receiving
20		income in or as a resident of this State. The Personal Property
21		Tax Replacement Income Tax shall be in addition to the income
22		tax imposed by subsections (a) and (b) of this Section and in
23		addition to all other occupation or privilege taxes imposed by
24		this State or by any municipal corporation or political
25		subdivision thereof.
26		(d) Additional Personal Property Tax Replacement Income
27		Tax Rates. The personal property tax replacement income tax
28		imposed by this subsection and subsection (c) of this Section
29		in the case of a corporation, other than a Subchapter S
30		corporation and except as adjusted by subsection (d-1), shall
31		be an additional amount equal to 2.85% of such taxpayer's net
32		income for the taxable year, except that beginning on January
33		1, 1981, and thereafter, the rate of 2.85% specified in this
34		subsection shall be reduced to 2.5%, and in the case of a

1		partnership, trust or a Subchapter S corporation shall be an
2		additional amount equal to 1.5% of such taxpayer's net income
3		for the taxable year.
4		(d-1) Rate reduction for certain foreign insurers. In the
5		case of a foreign insurer, as defined by Section 35A-5 of the
6		Illinois Insurance Code, whose state or country of domicile
7		imposes on insurers domiciled in Illinois a retaliatory tax
8		(excluding any insurer whose premiums from reinsurance assumed
9		are 50% or more of its total insurance premiums as determined
10		under paragraph (2) of subsection (b) of Section 304, except
11		that for purposes of this determination premiums from
12		reinsurance do not include premiums from inter-affiliate
13		reinsurance arrangements), beginning with taxable years ending
14		on or after December 31, 1999, the sum of the rates of tax
15		imposed by subsections (b) and (d) shall be reduced (but not
16		increased) to the rate at which the total amount of tax imposed
17		under this Act, net of all credits allowed under this Act,
18		shall equal (i) the total amount of tax that would be imposed
19		on the foreign insurer's net income allocable to Illinois for
20		the taxable year by such foreign insurer's state or country of
21		domicile if that net income were subject to all income taxes
22		and taxes measured by net income imposed by such foreign
23		insurer's state or country of domicile, net of all credits
24		allowed or (ii) a rate of zero if no such tax is imposed on such
25		income by the foreign insurer's state of domicile. For the
26		purposes of this subsection (d-1), an inter-affiliate includes
27		a mutual insurer under common management.
28		(1) For the purposes of subsection (d-1), in no event
29		shall the sum of the rates of tax imposed by subsections
30		(b) and (d) be reduced below the rate at which the sum of:
31		(A) the total amount of tax imposed on such foreign
32		insurer under this Act for a taxable year, net of all
33		credits allowed under this Act, plus
34		(B) the privilege tax imposed by Section 409 of the

1		Illinois Insurance Code, the fire insurance company
2		tax imposed by Section 12 of the Fire Investigation
3		Act, and the fire department taxes imposed under
4		Section 11-10-1 of the Illinois Municipal Code,
5		equals 1.25% for taxable years ending prior to December 31,
6		2003, or 1.75% for taxable years ending on or after
7		December 31, 2003, of the net taxable premiums written for
8		the taxable year, as described by subsection (1) of Section
9		409 of the Illinois Insurance Code. This paragraph will in
10		no event increase the rates imposed under subsections (b)
11		and (d).
12		(2) Any reduction in the rates of tax imposed by this
13		subsection shall be applied first against the rates imposed
14		by subsection (b) and only after the tax imposed by
15		subsection (a) net of all credits allowed under this
16		Section other than the credit allowed under subsection (i)
17		has been reduced to zero, against the rates imposed by
18		subsection (d).
19		This subsection (d-1) is exempt from the provisions of
20		Section 250.
21		(e) Investment credit. A taxpayer shall be allowed a credit
22		against the Personal Property Tax Replacement Income Tax for
23		investment in qualified property.
24		(1) A taxpayer shall be allowed a credit equal to .5%
25		of the basis of qualified property placed in service during
26		the taxable year, provided such property is placed in
27		service on or after July 1, 1984. There shall be allowed an
28		additional credit equal to .5% of the basis of qualified
29		property placed in service during the taxable year,
30		provided such property is placed in service on or after
31		July 1, 1986, and the taxpayer's base employment within
32		Illinois has increased by 1% or more over the preceding
33		year as determined by the taxpayer's employment records
34		filed with the Illinois Department of Employment Security.

1		Taxpayers who are new to Illinois shall be deemed to have
2		met the 1% growth in base employment for the first year in
3		which they file employment records with the Illinois
4		Department of Employment Security. The provisions added to
5		this Section by Public Act 85-1200 (and restored by Public
6		Act 87-895) shall be construed as declaratory of existing
7		law and not as a new enactment. If, in any year, the
8		increase in base employment within Illinois over the
9		preceding year is less than 1%, the additional credit shall
10		be limited to that percentage times a fraction, the
11		numerator of which is .5% and the denominator of which is
12		1%, but shall not exceed .5%. The investment credit shall
13		not be allowed to the extent that it would reduce a
14		taxpayer's liability in any tax year below zero, nor may
15		any credit for qualified property be allowed for any year
16		other than the year in which the property was placed in
17		service in Illinois. For tax years ending on or after
18		December 31, 1987, and on or before December 31, 1988, the
19		credit shall be allowed for the tax year in which the
20		property is placed in service, or, if the amount of the
21		credit exceeds the tax liability for that year, whether it
22		exceeds the original liability or the liability as later
23		amended, such excess may be carried forward and applied to
24		the tax liability of the 5 taxable years following the
25		excess credit years if the taxpayer (i) makes investments
26		which cause the creation of a minimum of 2,000 full-time
27		equivalent jobs in Illinois, (ii) is located in an
28		enterprise zone established pursuant to the Illinois
29		Enterprise Zone Act and (iii) is certified by the
30		Department of Commerce and Community Affairs (now
31		Department of Commerce and Economic Opportunity) as
32		complying with the requirements specified in clause (i) and
33		(ii) by July 1, 1986. The Department of Commerce and
34		Community Affairs (now Department of Commerce and Economic

1		Opportunity) shall notify the Department of Revenue of all
2		such certifications immediately. For tax years ending
3		after December 31, 1988, the credit shall be allowed for
4		the tax year in which the property is placed in service,
5		or, if the amount of the credit exceeds the tax liability
6		for that year, whether it exceeds the original liability or
7		the liability as later amended, such excess may be carried
8		forward and applied to the tax liability of the 5 taxable
9		years following the excess credit years. The credit shall
10		be applied to the earliest year for which there is a
11		liability. If there is credit from more than one tax year
12		that is available to offset a liability, earlier credit
13		shall be applied first.
14		(2) The term "qualified property" means property
15		which:
16		(A) is tangible, whether new or used, including
17		buildings and structural components of buildings and
18		signs that are real property, but not including land or
19		improvements to real property that are not a structural
20		component of a building such as landscaping, sewer
21		lines, local access roads, fencing, parking lots, and
22		other appurtenances;
23		(B) is depreciable pursuant to Section 167 of the
24		Internal Revenue Code, except that "3-year property"
25		as defined in Section 168(c)(2)(A) of that Code is not
26		eligible for the credit provided by this subsection
27		(e);
28		(C) is acquired by purchase as defined in Section
29		179(d) of the Internal Revenue Code;
30		(D) is used in Illinois by a taxpayer who is
31		primarily engaged in manufacturing, or in mining coal
32		or fluorite, or in retailing; and
33		(E) has not previously been used in Illinois in
34		such a manner and by such a person as would qualify for

1		the credit provided by this subsection (e) or
2		subsection (f).
3		(3) For purposes of this subsection (e),
4		"manufacturing" means the material staging and production
5		of tangible personal property by procedures commonly
6		regarded as manufacturing, processing, fabrication, or
7		assembling which changes some existing material into new
8		shapes, new qualities, or new combinations. For purposes of
9		this subsection (e) the term "mining" shall have the same
10		meaning as the term "mining" in Section 613(c) of the
11		Internal Revenue Code. For purposes of this subsection (e),
12		the term "retailing" means the sale of tangible personal
13		property or services rendered in conjunction with the sale
14		of tangible consumer goods or commodities.
15		(4) The basis of qualified property shall be the basis
16		used to compute the depreciation deduction for federal
17		income tax purposes.
18		(5) If the basis of the property for federal income tax
19		depreciation purposes is increased after it has been placed
20		in service in Illinois by the taxpayer, the amount of such
21		increase shall be deemed property placed in service on the
22		date of such increase in basis.
23		(6) The term "placed in service" shall have the same
24		meaning as under Section 46 of the Internal Revenue Code.
25		(7) If during any taxable year, any property ceases to
26		be qualified property in the hands of the taxpayer within
27		48 months after being placed in service, or the situs of
28		any qualified property is moved outside Illinois within 48
29		months after being placed in service, the Personal Property
30		Tax Replacement Income Tax for such taxable year shall be
31		increased. Such increase shall be determined by (i)
32		recomputing the investment credit which would have been
33		allowed for the year in which credit for such property was
34		originally allowed by eliminating such property from such

1		computation and, (ii) subtracting such recomputed credit
2		from the amount of credit previously allowed. For the
3		purposes of this paragraph (7), a reduction of the basis of
4		qualified property resulting from a redetermination of the
5		purchase price shall be deemed a disposition of qualified
6		property to the extent of such reduction.
7		(8) Unless the investment credit is extended by law,
8		the basis of qualified property shall not include costs
9		incurred after December 31, 2003, except for costs incurred
10		pursuant to a binding contract entered into on or before
11		December 31, 2003.
12		(9) Each taxable year ending before December 31, 2000,
13		a partnership may elect to pass through to its partners the
14		credits to which the partnership is entitled under this
15		subsection (e) for the taxable year. A partner may use the
16		credit allocated to him or her under this paragraph only
17		against the tax imposed in subsections (c) and (d) of this
18		Section. If the partnership makes that election, those
19		credits shall be allocated among the partners in the
20		partnership in accordance with the rules set forth in
21		Section 704(b) of the Internal Revenue Code, and the rules
22		promulgated under that Section, and the allocated amount of
23		the credits shall be allowed to the partners for that
24		taxable year. The partnership shall make this election on
25		its Personal Property Tax Replacement Income Tax return for
26		that taxable year. The election to pass through the credits
27		shall be irrevocable.
28		For taxable years ending on or after December 31, 2000,
29		a partner that qualifies its partnership for a subtraction
30		under subparagraph (I) of paragraph (2) of subsection (d)
31		of Section 203 or a shareholder that qualifies a Subchapter
32		S corporation for a subtraction under subparagraph (S) of
33		paragraph (2) of subsection (b) of Section 203 shall be
34		allowed a credit under this subsection (e) equal to its

1		share of the credit earned under this subsection (e) during
2		the taxable year by the partnership or Subchapter S
3		corporation, determined in accordance with the
4		determination of income and distributive share of income
5		under Sections 702 and 704 and Subchapter S of the Internal
6		Revenue Code. This paragraph is exempt from the provisions
7		of Section 250.
8		(f) Investment credit; Enterprise Zone.
9		(1) A taxpayer shall be allowed a credit against the
10		tax imposed by subsections (a) and (b) of this Section for
11		investment in qualified property which is placed in service
12		in an Enterprise Zone created pursuant to the Illinois
13		Enterprise Zone Act. For partners, shareholders of
14		Subchapter S corporations, and owners of limited liability
15		companies, if the liability company is treated as a
16		partnership for purposes of federal and State income
17		taxation, there shall be allowed a credit under this
18		subsection (f) to be determined in accordance with the
19		determination of income and distributive share of income
20		under Sections 702 and 704 and Subchapter S of the Internal
21		Revenue Code. The credit shall be .5% of the basis for such
22		property. The credit shall be available only in the taxable
23		year in which the property is placed in service in the
24		Enterprise Zone and shall not be allowed to the extent that
25		it would reduce a taxpayer's liability for the tax imposed
26		by subsections (a) and (b) of this Section to below zero.
27		For tax years ending on or after December 31, 1985, the
28		credit shall be allowed for the tax year in which the
29		property is placed in service, or, if the amount of the
30		credit exceeds the tax liability for that year, whether it
31		exceeds the original liability or the liability as later
32		amended, such excess may be carried forward and applied to
33		the tax liability of the 5 taxable years following the
34		excess credit year. The credit shall be applied to the

1		earliest year for which there is a liability. If there is
2		credit from more than one tax year that is available to
3		offset a liability, the credit accruing first in time shall
4		be applied first.
5		(2) The term qualified property means property which:
6		(A) is tangible, whether new or used, including
7		buildings and structural components of buildings;
8		(B) is depreciable pursuant to Section 167 of the
9		Internal Revenue Code, except that "3-year property"
10		as defined in Section 168(c)(2)(A) of that Code is not
11		eligible for the credit provided by this subsection
12		(f);
13		(C) is acquired by purchase as defined in Section
14		179(d) of the Internal Revenue Code;
15		(D) is used in the Enterprise Zone by the taxpayer;
16		and
17		(E) has not been previously used in Illinois in
18		such a manner and by such a person as would qualify for
19		the credit provided by this subsection (f) or
20		subsection (e).
21		(3) The basis of qualified property shall be the basis
22		used to compute the depreciation deduction for federal
23		income tax purposes.
24		(4) If the basis of the property for federal income tax
25		depreciation purposes is increased after it has been placed
26		in service in the Enterprise Zone by the taxpayer, the
27		amount of such increase shall be deemed property placed in
28		service on the date of such increase in basis.
29		(5) The term "placed in service" shall have the same
30		meaning as under Section 46 of the Internal Revenue Code.
31		(6) If during any taxable year, any property ceases to
32		be qualified property in the hands of the taxpayer within
33		48 months after being placed in service, or the situs of
34		any qualified property is moved outside the Enterprise Zone

1		within 48 months after being placed in service, the tax
2		imposed under subsections (a) and (b) of this Section for
3		such taxable year shall be increased. Such increase shall
4		be determined by (i) recomputing the investment credit
5		which would have been allowed for the year in which credit
6		for such property was originally allowed by eliminating
7		such property from such computation, and (ii) subtracting
8		such recomputed credit from the amount of credit previously
9		allowed. For the purposes of this paragraph (6), a
10		reduction of the basis of qualified property resulting from
11		a redetermination of the purchase price shall be deemed a
12		disposition of qualified property to the extent of such
13		reduction.
14		(g) Jobs Tax Credit; Enterprise Zone and Foreign Trade
15		Zone or Sub-Zone.
16		(1) A taxpayer conducting a trade or business in an
17		enterprise zone or a High Impact Business designated by the
18		Department of Commerce and Economic Opportunity Community
19		Affairs conducting a trade or business in a federally
20		designated Foreign Trade Zone or Sub-Zone shall be allowed
21		a credit against the tax imposed by subsections (a) and (b)
22		of this Section in the amount of $500 per eligible employee
23		hired to work in the zone during the taxable year.
24		(2) To qualify for the credit:
25		(A) the taxpayer must hire 5 or more eligible
26		employees to work in an enterprise zone or federally
27		designated Foreign Trade Zone or Sub-Zone during the
28		taxable year;
29		(B) the taxpayer's total employment within the
30		enterprise zone or federally designated Foreign Trade
31		Zone or Sub-Zone must increase by 5 or more full-time
32		employees beyond the total employed in that zone at the
33		end of the previous tax year for which a jobs tax
34		credit under this Section was taken, or beyond the

1		total employed by the taxpayer as of December 31, 1985,
2		whichever is later; and
3		(C) the eligible employees must be employed 180
4		consecutive days in order to be deemed hired for
5		purposes of this subsection.
6		(3) An "eligible employee" means an employee who is:
7		(A) Certified by the Department of Commerce and
8		Economic Opportunity Community Affairs as "eligible
9		for services" pursuant to regulations promulgated in
10		accordance with Title II of the Job Training
11		Partnership Act, Training Services for the
12		Disadvantaged or Title III of the Job Training
13		Partnership Act, Employment and Training Assistance
14		for Dislocated Workers Program.
15		(B) Hired after the enterprise zone or federally
16		designated Foreign Trade Zone or Sub-Zone was
17		designated or the trade or business was located in that
18		zone, whichever is later.
19		(C) Employed in the enterprise zone or Foreign
20		Trade Zone or Sub-Zone. An employee is employed in an
21		enterprise zone or federally designated Foreign Trade
22		Zone or Sub-Zone if his services are rendered there or
23		it is the base of operations for the services
24		performed.
25		(D) A full-time employee working 30 or more hours
26		per week.
27		(4) For tax years ending on or after December 31, 1985
28		and prior to December 31, 1988, the credit shall be allowed
29		for the tax year in which the eligible employees are hired.
30		For tax years ending on or after December 31, 1988, the
31		credit shall be allowed for the tax year immediately
32		following the tax year in which the eligible employees are
33		hired. If the amount of the credit exceeds the tax
34		liability for that year, whether it exceeds the original

1		liability or the liability as later amended, such excess
2		may be carried forward and applied to the tax liability of
3		the 5 taxable years following the excess credit year. The
4		credit shall be applied to the earliest year for which
5		there is a liability. If there is credit from more than one
6		tax year that is available to offset a liability, earlier
7		credit shall be applied first.
8		(5) The Department of Revenue shall promulgate such
9		rules and regulations as may be deemed necessary to carry
10		out the purposes of this subsection (g).
11		(6) The credit shall be available for eligible
12		employees hired on or after January 1, 1986.
13		(h) Investment credit; High Impact Business.
14		(1) Subject to subsections (b) and (b-5) of Section 5.5
15		of the Illinois Enterprise Zone Act, a taxpayer shall be
16		allowed a credit against the tax imposed by subsections (a)
17		and (b) of this Section for investment in qualified
18		property which is placed in service by a Department of
19		Commerce and Economic Opportunity Community Affairs
20		designated High Impact Business. The credit shall be .5% of
21		the basis for such property. The credit shall not be
22		available (i) until the minimum investments in qualified
23		property set forth in subdivision (a)(3)(A) of Section 5.5
24		of the Illinois Enterprise Zone Act have been satisfied or
25		(ii) until the time authorized in subsection (b-5) of the
26		Illinois Enterprise Zone Act for entities designated as
27		High Impact Businesses under subdivisions (a)(3)(B),
28		(a)(3)(C), and (a)(3)(D) of Section 5.5 of the Illinois
29		Enterprise Zone Act, and shall not be allowed to the extent
30		that it would reduce a taxpayer's liability for the tax
31		imposed by subsections (a) and (b) of this Section to below
32		zero. The credit applicable to such investments shall be
33		taken in the taxable year in which such investments have
34		been completed. The credit for additional investments

1		beyond the minimum investment by a designated high impact
2		business authorized under subdivision (a)(3)(A) of Section
3		5.5 of the Illinois Enterprise Zone Act shall be available
4		only in the taxable year in which the property is placed in
5		service and shall not be allowed to the extent that it
6		would reduce a taxpayer's liability for the tax imposed by
7		subsections (a) and (b) of this Section to below zero. For
8		tax years ending on or after December 31, 1987, the credit
9		shall be allowed for the tax year in which the property is
10		placed in service, or, if the amount of the credit exceeds
11		the tax liability for that year, whether it exceeds the
12		original liability or the liability as later amended, such
13		excess may be carried forward and applied to the tax
14		liability of the 5 taxable years following the excess
15		credit year. The credit shall be applied to the earliest
16		year for which there is a liability. If there is credit
17		from more than one tax year that is available to offset a
18		liability, the credit accruing first in time shall be
19		applied first.
20		Changes made in this subdivision (h)(1) by Public Act
21		88-670 restore changes made by Public Act 85-1182 and
22		reflect existing law.
23		(2) The term qualified property means property which:
24		(A) is tangible, whether new or used, including
25		buildings and structural components of buildings;
26		(B) is depreciable pursuant to Section 167 of the
27		Internal Revenue Code, except that "3-year property"
28		as defined in Section 168(c)(2)(A) of that Code is not
29		eligible for the credit provided by this subsection
30		(h);
31		(C) is acquired by purchase as defined in Section
32		179(d) of the Internal Revenue Code; and
33		(D) is not eligible for the Enterprise Zone
34		Investment Credit provided by subsection (f) of this

1		Section.
2		(3) The basis of qualified property shall be the basis
3		used to compute the depreciation deduction for federal
4		income tax purposes.
5		(4) If the basis of the property for federal income tax
6		depreciation purposes is increased after it has been placed
7		in service in a federally designated Foreign Trade Zone or
8		Sub-Zone located in Illinois by the taxpayer, the amount of
9		such increase shall be deemed property placed in service on
10		the date of such increase in basis.
11		(5) The term "placed in service" shall have the same
12		meaning as under Section 46 of the Internal Revenue Code.
13		(6) If during any taxable year ending on or before
14		December 31, 1996, any property ceases to be qualified
15		property in the hands of the taxpayer within 48 months
16		after being placed in service, or the situs of any
17		qualified property is moved outside Illinois within 48
18		months after being placed in service, the tax imposed under
19		subsections (a) and (b) of this Section for such taxable
20		year shall be increased. Such increase shall be determined
21		by (i) recomputing the investment credit which would have
22		been allowed for the year in which credit for such property
23		was originally allowed by eliminating such property from
24		such computation, and (ii) subtracting such recomputed
25		credit from the amount of credit previously allowed. For
26		the purposes of this paragraph (6), a reduction of the
27		basis of qualified property resulting from a
28		redetermination of the purchase price shall be deemed a
29		disposition of qualified property to the extent of such
30		reduction.
31		(7) Beginning with tax years ending after December 31,
32		1996, if a taxpayer qualifies for the credit under this
33		subsection (h) and thereby is granted a tax abatement and
34		the taxpayer relocates its entire facility in violation of

1		the explicit terms and length of the contract under Section
2		18-183 of the Property Tax Code, the tax imposed under
3		subsections (a) and (b) of this Section shall be increased
4		for the taxable year in which the taxpayer relocated its
5		facility by an amount equal to the amount of credit
6		received by the taxpayer under this subsection (h).
7		(i) Credit for Personal Property Tax Replacement Income
8		Tax. For tax years ending prior to December 31, 2003, a credit
9		shall be allowed against the tax imposed by subsections (a) and
10		(b) of this Section for the tax imposed by subsections (c) and
11		(d) of this Section. This credit shall be computed by
12		multiplying the tax imposed by subsections (c) and (d) of this
13		Section by a fraction, the numerator of which is base income
14		allocable to Illinois and the denominator of which is Illinois
15		base income, and further multiplying the product by the tax
16		rate imposed by subsections (a) and (b) of this Section.
17		Any credit earned on or after December 31, 1986 under this
18		subsection which is unused in the year the credit is computed
19		because it exceeds the tax liability imposed by subsections (a)
20		and (b) for that year (whether it exceeds the original
21		liability or the liability as later amended) may be carried
22		forward and applied to the tax liability imposed by subsections
23		(a) and (b) of the 5 taxable years following the excess credit
24		year, provided that no credit may be carried forward to any
25		year ending on or after December 31, 2003. This credit shall be
26		applied first to the earliest year for which there is a
27		liability. If there is a credit under this subsection from more
28		than one tax year that is available to offset a liability the
29		earliest credit arising under this subsection shall be applied
30		first.
31		If, during any taxable year ending on or after December 31,
32		1986, the tax imposed by subsections (c) and (d) of this
33		Section for which a taxpayer has claimed a credit under this
34		subsection (i) is reduced, the amount of credit for such tax

1		shall also be reduced. Such reduction shall be determined by
2		recomputing the credit to take into account the reduced tax
3		imposed by subsections (c) and (d). If any portion of the
4		reduced amount of credit has been carried to a different
5		taxable year, an amended return shall be filed for such taxable
6		year to reduce the amount of credit claimed.
7		(j) Training expense credit. Beginning with tax years
8		ending on or after December 31, 1986 and prior to December 31,
9		2003, a taxpayer shall be allowed a credit against the tax
10		imposed by subsections (a) and (b) under this Section for all
11		amounts paid or accrued, on behalf of all persons employed by
12		the taxpayer in Illinois or Illinois residents employed outside
13		of Illinois by a taxpayer, for educational or vocational
14		training in semi-technical or technical fields or semi-skilled
15		or skilled fields, which were deducted from gross income in the
16		computation of taxable income. The credit against the tax
17		imposed by subsections (a) and (b) shall be 1.6% of such
18		training expenses. For partners, shareholders of subchapter S
19		corporations, and owners of limited liability companies, if the
20		liability company is treated as a partnership for purposes of
21		federal and State income taxation, there shall be allowed a
22		credit under this subsection (j) to be determined in accordance
23		with the determination of income and distributive share of
24		income under Sections 702 and 704 and subchapter S of the
25		Internal Revenue Code.
26		Any credit allowed under this subsection which is unused in
27		the year the credit is earned may be carried forward to each of
28		the 5 taxable years following the year for which the credit is
29		first computed until it is used. This credit shall be applied
30		first to the earliest year for which there is a liability. If
31		there is a credit under this subsection from more than one tax
32		year that is available to offset a liability the earliest
33		credit arising under this subsection shall be applied first. No
34		carryforward credit may be claimed in any tax year ending on or

1		after December 31, 2003.
2		(k) Research and development credit.
3		For tax years ending after July 1, 1990 and prior to
4		December 31, 2003, a taxpayer shall be allowed a credit against
5		the tax imposed by subsections (a) and (b) of this Section for
6		increasing research activities in this State. The credit
7		allowed against the tax imposed by subsections (a) and (b)
8		shall be equal to 6 1/2% of the qualifying expenditures for
9		increasing research activities in this State. For partners,
10		shareholders of subchapter S corporations, and owners of
11		limited liability companies, if the liability company is
12		treated as a partnership for purposes of federal and State
13		income taxation, there shall be allowed a credit under this
14		subsection to be determined in accordance with the
15		determination of income and distributive share of income under
16		Sections 702 and 704 and subchapter S of the Internal Revenue
17		Code.
18		For purposes of this subsection, "qualifying expenditures"
19		means the qualifying expenditures as defined for the federal
20		credit for increasing research activities which would be
21		allowable under Section 41 of the Internal Revenue Code and
22		which are conducted in this State, "qualifying expenditures for
23		increasing research activities in this State" means the excess
24		of qualifying expenditures for the taxable year in which
25		incurred over qualifying expenditures for the base period,
26		"qualifying expenditures for the base period" means the average
27		of the qualifying expenditures for each year in the base
28		period, and "base period" means the 3 taxable years immediately
29		preceding the taxable year for which the determination is being
30		made.
31		Any credit in excess of the tax liability for the taxable
32		year may be carried forward. A taxpayer may elect to have the
33		unused credit shown on its final completed return carried over
34		as a credit against the tax liability for the following 5

1		taxable years or until it has been fully used, whichever occurs
2		first; provided that no credit may be carried forward to any
3		year ending on or after December 31, 2003.
4		If an unused credit is carried forward to a given year from
5		2 or more earlier years, that credit arising in the earliest
6		year will be applied first against the tax liability for the
7		given year. If a tax liability for the given year still
8		remains, the credit from the next earliest year will then be
9		applied, and so on, until all credits have been used or no tax
10		liability for the given year remains. Any remaining unused
11		credit or credits then will be carried forward to the next
12		following year in which a tax liability is incurred, except
13		that no credit can be carried forward to a year which is more
14		than 5 years after the year in which the expense for which the
15		credit is given was incurred.
16		No inference shall be drawn from this amendatory Act of the
17		91st General Assembly in construing this Section for taxable
18		years beginning before January 1, 1999.
19		(l) Environmental Remediation Tax Credit.
20		(i) For tax years ending after December 31, 1997 and on
21		or before December 31, 2001, a taxpayer shall be allowed a
22		credit against the tax imposed by subsections (a) and (b)
23		of this Section for certain amounts paid for unreimbursed
24		eligible remediation costs, as specified in this
25		subsection. For purposes of this Section, "unreimbursed
26		eligible remediation costs" means costs approved by the
27		Illinois Environmental Protection Agency ("Agency") under
28		Section 58.14 of the Environmental Protection Act that were
29		paid in performing environmental remediation at a site for
30		which a No Further Remediation Letter was issued by the
31		Agency and recorded under Section 58.10 of the
32		Environmental Protection Act. The credit must be claimed
33		for the taxable year in which Agency approval of the
34		eligible remediation costs is granted. The credit is not

1		available to any taxpayer if the taxpayer or any related
2		party caused or contributed to, in any material respect, a
3		release of regulated substances on, in, or under the site
4		that was identified and addressed by the remedial action
5		pursuant to the Site Remediation Program of the
6		Environmental Protection Act. After the Pollution Control
7		Board rules are adopted pursuant to the Illinois
8		Administrative Procedure Act for the administration and
9		enforcement of Section 58.9 of the Environmental
10		Protection Act, determinations as to credit availability
11		for purposes of this Section shall be made consistent with
12		those rules. For purposes of this Section, "taxpayer"
13		includes a person whose tax attributes the taxpayer has
14		succeeded to under Section 381 of the Internal Revenue Code
15		and "related party" includes the persons disallowed a
16		deduction for losses by paragraphs (b), (c), and (f)(1) of
17		Section 267 of the Internal Revenue Code by virtue of being
18		a related taxpayer, as well as any of its partners. The
19		credit allowed against the tax imposed by subsections (a)
20		and (b) shall be equal to 25% of the unreimbursed eligible
21		remediation costs in excess of $100,000 per site, except
22		that the $100,000 threshold shall not apply to any site
23		contained in an enterprise zone as determined by the
24		Department of Commerce and Community Affairs (now
25		Department of Commerce and Economic Opportunity). The
26		total credit allowed shall not exceed $40,000 per year with
27		a maximum total of $150,000 per site. For partners and
28		shareholders of subchapter S corporations, there shall be
29		allowed a credit under this subsection to be determined in
30		accordance with the determination of income and
31		distributive share of income under Sections 702 and 704 and
32		subchapter S of the Internal Revenue Code.
33		(ii) A credit allowed under this subsection that is
34		unused in the year the credit is earned may be carried

1		forward to each of the 5 taxable years following the year
2		for which the credit is first earned until it is used. The
3		term "unused credit" does not include any amounts of
4		unreimbursed eligible remediation costs in excess of the
5		maximum credit per site authorized under paragraph (i).
6		This credit shall be applied first to the earliest year for
7		which there is a liability. If there is a credit under this
8		subsection from more than one tax year that is available to
9		offset a liability, the earliest credit arising under this
10		subsection shall be applied first. A credit allowed under
11		this subsection may be sold to a buyer as part of a sale of
12		all or part of the remediation site for which the credit
13		was granted. The purchaser of a remediation site and the
14		tax credit shall succeed to the unused credit and remaining
15		carry-forward period of the seller. To perfect the
16		transfer, the assignor shall record the transfer in the
17		chain of title for the site and provide written notice to
18		the Director of the Illinois Department of Revenue of the
19		assignor's intent to sell the remediation site and the
20		amount of the tax credit to be transferred as a portion of
21		the sale. In no event may a credit be transferred to any
22		taxpayer if the taxpayer or a related party would not be
23		eligible under the provisions of subsection (i).
24		(iii) For purposes of this Section, the term "site"
25		shall have the same meaning as under Section 58.2 of the
26		Environmental Protection Act.
27		(m) Education expense credit. Beginning with tax years
28		ending after December 31, 1999, a taxpayer who is the custodian
29		of one or more qualifying pupils shall be allowed a credit
30		against the tax imposed by subsections (a) and (b) of this
31		Section for qualified education expenses incurred on behalf of
32		the qualifying pupils. The credit shall be equal to 25% of
33		qualified education expenses, but in no event may the total
34		credit under this subsection claimed by a family that is the

1		custodian of qualifying pupils exceed $500. In no event shall a
2		credit under this subsection reduce the taxpayer's liability
3		under this Act to less than zero. This subsection is exempt
4		from the provisions of Section 250 of this Act.
5		For purposes of this subsection:
6		"Qualifying pupils" means individuals who (i) are
7		residents of the State of Illinois, (ii) are under the age of
8		21 at the close of the school year for which a credit is
9		sought, and (iii) during the school year for which a credit is
10		sought were full-time pupils enrolled in a kindergarten through
11		twelfth grade education program at any school, as defined in
12		this subsection.
13		"Qualified education expense" means the amount incurred on
14		behalf of a qualifying pupil in excess of $250 for tuition,
15		book fees, and lab fees at the school in which the pupil is
16		enrolled during the regular school year.
17		"School" means any public or nonpublic elementary or
18		secondary school in Illinois that is in compliance with Title
19		VI of the Civil Rights Act of 1964 and attendance at which
20		satisfies the requirements of Section 26-1 of the School Code,
21		except that nothing shall be construed to require a child to
22		attend any particular public or nonpublic school to qualify for
23		the credit under this Section.
24		"Custodian" means, with respect to qualifying pupils, an
25		Illinois resident who is a parent, the parents, a legal
26		guardian, or the legal guardians of the qualifying pupils.
27		(Source: P.A. 92-12, eff. 7-1-01; 92-16, eff. 6-28-01; 92-651,
28		eff. 7-11-02; 92-846, eff. 8-23-02; 93-29, eff. 6-20-03;
29		revised 12-6-03.)
30		(35 ILCS 5/203) (from Ch. 120, par. 2-203)
31		Sec. 203. Base income defined.
32		(a) Individuals.
33		(1) In general. In the case of an individual, base

1		income means an amount equal to the taxpayer's adjusted
2		gross income for the taxable year as modified by paragraph
3		(2).
4		(2) Modifications. The adjusted gross income referred
5		to in paragraph (1) shall be modified by adding thereto the
6		sum of the following amounts:
7		(A) An amount equal to all amounts paid or accrued
8		to the taxpayer as interest or dividends during the
9		taxable year to the extent excluded from gross income
10		in the computation of adjusted gross income, except
11		stock dividends of qualified public utilities
12		described in Section 305(e) of the Internal Revenue
13		Code;
14		(B) An amount equal to the amount of tax imposed by
15		this Act to the extent deducted from gross income in
16		the computation of adjusted gross income for the
17		taxable year;
18		(C) An amount equal to the amount received during
19		the taxable year as a recovery or refund of real
20		property taxes paid with respect to the taxpayer's
21		principal residence under the Revenue Act of 1939 and
22		for which a deduction was previously taken under
23		subparagraph (L) of this paragraph (2) prior to July 1,
24		1991, the retrospective application date of Article 4
25		of Public Act 87-17. In the case of multi-unit or
26		multi-use structures and farm dwellings, the taxes on
27		the taxpayer's principal residence shall be that
28		portion of the total taxes for the entire property
29		which is attributable to such principal residence;
30		(D) An amount equal to the amount of the capital
31		gain deduction allowable under the Internal Revenue
32		Code, to the extent deducted from gross income in the
33		computation of adjusted gross income;
34		(D-5) An amount, to the extent not included in

1		adjusted gross income, equal to the amount of money
2		withdrawn by the taxpayer in the taxable year from a
3		medical care savings account and the interest earned on
4		the account in the taxable year of a withdrawal
5		pursuant to subsection (b) of Section 20 of the Medical
6		Care Savings Account Act or subsection (b) of Section
7		20 of the Medical Care Savings Account Act of 2000;
8		(D-10) For taxable years ending after December 31,
9		1997, an amount equal to any eligible remediation costs
10		that the individual deducted in computing adjusted
11		gross income and for which the individual claims a
12		credit under subsection (l) of Section 201;
13		(D-15) For taxable years 2001 and thereafter, an
14		amount equal to the bonus depreciation deduction (30%
15		of the adjusted basis of the qualified property) taken
16		on the taxpayer's federal income tax return for the
17		taxable year under subsection (k) of Section 168 of the
18		Internal Revenue Code; and
19		(D-16) If the taxpayer reports a capital gain or
20		loss on the taxpayer's federal income tax return for
21		the taxable year based on a sale or transfer of
22		property for which the taxpayer was required in any
23		taxable year to make an addition modification under
24		subparagraph (D-15), then an amount equal to the
25		aggregate amount of the deductions taken in all taxable
26		years under subparagraph (Z) with respect to that
27		property. ;
28		The taxpayer is required to make the addition
29		modification under this subparagraph only once with
30		respect to any one piece of property; . and
31		(D-20) (D-15) For taxable years beginning on or
32		after January 1, 2002, in the case of a distribution
33		from a qualified tuition program under Section 529 of
34		the Internal Revenue Code, other than (i) a

1		distribution from a College Savings Pool created under
2		Section 16.5 of the State Treasurer Act or (ii) a
3		distribution from the Illinois Prepaid Tuition Trust
4		Fund, an amount equal to the amount excluded from gross
5		income under Section 529(c)(3)(B);
6		and by deducting from the total so obtained the sum of the
7		following amounts:
8		(E) For taxable years ending before December 31,
9		2001, any amount included in such total in respect of
10		any compensation (including but not limited to any
11		compensation paid or accrued to a serviceman while a
12		prisoner of war or missing in action) paid to a
13		resident by reason of being on active duty in the Armed
14		Forces of the United States and in respect of any
15		compensation paid or accrued to a resident who as a
16		governmental employee was a prisoner of war or missing
17		in action, and in respect of any compensation paid to a
18		resident in 1971 or thereafter for annual training
19		performed pursuant to Sections 502 and 503, Title 32,
20		United States Code as a member of the Illinois National
21		Guard. For taxable years ending on or after December
22		31, 2001, any amount included in such total in respect
23		of any compensation (including but not limited to any
24		compensation paid or accrued to a serviceman while a
25		prisoner of war or missing in action) paid to a
26		resident by reason of being a member of any component
27		of the Armed Forces of the United States and in respect
28		of any compensation paid or accrued to a resident who
29		as a governmental employee was a prisoner of war or
30		missing in action, and in respect of any compensation
31		paid to a resident in 2001 or thereafter by reason of
32		being a member of the Illinois National Guard. The
33		provisions of this amendatory Act of the 92nd General
34		Assembly are exempt from the provisions of Section 250;

1		(F) For taxable years beginning on or before
2		January 1, 2005, an An amount equal to all amounts
3		included in such total pursuant to the provisions of
4		Sections 402(a), 402(c), 403(a), 403(b), 406(a),
5		407(a), and 408 of the Internal Revenue Code, or
6		included in such total as distributions under the
7		provisions of any retirement or disability plan for
8		employees of any governmental agency or unit, or
9		retirement payments to retired partners, which
10		payments are excluded in computing net earnings from
11		self employment by Section 1402 of the Internal Revenue
12		Code and regulations adopted pursuant thereto;
13		(F-5) For taxable years beginning after January 1,
14		2005, for those taxpayers who report an adjusted gross
15		income of $74,999 ("the retirement threshold amount")
16		or less, an amount equal to all amounts included in
17		such total pursuant to the provisions of Sections
18		402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
19		408 of the Internal Revenue Code, or included in such
20		total as distributions under the provisions of any
21		retirement or disability plan for employees of any
22		governmental agency or unit, or retirement payments to
23		retired partners, which payments are excluded in
24		computing net earnings from self employment by Section
25		1402 of the Internal Revenue Code and regulations
26		adopted pursuant thereto, provided that the retirement
27		threshold amount shall increase annually for each tax
28		year by the percentage increase, if any, in the
29		Consumer Price Index published by the U.S. Bureau of
30		Labor Statistics from July of the immediately
31		preceding tax year to June 30 of the then current tax
32		year;
33		(G) The valuation limitation amount;
34		(H) An amount equal to the amount of any tax

1		imposed by this Act which was refunded to the taxpayer
2		and included in such total for the taxable year;
3		(I) An amount equal to all amounts included in such
4		total pursuant to the provisions of Section 111 of the
5		Internal Revenue Code as a recovery of items previously
6		deducted from adjusted gross income in the computation
7		of taxable income;
8		(J) An amount equal to those dividends included in
9		such total which were paid by a corporation which
10		conducts business operations in an Enterprise Zone or
11		zones created under the Illinois Enterprise Zone Act,
12		and conducts substantially all of its operations in an
13		Enterprise Zone or zones;
14		(K) An amount equal to those dividends included in
15		such total that were paid by a corporation that
16		conducts business operations in a federally designated
17		Foreign Trade Zone or Sub-Zone and that is designated a
18		High Impact Business located in Illinois; provided
19		that dividends eligible for the deduction provided in
20		subparagraph (J) of paragraph (2) of this subsection
21		shall not be eligible for the deduction provided under
22		this subparagraph (K);
23		(L) For taxable years ending after December 31,
24		1983, an amount equal to all social security benefits
25		and railroad retirement benefits included in such
26		total pursuant to Sections 72(r) and 86 of the Internal
27		Revenue Code;
28		(M) With the exception of any amounts subtracted
29		under subparagraph (N), an amount equal to the sum of
30		all amounts disallowed as deductions by (i) Sections
31		171(a) (2), and 265(2) of the Internal Revenue Code of
32		1954, as now or hereafter amended, and all amounts of
33		expenses allocable to interest and disallowed as
34		deductions by Section 265(1) of the Internal Revenue

1		Code of 1954, as now or hereafter amended; and (ii) for
2		taxable years ending on or after August 13, 1999,
3		Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
4		the Internal Revenue Code; the provisions of this
5		subparagraph are exempt from the provisions of Section
6		250;
7		(N) An amount equal to all amounts included in such
8		total which are exempt from taxation by this State
9		either by reason of its statutes or Constitution or by
10		reason of the Constitution, treaties or statutes of the
11		United States; provided that, in the case of any
12		statute of this State that exempts income derived from
13		bonds or other obligations from the tax imposed under
14		this Act, the amount exempted shall be the interest net
15		of bond premium amortization;
16		(O) An amount equal to any contribution made to a
17		job training project established pursuant to the Tax
18		Increment Allocation Redevelopment Act;
19		(P) An amount equal to the amount of the deduction
20		used to compute the federal income tax credit for
21		restoration of substantial amounts held under claim of
22		right for the taxable year pursuant to Section 1341 of
23		the Internal Revenue Code of 1986;
24		(Q) An amount equal to any amounts included in such
25		total, received by the taxpayer as an acceleration in
26		the payment of life, endowment or annuity benefits in
27		advance of the time they would otherwise be payable as
28		an indemnity for a terminal illness;
29		(R) An amount equal to the amount of any federal or
30		State bonus paid to veterans of the Persian Gulf War;
31		(S) An amount, to the extent included in adjusted
32		gross income, equal to the amount of a contribution
33		made in the taxable year on behalf of the taxpayer to a
34		medical care savings account established under the

1		Medical Care Savings Account Act or the Medical Care
2		Savings Account Act of 2000 to the extent the
3		contribution is accepted by the account administrator
4		as provided in that Act;
5		(T) An amount, to the extent included in adjusted
6		gross income, equal to the amount of interest earned in
7		the taxable year on a medical care savings account
8		established under the Medical Care Savings Account Act
9		or the Medical Care Savings Account Act of 2000 on
10		behalf of the taxpayer, other than interest added
11		pursuant to item (D-5) of this paragraph (2);
12		(U) For one taxable year beginning on or after
13		January 1, 1994, an amount equal to the total amount of
14		tax imposed and paid under subsections (a) and (b) of
15		Section 201 of this Act on grant amounts received by
16		the taxpayer under the Nursing Home Grant Assistance
17		Act during the taxpayer's taxable years 1992 and 1993;
18		(V) Beginning with tax years ending on or after
19		December 31, 1995 and ending with tax years ending on
20		or before December 31, 2004, an amount equal to the
21		amount paid by a taxpayer who is a self-employed
22		taxpayer, a partner of a partnership, or a shareholder
23		in a Subchapter S corporation for health insurance or
24		long-term care insurance for that taxpayer or that
25		taxpayer's spouse or dependents, to the extent that the
26		amount paid for that health insurance or long-term care
27		insurance may be deducted under Section 213 of the
28		Internal Revenue Code of 1986, has not been deducted on
29		the federal income tax return of the taxpayer, and does
30		not exceed the taxable income attributable to that
31		taxpayer's income, self-employment income, or
32		Subchapter S corporation income; except that no
33		deduction shall be allowed under this item (V) if the
34		taxpayer is eligible to participate in any health

1		insurance or long-term care insurance plan of an
2		employer of the taxpayer or the taxpayer's spouse. The
3		amount of the health insurance and long-term care
4		insurance subtracted under this item (V) shall be
5		determined by multiplying total health insurance and
6		long-term care insurance premiums paid by the taxpayer
7		times a number that represents the fractional
8		percentage of eligible medical expenses under Section
9		213 of the Internal Revenue Code of 1986 not actually
10		deducted on the taxpayer's federal income tax return;
11		(W) For taxable years beginning on or after January
12		1, 1998, all amounts included in the taxpayer's federal
13		gross income in the taxable year from amounts converted
14		from a regular IRA to a Roth IRA. This paragraph is
15		exempt from the provisions of Section 250;
16		(X) For taxable year 1999 and thereafter, an amount
17		equal to the amount of any (i) distributions, to the
18		extent includible in gross income for federal income
19		tax purposes, made to the taxpayer because of his or
20		her status as a victim of persecution for racial or
21		religious reasons by Nazi Germany or any other Axis
22		regime or as an heir of the victim and (ii) items of
23		income, to the extent includible in gross income for
24		federal income tax purposes, attributable to, derived
25		from or in any way related to assets stolen from,
26		hidden from, or otherwise lost to a victim of
27		persecution for racial or religious reasons by Nazi
28		Germany or any other Axis regime immediately prior to,
29		during, and immediately after World War II, including,
30		but not limited to, interest on the proceeds receivable
31		as insurance under policies issued to a victim of
32		persecution for racial or religious reasons by Nazi
33		Germany or any other Axis regime by European insurance
34		companies immediately prior to and during World War II;

1		provided, however, this subtraction from federal
2		adjusted gross income does not apply to assets acquired
3		with such assets or with the proceeds from the sale of
4		such assets; provided, further, this paragraph shall
5		only apply to a taxpayer who was the first recipient of
6		such assets after their recovery and who is a victim of
7		persecution for racial or religious reasons by Nazi
8		Germany or any other Axis regime or as an heir of the
9		victim. The amount of and the eligibility for any
10		public assistance, benefit, or similar entitlement is
11		not affected by the inclusion of items (i) and (ii) of
12		this paragraph in gross income for federal income tax
13		purposes. This paragraph is exempt from the provisions
14		of Section 250;
15		(Y) For taxable years beginning on or after January
16		1, 2002, moneys contributed in the taxable year to a
17		College Savings Pool account under Section 16.5 of the
18		State Treasurer Act, except that amounts excluded from
19		gross income under Section 529(c)(3)(C)(i) of the
20		Internal Revenue Code shall not be considered moneys
21		contributed under this subparagraph (Y). This
22		subparagraph (Y) is exempt from the provisions of
23		Section 250;
24		(Z) For taxable years 2001 and thereafter, for the
25		taxable year in which the bonus depreciation deduction
26		(30% of the adjusted basis of the qualified property)
27		is taken on the taxpayer's federal income tax return
28		under subsection (k) of Section 168 of the Internal
29		Revenue Code and for each applicable taxable year
30		thereafter, an amount equal to "x", where:
31		(1) "y" equals the amount of the depreciation
32		deduction taken for the taxable year on the
33		taxpayer's federal income tax return on property
34		for which the bonus depreciation deduction (30% of

1		the adjusted basis of the qualified property) was
2		taken in any year under subsection (k) of Section
3		168 of the Internal Revenue Code, but not including
4		the bonus depreciation deduction; and
5		(2) "x" equals "y" multiplied by 30 and then
6		divided by 70 (or "y" multiplied by 0.429).
7		The aggregate amount deducted under this
8		subparagraph in all taxable years for any one piece of
9		property may not exceed the amount of the bonus
10		depreciation deduction (30% of the adjusted basis of
11		the qualified property) taken on that property on the
12		taxpayer's federal income tax return under subsection
13		(k) of Section 168 of the Internal Revenue Code; and
14		(AA) If the taxpayer reports a capital gain or loss
15		on the taxpayer's federal income tax return for the
16		taxable year based on a sale or transfer of property
17		for which the taxpayer was required in any taxable year
18		to make an addition modification under subparagraph
19		(D-15), then an amount equal to that addition
20		modification.
21		The taxpayer is allowed to take the deduction under
22		this subparagraph only once with respect to any one
23		piece of property; and
24		(BB) (Z) Any amount included in adjusted gross
25		income, other than salary, received by a driver in a
26		ridesharing arrangement using a motor vehicle.
27		(b) Corporations.
28		(1) In general. In the case of a corporation, base
29		income means an amount equal to the taxpayer's taxable
30		income for the taxable year as modified by paragraph (2).
31		(2) Modifications. The taxable income referred to in
32		paragraph (1) shall be modified by adding thereto the sum
33		of the following amounts:

1		(A) An amount equal to all amounts paid or accrued
2		to the taxpayer as interest and all distributions
3		received from regulated investment companies during
4		the taxable year to the extent excluded from gross
5		income in the computation of taxable income;
6		(B) An amount equal to the amount of tax imposed by
7		this Act to the extent deducted from gross income in
8		the computation of taxable income for the taxable year;
9		(C) In the case of a regulated investment company,
10		an amount equal to the excess of (i) the net long-term
11		capital gain for the taxable year, over (ii) the amount
12		of the capital gain dividends designated as such in
13		accordance with Section 852(b)(3)(C) of the Internal
14		Revenue Code and any amount designated under Section
15		852(b)(3)(D) of the Internal Revenue Code,
16		attributable to the taxable year (this amendatory Act
17		of 1995 (Public Act 89-89) is declarative of existing
18		law and is not a new enactment);
19		(D) The amount of any net operating loss deduction
20		taken in arriving at taxable income, other than a net
21		operating loss carried forward from a taxable year
22		ending prior to December 31, 1986;
23		(E) For taxable years in which a net operating loss
24		carryback or carryforward from a taxable year ending
25		prior to December 31, 1986 is an element of taxable
26		income under paragraph (1) of subsection (e) or
27		subparagraph (E) of paragraph (2) of subsection (e),
28		the amount by which addition modifications other than
29		those provided by this subparagraph (E) exceeded
30		subtraction modifications in such earlier taxable
31		year, with the following limitations applied in the
32		order that they are listed:
33		(i) the addition modification relating to the
34		net operating loss carried back or forward to the

1		taxable year from any taxable year ending prior to
2		December 31, 1986 shall be reduced by the amount of
3		addition modification under this subparagraph (E)
4		which related to that net operating loss and which
5		was taken into account in calculating the base
6		income of an earlier taxable year, and
7		(ii) the addition modification relating to the
8		net operating loss carried back or forward to the
9		taxable year from any taxable year ending prior to
10		December 31, 1986 shall not exceed the amount of
11		such carryback or carryforward;
12		For taxable years in which there is a net operating
13		loss carryback or carryforward from more than one other
14		taxable year ending prior to December 31, 1986, the
15		addition modification provided in this subparagraph
16		(E) shall be the sum of the amounts computed
17		independently under the preceding provisions of this
18		subparagraph (E) for each such taxable year;
19		(E-5) For taxable years ending after December 31,
20		1997, an amount equal to any eligible remediation costs
21		that the corporation deducted in computing adjusted
22		gross income and for which the corporation claims a
23		credit under subsection (l) of Section 201;
24		(E-10) For taxable years 2001 and thereafter, an
25		amount equal to the bonus depreciation deduction (30%
26		of the adjusted basis of the qualified property) taken
27		on the taxpayer's federal income tax return for the
28		taxable year under subsection (k) of Section 168 of the
29		Internal Revenue Code; and
30		(E-11) If the taxpayer reports a capital gain or
31		loss on the taxpayer's federal income tax return for
32		the taxable year based on a sale or transfer of
33		property for which the taxpayer was required in any
34		taxable year to make an addition modification under

1		subparagraph (E-10), then an amount equal to the
2		aggregate amount of the deductions taken in all taxable
3		years under subparagraph (T) with respect to that
4		property. ;
5		The taxpayer is required to make the addition
6		modification under this subparagraph only once with
7		respect to any one piece of property;
8		and by deducting from the total so obtained the sum of the
9		following amounts:
10		(F) An amount equal to the amount of any tax
11		imposed by this Act which was refunded to the taxpayer
12		and included in such total for the taxable year;
13		(G) An amount equal to any amount included in such
14		total under Section 78 of the Internal Revenue Code;
15		(H) In the case of a regulated investment company,
16		an amount equal to the amount of exempt interest
17		dividends as defined in subsection (b) (5) of Section
18		852 of the Internal Revenue Code, paid to shareholders
19		for the taxable year;
20		(I) With the exception of any amounts subtracted
21		under subparagraph (J), an amount equal to the sum of
22		all amounts disallowed as deductions by (i) Sections
23		171(a) (2), and 265(a)(2) and amounts disallowed as
24		interest expense by Section 291(a)(3) of the Internal
25		Revenue Code, as now or hereafter amended, and all
26		amounts of expenses allocable to interest and
27		disallowed as deductions by Section 265(a)(1) of the
28		Internal Revenue Code, as now or hereafter amended; and
29		(ii) for taxable years ending on or after August 13,
30		1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
31		832(b)(5)(B)(i) of the Internal Revenue Code; the
32		provisions of this subparagraph are exempt from the
33		provisions of Section 250;
34		(J) An amount equal to all amounts included in such

1		total which are exempt from taxation by this State
2		either by reason of its statutes or Constitution or by
3		reason of the Constitution, treaties or statutes of the
4		United States; provided that, in the case of any
5		statute of this State that exempts income derived from
6		bonds or other obligations from the tax imposed under
7		this Act, the amount exempted shall be the interest net
8		of bond premium amortization;
9		(K) (Blank); An amount equal to those dividends
10		included in such total which were paid by a corporation
11		which conducts business operations in an Enterprise
12		Zone or zones created under the Illinois Enterprise
13		Zone Act and conducts substantially all of its
14		operations in an Enterprise Zone or zones;
15		(L) (Blank); An amount equal to those dividends
16		included in such total that were paid by a corporation
17		that conducts business operations in a federally
18		designated Foreign Trade Zone or Sub-Zone and that is
19		designated a High Impact Business located in Illinois;
20		provided that dividends eligible for the deduction
21		provided in subparagraph (K) of paragraph 2 of this
22		subsection shall not be eligible for the deduction
23		provided under this subparagraph (L);
24		(M) For any taxpayer that is a financial
25		organization within the meaning of Section 304(c) of
26		this Act, an amount included in such total as interest
27		income from a loan or loans made by such taxpayer to a
28		borrower, to the extent that such a loan is secured by
29		property which is eligible for the Enterprise Zone
30		Investment Credit. To determine the portion of a loan
31		or loans that is secured by property eligible for a
32		Section 201(f) investment credit to the borrower, the
33		entire principal amount of the loan or loans between
34		the taxpayer and the borrower should be divided into

1		the basis of the Section 201(f) investment credit
2		property which secures the loan or loans, using for
3		this purpose the original basis of such property on the
4		date that it was placed in service in the Enterprise
5		Zone. The subtraction modification available to
6		taxpayer in any year under this subsection shall be
7		that portion of the total interest paid by the borrower
8		with respect to such loan attributable to the eligible
9		property as calculated under the previous sentence;
10		(M-1) For any taxpayer that is a financial
11		organization within the meaning of Section 304(c) of
12		this Act, an amount included in such total as interest
13		income from a loan or loans made by such taxpayer to a
14		borrower, to the extent that such a loan is secured by
15		property which is eligible for the High Impact Business
16		Investment Credit. To determine the portion of a loan
17		or loans that is secured by property eligible for a
18		Section 201(h) investment credit to the borrower, the
19		entire principal amount of the loan or loans between
20		the taxpayer and the borrower should be divided into
21		the basis of the Section 201(h) investment credit
22		property which secures the loan or loans, using for
23		this purpose the original basis of such property on the
24		date that it was placed in service in a federally
25		designated Foreign Trade Zone or Sub-Zone located in
26		Illinois. No taxpayer that is eligible for the
27		deduction provided in subparagraph (M) of paragraph
28		(2) of this subsection shall be eligible for the
29		deduction provided under this subparagraph (M-1). The
30		subtraction modification available to taxpayers in any
31		year under this subsection shall be that portion of the
32		total interest paid by the borrower with respect to
33		such loan attributable to the eligible property as
34		calculated under the previous sentence;

1		(N) Two times any contribution made during the
2		taxable year to a designated zone organization to the
3		extent that the contribution (i) qualifies as a
4		charitable contribution under subsection (c) of
5		Section 170 of the Internal Revenue Code and (ii) must,
6		by its terms, be used for a project approved by the
7		Department of Commerce and Economic Opportunity
8		Community Affairs under Section 11 of the Illinois
9		Enterprise Zone Act;
10		(O) An amount equal to: (i) 85% for taxable years
11		ending on or before December 31, 1992, or, a percentage
12		equal to the percentage allowable under Section
13		243(a)(1) of the Internal Revenue Code of 1986 for
14		taxable years ending after December 31, 1992, of the
15		amount by which dividends included in taxable income
16		and received from a corporation that is not created or
17		organized under the laws of the United States or any
18		state or political subdivision thereof, including, for
19		taxable years ending on or after December 31, 1988,
20		dividends received or deemed received or paid or deemed
21		paid under Sections 951 through 964 of the Internal
22		Revenue Code, exceed the amount of the modification
23		provided under subparagraph (G) of paragraph (2) of
24		this subsection (b) which is related to such dividends;
25		plus (ii) 100% of the amount by which dividends,
26		included in taxable income and received, including,
27		for taxable years ending on or after December 31, 1988,
28		dividends received or deemed received or paid or deemed
29		paid under Sections 951 through 964 of the Internal
30		Revenue Code, from any such corporation specified in
31		clause (i) that would but for the provisions of Section
32		1504 (b) (3) of the Internal Revenue Code be treated as
33		a member of the affiliated group which includes the
34		dividend recipient, exceed the amount of the

1		modification provided under subparagraph (G) of
2		paragraph (2) of this subsection (b) which is related
3		to such dividends;
4		(P) An amount equal to any contribution made to a
5		job training project established pursuant to the Tax
6		Increment Allocation Redevelopment Act;
7		(Q) An amount equal to the amount of the deduction
8		used to compute the federal income tax credit for
9		restoration of substantial amounts held under claim of
10		right for the taxable year pursuant to Section 1341 of
11		the Internal Revenue Code of 1986;
12		(R) In the case of an attorney-in-fact with respect
13		to whom an interinsurer or a reciprocal insurer has
14		made the election under Section 835 of the Internal
15		Revenue Code, 26 U.S.C. 835, an amount equal to the
16		excess, if any, of the amounts paid or incurred by that
17		interinsurer or reciprocal insurer in the taxable year
18		to the attorney-in-fact over the deduction allowed to
19		that interinsurer or reciprocal insurer with respect
20		to the attorney-in-fact under Section 835(b) of the
21		Internal Revenue Code for the taxable year;
22		(S) For taxable years ending on or after December
23		31, 1997, in the case of a Subchapter S corporation, an
24		amount equal to all amounts of income allocable to a
25		shareholder subject to the Personal Property Tax
26		Replacement Income Tax imposed by subsections (c) and
27		(d) of Section 201 of this Act, including amounts
28		allocable to organizations exempt from federal income
29		tax by reason of Section 501(a) of the Internal Revenue
30		Code. This subparagraph (S) is exempt from the
31		provisions of Section 250;
32		(T) For taxable years 2001 and thereafter, for the
33		taxable year in which the bonus depreciation deduction
34		(30% of the adjusted basis of the qualified property)

1		is taken on the taxpayer's federal income tax return
2		under subsection (k) of Section 168 of the Internal
3		Revenue Code and for each applicable taxable year
4		thereafter, an amount equal to "x", where:
5		(1) "y" equals the amount of the depreciation
6		deduction taken for the taxable year on the
7		taxpayer's federal income tax return on property
8		for which the bonus depreciation deduction (30% of
9		the adjusted basis of the qualified property) was
10		taken in any year under subsection (k) of Section
11		168 of the Internal Revenue Code, but not including
12		the bonus depreciation deduction; and
13		(2) "x" equals "y" multiplied by 30 and then
14		divided by 70 (or "y" multiplied by 0.429).
15		The aggregate amount deducted under this
16		subparagraph in all taxable years for any one piece of
17		property may not exceed the amount of the bonus
18		depreciation deduction (30% of the adjusted basis of
19		the qualified property) taken on that property on the
20		taxpayer's federal income tax return under subsection
21		(k) of Section 168 of the Internal Revenue Code; and
22		(U) If the taxpayer reports a capital gain or loss
23		on the taxpayer's federal income tax return for the
24		taxable year based on a sale or transfer of property
25		for which the taxpayer was required in any taxable year
26		to make an addition modification under subparagraph
27		(E-10), then an amount equal to that addition
28		modification.
29		The taxpayer is allowed to take the deduction under
30		this subparagraph only once with respect to any one
31		piece of property.
32		(3) Special rule. For purposes of paragraph (2) (A),
33		"gross income" in the case of a life insurance company, for
34		tax years ending on and after December 31, 1994, shall mean

1		the gross investment income for the taxable year.
2		(c) Trusts and estates.
3		(1) In general. In the case of a trust or estate, base
4		income means an amount equal to the taxpayer's taxable
5		income for the taxable year as modified by paragraph (2).
6		(2) Modifications. Subject to the provisions of
7		paragraph (3), the taxable income referred to in paragraph
8		(1) shall be modified by adding thereto the sum of the
9		following amounts:
10		(A) An amount equal to all amounts paid or accrued
11		to the taxpayer as interest or dividends during the
12		taxable year to the extent excluded from gross income
13		in the computation of taxable income;
14		(B) In the case of (i) an estate, $600; (ii) a
15		trust which, under its governing instrument, is
16		required to distribute all of its income currently,
17		$300; and (iii) any other trust, $100, but in each such
18		case, only to the extent such amount was deducted in
19		the computation of taxable income;
20		(C) An amount equal to the amount of tax imposed by
21		this Act to the extent deducted from gross income in
22		the computation of taxable income for the taxable year;
23		(D) The amount of any net operating loss deduction
24		taken in arriving at taxable income, other than a net
25		operating loss carried forward from a taxable year
26		ending prior to December 31, 1986;
27		(E) For taxable years in which a net operating loss
28		carryback or carryforward from a taxable year ending
29		prior to December 31, 1986 is an element of taxable
30		income under paragraph (1) of subsection (e) or
31		subparagraph (E) of paragraph (2) of subsection (e),
32		the amount by which addition modifications other than
33		those provided by this subparagraph (E) exceeded

1		subtraction modifications in such taxable year, with
2		the following limitations applied in the order that
3		they are listed:
4		(i) the addition modification relating to the
5		net operating loss carried back or forward to the
6		taxable year from any taxable year ending prior to
7		December 31, 1986 shall be reduced by the amount of
8		addition modification under this subparagraph (E)
9		which related to that net operating loss and which
10		was taken into account in calculating the base
11		income of an earlier taxable year, and
12		(ii) the addition modification relating to the
13		net operating loss carried back or forward to the
14		taxable year from any taxable year ending prior to
15		December 31, 1986 shall not exceed the amount of
16		such carryback or carryforward;
17		For taxable years in which there is a net operating
18		loss carryback or carryforward from more than one other
19		taxable year ending prior to December 31, 1986, the
20		addition modification provided in this subparagraph
21		(E) shall be the sum of the amounts computed
22		independently under the preceding provisions of this
23		subparagraph (E) for each such taxable year;
24		(F) For taxable years ending on or after January 1,
25		1989, an amount equal to the tax deducted pursuant to
26		Section 164 of the Internal Revenue Code if the trust
27		or estate is claiming the same tax for purposes of the
28		Illinois foreign tax credit under Section 601 of this
29		Act;
30		(G) An amount equal to the amount of the capital
31		gain deduction allowable under the Internal Revenue
32		Code, to the extent deducted from gross income in the
33		computation of taxable income;
34		(G-5) For taxable years ending after December 31,

1		1997, an amount equal to any eligible remediation costs
2		that the trust or estate deducted in computing adjusted
3		gross income and for which the trust or estate claims a
4		credit under subsection (l) of Section 201;
5		(G-10) For taxable years 2001 and thereafter, an
6		amount equal to the bonus depreciation deduction (30%
7		of the adjusted basis of the qualified property) taken
8		on the taxpayer's federal income tax return for the
9		taxable year under subsection (k) of Section 168 of the
10		Internal Revenue Code; and
11		(G-11) If the taxpayer reports a capital gain or
12		loss on the taxpayer's federal income tax return for
13		the taxable year based on a sale or transfer of
14		property for which the taxpayer was required in any
15		taxable year to make an addition modification under
16		subparagraph (G-10), then an amount equal to the
17		aggregate amount of the deductions taken in all taxable
18		years under subparagraph (R) with respect to that
19		property. ;
20		The taxpayer is required to make the addition
21		modification under this subparagraph only once with
22		respect to any one piece of property;
23		and by deducting from the total so obtained the sum of the
24		following amounts:
25		(H) An amount equal to all amounts included in such
26		total pursuant to the provisions of Sections 402(a),
27		402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
28		Internal Revenue Code or included in such total as
29		distributions under the provisions of any retirement
30		or disability plan for employees of any governmental
31		agency or unit, or retirement payments to retired
32		partners, which payments are excluded in computing net
33		earnings from self employment by Section 1402 of the
34		Internal Revenue Code and regulations adopted pursuant

1		thereto;
2		(I) The valuation limitation amount;
3		(J) An amount equal to the amount of any tax
4		imposed by this Act which was refunded to the taxpayer
5		and included in such total for the taxable year;
6		(K) An amount equal to all amounts included in
7		taxable income as modified by subparagraphs (A), (B),
8		(C), (D), (E), (F) and (G) which are exempt from
9		taxation by this State either by reason of its statutes
10		or Constitution or by reason of the Constitution,
11		treaties or statutes of the United States; provided
12		that, in the case of any statute of this State that
13		exempts income derived from bonds or other obligations
14		from the tax imposed under this Act, the amount
15		exempted shall be the interest net of bond premium
16		amortization;
17		(L) With the exception of any amounts subtracted
18		under subparagraph (K), an amount equal to the sum of
19		all amounts disallowed as deductions by (i) Sections
20		171(a) (2) and 265(a)(2) of the Internal Revenue Code,
21		as now or hereafter amended, and all amounts of
22		expenses allocable to interest and disallowed as
23		deductions by Section 265(1) of the Internal Revenue
24		Code of 1954, as now or hereafter amended; and (ii) for
25		taxable years ending on or after August 13, 1999,
26		Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
27		the Internal Revenue Code; the provisions of this
28		subparagraph are exempt from the provisions of Section
29		250;
30		(M) An amount equal to those dividends included in
31		such total which were paid by a corporation which
32		conducts business operations in an Enterprise Zone or
33		zones created under the Illinois Enterprise Zone Act
34		and conducts substantially all of its operations in an

1		Enterprise Zone or Zones;
2		(N) An amount equal to any contribution made to a
3		job training project established pursuant to the Tax
4		Increment Allocation Redevelopment Act;
5		(O) An amount equal to those dividends included in
6		such total that were paid by a corporation that
7		conducts business operations in a federally designated
8		Foreign Trade Zone or Sub-Zone and that is designated a
9		High Impact Business located in Illinois; provided
10		that dividends eligible for the deduction provided in
11		subparagraph (M) of paragraph (2) of this subsection
12		shall not be eligible for the deduction provided under
13		this subparagraph (O);
14		(P) An amount equal to the amount of the deduction
15		used to compute the federal income tax credit for
16		restoration of substantial amounts held under claim of
17		right for the taxable year pursuant to Section 1341 of
18		the Internal Revenue Code of 1986;
19		(Q) For taxable year 1999 and thereafter, an amount
20		equal to the amount of any (i) distributions, to the
21		extent includible in gross income for federal income
22		tax purposes, made to the taxpayer because of his or
23		her status as a victim of persecution for racial or
24		religious reasons by Nazi Germany or any other Axis
25		regime or as an heir of the victim and (ii) items of
26		income, to the extent includible in gross income for
27		federal income tax purposes, attributable to, derived
28		from or in any way related to assets stolen from,
29		hidden from, or otherwise lost to a victim of
30		persecution for racial or religious reasons by Nazi
31		Germany or any other Axis regime immediately prior to,
32		during, and immediately after World War II, including,
33		but not limited to, interest on the proceeds receivable
34		as insurance under policies issued to a victim of

1		persecution for racial or religious reasons by Nazi
2		Germany or any other Axis regime by European insurance
3		companies immediately prior to and during World War II;
4		provided, however, this subtraction from federal
5		adjusted gross income does not apply to assets acquired
6		with such assets or with the proceeds from the sale of
7		such assets; provided, further, this paragraph shall
8		only apply to a taxpayer who was the first recipient of
9		such assets after their recovery and who is a victim of
10		persecution for racial or religious reasons by Nazi
11		Germany or any other Axis regime or as an heir of the
12		victim. The amount of and the eligibility for any
13		public assistance, benefit, or similar entitlement is
14		not affected by the inclusion of items (i) and (ii) of
15		this paragraph in gross income for federal income tax
16		purposes. This paragraph is exempt from the provisions
17		of Section 250;
18		(R) For taxable years 2001 and thereafter, for the
19		taxable year in which the bonus depreciation deduction
20		(30% of the adjusted basis of the qualified property)
21		is taken on the taxpayer's federal income tax return
22		under subsection (k) of Section 168 of the Internal
23		Revenue Code and for each applicable taxable year
24		thereafter, an amount equal to "x", where:
25		(1) "y" equals the amount of the depreciation
26		deduction taken for the taxable year on the
27		taxpayer's federal income tax return on property
28		for which the bonus depreciation deduction (30% of
29		the adjusted basis of the qualified property) was
30		taken in any year under subsection (k) of Section
31		168 of the Internal Revenue Code, but not including
32		the bonus depreciation deduction; and
33		(2) "x" equals "y" multiplied by 30 and then
34		divided by 70 (or "y" multiplied by 0.429).

1		The aggregate amount deducted under this
2		subparagraph in all taxable years for any one piece of
3		property may not exceed the amount of the bonus
4		depreciation deduction (30% of the adjusted basis of
5		the qualified property) taken on that property on the
6		taxpayer's federal income tax return under subsection
7		(k) of Section 168 of the Internal Revenue Code; and
8		(S) If the taxpayer reports a capital gain or loss
9		on the taxpayer's federal income tax return for the
10		taxable year based on a sale or transfer of property
11		for which the taxpayer was required in any taxable year
12		to make an addition modification under subparagraph
13		(G-10), then an amount equal to that addition
14		modification.
15		The taxpayer is allowed to take the deduction under
16		this subparagraph only once with respect to any one
17		piece of property.
18		(3) Limitation. The amount of any modification
19		otherwise required under this subsection shall, under
20		regulations prescribed by the Department, be adjusted by
21		any amounts included therein which were properly paid,
22		credited, or required to be distributed, or permanently set
23		aside for charitable purposes pursuant to Internal Revenue
24		Code Section 642(c) during the taxable year.
25		(d) Partnerships.
26		(1) In general. In the case of a partnership, base
27		income means an amount equal to the taxpayer's taxable
28		income for the taxable year as modified by paragraph (2).
29		(2) Modifications. The taxable income referred to in
30		paragraph (1) shall be modified by adding thereto the sum
31		of the following amounts:
32		(A) An amount equal to all amounts paid or accrued
33		to the taxpayer as interest or dividends during the

1		taxable year to the extent excluded from gross income
2		in the computation of taxable income;
3		(B) An amount equal to the amount of tax imposed by
4		this Act to the extent deducted from gross income for
5		the taxable year;
6		(C) The amount of deductions allowed to the
7		partnership pursuant to Section 707 (c) of the Internal
8		Revenue Code in calculating its taxable income;
9		(D) An amount equal to the amount of the capital
10		gain deduction allowable under the Internal Revenue
11		Code, to the extent deducted from gross income in the
12		computation of taxable income;
13		(D-5) For taxable years 2001 and thereafter, an
14		amount equal to the bonus depreciation deduction (30%
15		of the adjusted basis of the qualified property) taken
16		on the taxpayer's federal income tax return for the
17		taxable year under subsection (k) of Section 168 of the
18		Internal Revenue Code; and
19		(D-6) If the taxpayer reports a capital gain or
20		loss on the taxpayer's federal income tax return for
21		the taxable year based on a sale or transfer of
22		property for which the taxpayer was required in any
23		taxable year to make an addition modification under
24		subparagraph (D-5), then an amount equal to the
25		aggregate amount of the deductions taken in all taxable
26		years under subparagraph (O) with respect to that
27		property. ;
28		The taxpayer is required to make the addition
29		modification under this subparagraph only once with
30		respect to any one piece of property;
31		and by deducting from the total so obtained the following
32		amounts:
33		(E) The valuation limitation amount;
34		(F) An amount equal to the amount of any tax

1		imposed by this Act which was refunded to the taxpayer
2		and included in such total for the taxable year;
3		(G) An amount equal to all amounts included in
4		taxable income as modified by subparagraphs (A), (B),
5		(C) and (D) which are exempt from taxation by this
6		State either by reason of its statutes or Constitution
7		or by reason of the Constitution, treaties or statutes
8		of the United States; provided that, in the case of any
9		statute of this State that exempts income derived from
10		bonds or other obligations from the tax imposed under
11		this Act, the amount exempted shall be the interest net
12		of bond premium amortization;
13		(H) Any income of the partnership which
14		constitutes personal service income as defined in
15		Section 1348 (b) (1) of the Internal Revenue Code (as
16		in effect December 31, 1981) or a reasonable allowance
17		for compensation paid or accrued for services rendered
18		by partners to the partnership, whichever is greater;
19		(I) An amount equal to all amounts of income
20		distributable to an entity subject to the Personal
21		Property Tax Replacement Income Tax imposed by
22		subsections (c) and (d) of Section 201 of this Act
23		including amounts distributable to organizations
24		exempt from federal income tax by reason of Section
25		501(a) of the Internal Revenue Code;
26		(J) With the exception of any amounts subtracted
27		under subparagraph (G), an amount equal to the sum of
28		all amounts disallowed as deductions by (i) Sections
29		171(a) (2), and 265(2) of the Internal Revenue Code of
30		1954, as now or hereafter amended, and all amounts of
31		expenses allocable to interest and disallowed as
32		deductions by Section 265(1) of the Internal Revenue
33		Code, as now or hereafter amended; and (ii) for taxable
34		years ending on or after August 13, 1999, Sections

1		171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
2		Internal Revenue Code; the provisions of this
3		subparagraph are exempt from the provisions of Section
4		250;
5		(K) An amount equal to those dividends included in
6		such total which were paid by a corporation which
7		conducts business operations in an Enterprise Zone or
8		zones created under the Illinois Enterprise Zone Act,
9		enacted by the 82nd General Assembly, and conducts
10		substantially all of its operations in an Enterprise
11		Zone or Zones;
12		(L) An amount equal to any contribution made to a
13		job training project established pursuant to the Real
14		Property Tax Increment Allocation Redevelopment Act;
15		(M) An amount equal to those dividends included in
16		such total that were paid by a corporation that
17		conducts business operations in a federally designated
18		Foreign Trade Zone or Sub-Zone and that is designated a
19		High Impact Business located in Illinois; provided
20		that dividends eligible for the deduction provided in
21		subparagraph (K) of paragraph (2) of this subsection
22		shall not be eligible for the deduction provided under
23		this subparagraph (M);
24		(N) An amount equal to the amount of the deduction
25		used to compute the federal income tax credit for
26		restoration of substantial amounts held under claim of
27		right for the taxable year pursuant to Section 1341 of
28		the Internal Revenue Code of 1986;
29		(O) For taxable years 2001 and thereafter, for the
30		taxable year in which the bonus depreciation deduction
31		(30% of the adjusted basis of the qualified property)
32		is taken on the taxpayer's federal income tax return
33		under subsection (k) of Section 168 of the Internal
34		Revenue Code and for each applicable taxable year

1		thereafter, an amount equal to "x", where:
2		(1) "y" equals the amount of the depreciation
3		deduction taken for the taxable year on the
4		taxpayer's federal income tax return on property
5		for which the bonus depreciation deduction (30% of
6		the adjusted basis of the qualified property) was
7		taken in any year under subsection (k) of Section
8		168 of the Internal Revenue Code, but not including
9		the bonus depreciation deduction; and
10		(2) "x" equals "y" multiplied by 30 and then
11		divided by 70 (or "y" multiplied by 0.429).
12		The aggregate amount deducted under this
13		subparagraph in all taxable years for any one piece of
14		property may not exceed the amount of the bonus
15		depreciation deduction (30% of the adjusted basis of
16		the qualified property) taken on that property on the
17		taxpayer's federal income tax return under subsection
18		(k) of Section 168 of the Internal Revenue Code; and
19		(P) If the taxpayer reports a capital gain or loss
20		on the taxpayer's federal income tax return for the
21		taxable year based on a sale or transfer of property
22		for which the taxpayer was required in any taxable year
23		to make an addition modification under subparagraph
24		(D-5), then an amount equal to that addition
25		modification.
26		The taxpayer is allowed to take the deduction under
27		this subparagraph only once with respect to any one
28		piece of property.
29		(e) Gross income; adjusted gross income; taxable income.
30		(1) In general. Subject to the provisions of paragraph
31		(2) and subsection (b) (3), for purposes of this Section
32		and Section 803(e), a taxpayer's gross income, adjusted
33		gross income, or taxable income for the taxable year shall

1		mean the amount of gross income, adjusted gross income or
2		taxable income properly reportable for federal income tax
3		purposes for the taxable year under the provisions of the
4		Internal Revenue Code. Taxable income may be less than
5		zero. However, for taxable years ending on or after
6		December 31, 1986, net operating loss carryforwards from
7		taxable years ending prior to December 31, 1986, may not
8		exceed the sum of federal taxable income for the taxable
9		year before net operating loss deduction, plus the excess
10		of addition modifications over subtraction modifications
11		for the taxable year. For taxable years ending prior to
12		December 31, 1986, taxable income may never be an amount in
13		excess of the net operating loss for the taxable year as
14		defined in subsections (c) and (d) of Section 172 of the
15		Internal Revenue Code, provided that when taxable income of
16		a corporation (other than a Subchapter S corporation),
17		trust, or estate is less than zero and addition
18		modifications, other than those provided by subparagraph
19		(E) of paragraph (2) of subsection (b) for corporations or
20		subparagraph (E) of paragraph (2) of subsection (c) for
21		trusts and estates, exceed subtraction modifications, an
22		addition modification must be made under those
23		subparagraphs for any other taxable year to which the
24		taxable income less than zero (net operating loss) is
25		applied under Section 172 of the Internal Revenue Code or
26		under subparagraph (E) of paragraph (2) of this subsection
27		(e) applied in conjunction with Section 172 of the Internal
28		Revenue Code.
29		(2) Special rule. For purposes of paragraph (1) of this
30		subsection, the taxable income properly reportable for
31		federal income tax purposes shall mean:
32		(A) Certain life insurance companies. In the case
33		of a life insurance company subject to the tax imposed
34		by Section 801 of the Internal Revenue Code, life

1		insurance company taxable income, plus the amount of
2		distribution from pre-1984 policyholder surplus
3		accounts as calculated under Section 815a of the
4		Internal Revenue Code;
5		(B) Certain other insurance companies. In the case
6		of mutual insurance companies subject to the tax
7		imposed by Section 831 of the Internal Revenue Code,
8		insurance company taxable income;
9		(C) Regulated investment companies. In the case of
10		a regulated investment company subject to the tax
11		imposed by Section 852 of the Internal Revenue Code,
12		investment company taxable income;
13		(D) Real estate investment trusts. In the case of a
14		real estate investment trust subject to the tax imposed
15		by Section 857 of the Internal Revenue Code, real
16		estate investment trust taxable income;
17		(E) Consolidated corporations. In the case of a
18		corporation which is a member of an affiliated group of
19		corporations filing a consolidated income tax return
20		for the taxable year for federal income tax purposes,
21		taxable income determined as if such corporation had
22		filed a separate return for federal income tax purposes
23		for the taxable year and each preceding taxable year
24		for which it was a member of an affiliated group. For
25		purposes of this subparagraph, the taxpayer's separate
26		taxable income shall be determined as if the election
27		provided by Section 243(b) (2) of the Internal Revenue
28		Code had been in effect for all such years;
29		(F) Cooperatives. In the case of a cooperative
30		corporation or association, the taxable income of such
31		organization determined in accordance with the
32		provisions of Section 1381 through 1388 of the Internal
33		Revenue Code;
34		(G) Subchapter S corporations. In the case of: (i)

1		a Subchapter S corporation for which there is in effect
2		an election for the taxable year under Section 1362 of
3		the Internal Revenue Code, the taxable income of such
4		corporation determined in accordance with Section
5		1363(b) of the Internal Revenue Code, except that
6		taxable income shall take into account those items
7		which are required by Section 1363(b)(1) of the
8		Internal Revenue Code to be separately stated; and (ii)
9		a Subchapter S corporation for which there is in effect
10		a federal election to opt out of the provisions of the
11		Subchapter S Revision Act of 1982 and have applied
12		instead the prior federal Subchapter S rules as in
13		effect on July 1, 1982, the taxable income of such
14		corporation determined in accordance with the federal
15		Subchapter S rules as in effect on July 1, 1982; and
16		(H) Partnerships. In the case of a partnership,
17		taxable income determined in accordance with Section
18		703 of the Internal Revenue Code, except that taxable
19		income shall take into account those items which are
20		required by Section 703(a)(1) to be separately stated
21		but which would be taken into account by an individual
22		in calculating his taxable income.
23		(f) Valuation limitation amount.
24		(1) In general. The valuation limitation amount
25		referred to in subsections (a) (2) (G), (c) (2) (I) and
26		(d)(2) (E) is an amount equal to:
27		(A) The sum of the pre-August 1, 1969 appreciation
28		amounts (to the extent consisting of gain reportable
29		under the provisions of Section 1245 or 1250 of the
30		Internal Revenue Code) for all property in respect of
31		which such gain was reported for the taxable year; plus
32		(B) The lesser of (i) the sum of the pre-August 1,
33		1969 appreciation amounts (to the extent consisting of

1		capital gain) for all property in respect of which such
2		gain was reported for federal income tax purposes for
3		the taxable year, or (ii) the net capital gain for the
4		taxable year, reduced in either case by any amount of
5		such gain included in the amount determined under
6		subsection (a) (2) (F) or (c) (2) (H).
7		(2) Pre-August 1, 1969 appreciation amount.
8		(A) If the fair market value of property referred
9		to in paragraph (1) was readily ascertainable on August
10		1, 1969, the pre-August 1, 1969 appreciation amount for
11		such property is the lesser of (i) the excess of such
12		fair market value over the taxpayer's basis (for
13		determining gain) for such property on that date
14		(determined under the Internal Revenue Code as in
15		effect on that date), or (ii) the total gain realized
16		and reportable for federal income tax purposes in
17		respect of the sale, exchange or other disposition of
18		such property.
19		(B) If the fair market value of property referred
20		to in paragraph (1) was not readily ascertainable on
21		August 1, 1969, the pre-August 1, 1969 appreciation
22		amount for such property is that amount which bears the
23		same ratio to the total gain reported in respect of the
24		property for federal income tax purposes for the
25		taxable year, as the number of full calendar months in
26		that part of the taxpayer's holding period for the
27		property ending July 31, 1969 bears to the number of
28		full calendar months in the taxpayer's entire holding
29		period for the property.
30		(C) The Department shall prescribe such
31		regulations as may be necessary to carry out the
32		purposes of this paragraph.
33		(g) Double deductions. Unless specifically provided

1		otherwise, nothing in this Section shall permit the same item
2		to be deducted more than once.
3		(h) Legislative intention. Except as expressly provided by
4		this Section there shall be no modifications or limitations on
5		the amounts of income, gain, loss or deduction taken into
6		account in determining gross income, adjusted gross income or
7		taxable income for federal income tax purposes for the taxable
8		year, or in the amount of such items entering into the
9		computation of base income and net income under this Act for
10		such taxable year, whether in respect of property values as of
11		August 1, 1969 or otherwise.
12		(Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99;
13		91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, eff.
14		12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
15		eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff. 8-17-01;
16		92-603, eff. 6-28-02; 92-626, eff. 7-11-02; 92-651, eff.
17		7-11-02; 92-846, eff. 8-23-02; revised 10-15-03.)
18		(35 ILCS 5/247 new)
19		Sec. 247. Family Tax Credit.
20		(a) For taxable years beginning after January 1, 2005, each
21		taxpayer who is a natural person or is a married couple filing
22		jointly that reports total annual income of $47,000 or less
23		(the "eligibility cap"), is entitled to a refundable tax credit
24		known as the Family Tax Credit in those amounts identified in
25		subsection (b) of this Section. The Family Tax Credit may be
26		claimed only upon proper filing of an Illinois State income tax
27		return by an eligible taxpayer. The eligibility cap shall
28		increase for each tax year beginning after December 31, 2005,
29		by an amount equal to the percentage increase, if any, in the
30		Consumer Price Index ("CPI") published by the U.S. Bureau of
31		Labor Statistics for the immediately preceding tax year,
32		multiplied by the eligibility cap for that immediately

1		preceding tax year.
2		(b) The amount of Family Tax Credit an eligible taxpayer
3		may claim will vary in amount, based on the following table:
9		The dollar ranges of Total Annual Income identified in each
10		category, as well as the value of the credit for that category,
11		shall increase in each tax year beginning after December 31,
12		2005 by an amount equal to the applicable Total Annual Income
13		category or credit amount, as the case may be, increased by the
14		percentage increase, if any, in the CPI for the immediately
15		preceding tax year. The Department of Revenue shall update the
16		Total Annual Income category and credit amounts for the Family
17		Tax Credit annually and distribute the updated table with the
18		Illinois personal income tax returns.
19		(c) If the amount of the Family Tax Credit exceeds the
20		income tax liability of an eligible taxpayer, the State shall
21		refund to the taxpayer the difference between the Family Tax
22		Credit and the taxpayer's income tax liability.
23		(d) This Section is exempt from the provisions of Section
24		250 of this Act.

25		Section 15. The Use Tax Act is amended by changing Section
26		2 as follows:
27		(35 ILCS 105/2) (from Ch. 120, par. 439.2)
28		Sec. 2. "Use" means the exercise by any person of any right
29		or power over tangible personal property incident to the
30		ownership of that property, except that it does not include the

1		sale of such property in any form as tangible personal property
2		in the regular course of business to the extent that such
3		property is not first subjected to a use for which it was
4		purchased, and does not include the use of such property by its
5		owner for demonstration purposes: Provided that the property
6		purchased is deemed to be purchased for the purpose of resale,
7		despite first being used, to the extent to which it is resold
8		as an ingredient of an intentionally produced product or
9		by-product of manufacturing. "Use" does not mean the
10		demonstration use or interim use of tangible personal property
11		by a retailer before he sells that tangible personal property.
12		For watercraft or aircraft, if the period of demonstration use
13		or interim use by the retailer exceeds 18 months, the retailer
14		shall pay on the retailers' original cost price the tax imposed
15		by this Act, and no credit for that tax is permitted if the
16		watercraft or aircraft is subsequently sold by the retailer.
17		"Use" does not mean the physical incorporation of tangible
18		personal property, to the extent not first subjected to a use
19		for which it was purchased, as an ingredient or constituent,
20		into other tangible personal property (a) which is sold in the
21		regular course of business or (b) which the person
22		incorporating such ingredient or constituent therein has
23		undertaken at the time of such purchase to cause to be
24		transported in interstate commerce to destinations outside the
25		State of Illinois: Provided that the property purchased is
26		deemed to be purchased for the purpose of resale, despite first
27		being used, to the extent to which it is resold as an
28		ingredient of an intentionally produced product or by-product
29		of manufacturing.
30		"Watercraft" means a Class 2, Class 3, or Class 4
31		watercraft as defined in Section 3-2 of the Boat Registration
32		and Safety Act, a personal watercraft, or any boat equipped
33		with an inboard motor.
34		"Purchase at retail" means the acquisition of the ownership

1		of or title to tangible personal property through a sale at
2		retail.
3		"Purchaser" means anyone who, through a sale at retail,
4		acquires the ownership of tangible personal property for a
5		valuable consideration.
6		"Sale at retail" means any transfer of the ownership of or
7		title to tangible personal property to a purchaser, for the
8		purpose of use, and not for the purpose of resale in any form
9		as tangible personal property to the extent not first subjected
10		to a use for which it was purchased, for a valuable
11		consideration: Provided that the property purchased is deemed
12		to be purchased for the purpose of resale, despite first being
13		used, to the extent to which it is resold as an ingredient of
14		an intentionally produced product or by-product of
15		manufacturing. For this purpose, slag produced as an incident
16		to manufacturing pig iron or steel and sold is considered to be
17		an intentionally produced by-product of manufacturing. "Sale
18		at retail" includes any such transfer made for resale unless
19		made in compliance with Section 2c of the Retailers' Occupation
20		Tax Act, as incorporated by reference into Section 12 of this
21		Act. Transactions whereby the possession of the property is
22		transferred but the seller retains the title as security for
23		payment of the selling price are sales.
24		"Sale at retail" shall also be construed to include any
25		Illinois florist's sales transaction in which the purchase
26		order is received in Illinois by a florist and the sale is for
27		use or consumption, but the Illinois florist has a florist in
28		another state deliver the property to the purchaser or the
29		purchaser's donee in such other state.
30		Nonreusable tangible personal property that is used by
31		persons engaged in the business of operating a restaurant,
32		cafeteria, or drive-in is a sale for resale when it is
33		transferred to customers in the ordinary course of business as
34		part of the sale of food or beverages and is used to deliver,

1		package, or consume food or beverages, regardless of where
2		consumption of the food or beverages occurs. Examples of those
3		items include, but are not limited to nonreusable, paper and
4		plastic cups, plates, baskets, boxes, sleeves, buckets or other
5		containers, utensils, straws, placemats, napkins, doggie bags,
6		and wrapping or packaging materials that are transferred to
7		customers as part of the sale of food or beverages in the
8		ordinary course of business.
9		The purchase, employment and transfer of such tangible
10		personal property as newsprint and ink for the primary purpose
11		of conveying news (with or without other information) is not a
12		purchase, use or sale of tangible personal property.
13		"Selling price" means the consideration for a sale valued
14		in money whether received in money or otherwise, including
15		cash, credits, property other than as hereinafter provided, and
16		services, but not including the value of or credit given for
17		traded-in tangible personal property where the item that is
18		traded-in is of like kind and character as that which is being
19		sold, and shall be determined without any deduction on account
20		of the cost of the property sold, the cost of materials used,
21		labor or service cost or any other expense whatsoever, but does
22		not include interest or finance charges which appear as
23		separate items on the bill of sale or sales contract nor
24		charges that are added to prices by sellers on account of the
25		seller's tax liability under the "Retailers' Occupation Tax
26		Act", or on account of the seller's duty to collect, from the
27		purchaser, the tax that is imposed by this Act, or on account
28		of the seller's tax liability under Section 8-11-1 of the
29		Illinois Municipal Code, as heretofore and hereafter amended,
30		or on account of the seller's tax liability under the "County
31		Retailers' Occupation Tax Act". Effective December 1, 1985,
32		"selling price" shall include charges that are added to prices
33		by sellers on account of the seller's tax liability under the
34		Cigarette Tax Act, on account of the seller's duty to collect,

1		from the purchaser, the tax imposed under the Cigarette Use Tax
2		Act, and on account of the seller's duty to collect, from the
3		purchaser, any cigarette tax imposed by a home rule unit.
4		The phrase "like kind and character" shall be liberally
5		construed (including but not limited to any form of motor
6		vehicle for any form of motor vehicle, or any kind of farm or
7		agricultural implement for any other kind of farm or
8		agricultural implement), while not including a kind of item
9		which, if sold at retail by that retailer, would be exempt from
10		retailers' occupation tax and use tax as an isolated or
11		occasional sale.
12		"Department" means the Department of Revenue.
13		"Person" means any natural individual, firm, partnership,
14		association, joint stock company, joint adventure, public or
15		private corporation, limited liability company, or a receiver,
16		executor, trustee, guardian or other representative appointed
17		by order of any court.
18		"Retailer" means and includes every person engaged in the
19		business of making sales at retail as defined in this Section.
20		A person who holds himself or herself out as being engaged
21		(or who habitually engages) in selling tangible personal
22		property at retail is a retailer hereunder with respect to such
23		sales (and not primarily in a service occupation)
24		notwithstanding the fact that such person designs and produces
25		such tangible personal property on special order for the
26		purchaser and in such a way as to render the property of value
27		only to such purchaser, if such tangible personal property so
28		produced on special order serves substantially the same
29		function as stock or standard items of tangible personal
30		property that are sold at retail.
31		A person whose activities are organized and conducted
32		primarily as a not-for-profit service enterprise, and who
33		engages in selling tangible personal property at retail
34		(whether to the public or merely to members and their guests)

1		is a retailer with respect to such transactions, excepting only
2		a person organized and operated exclusively for charitable,
3		religious or educational purposes either (1), to the extent of
4		sales by such person to its members, students, patients or
5		inmates of tangible personal property to be used primarily for
6		the purposes of such person, or (2), to the extent of sales by
7		such person of tangible personal property which is not sold or
8		offered for sale by persons organized for profit. The selling
9		of school books and school supplies by schools at retail to
10		students is not "primarily for the purposes of" the school
11		which does such selling. This paragraph does not apply to nor
12		subject to taxation occasional dinners, social or similar
13		activities of a person organized and operated exclusively for
14		charitable, religious or educational purposes, whether or not
15		such activities are open to the public.
16		A person who is the recipient of a grant or contract under
17		Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
18		serves meals to participants in the federal Nutrition Program
19		for the Elderly in return for contributions established in
20		amount by the individual participant pursuant to a schedule of
21		suggested fees as provided for in the federal Act is not a
22		retailer under this Act with respect to such transactions.
23		Persons who engage in the business of transferring tangible
24		personal property upon the redemption of trading stamps are
25		retailers hereunder when engaged in such business.
26		The isolated or occasional sale of tangible personal
27		property at retail by a person who does not hold himself out as
28		being engaged (or who does not habitually engage) in selling
29		such tangible personal property at retail or a sale through a
30		bulk vending machine does not make such person a retailer
31		hereunder. However, any person who is engaged in a business
32		which is not subject to the tax imposed by the "Retailers'
33		Occupation Tax Act" because of involving the sale of or a
34		contract to sell real estate or a construction contract to

1		improve real estate, but who, in the course of conducting such
2		business, transfers tangible personal property to users or
3		consumers in the finished form in which it was purchased, and
4		which does not become real estate, under any provision of a
5		construction contract or real estate sale or real estate sales
6		agreement entered into with some other person arising out of or
7		because of such nontaxable business, is a retailer to the
8		extent of the value of the tangible personal property so
9		transferred. If, in such transaction, a separate charge is made
10		for the tangible personal property so transferred, the value of
11		such property, for the purposes of this Act, is the amount so
12		separately charged, but not less than the cost of such property
13		to the transferor; if no separate charge is made, the value of
14		such property, for the purposes of this Act, is the cost to the
15		transferor of such tangible personal property.
16		"Retailer maintaining a place of business in this State",
17		or any like term, means and includes any of the following
18		retailers:
19		1. A retailer having or maintaining within this State,
20		directly or by a subsidiary, an office, distribution house,
21		sales house, warehouse or other place of business, or any
22		agent or other representative operating within this State
23		under the authority of the retailer or its subsidiary,
24		irrespective of whether such place of business or agent or
25		other representative is located here permanently or
26		temporarily, or whether such retailer or subsidiary is
27		licensed to do business in this State. However, the
28		ownership of property that is located at the premises of a
29		printer with which the retailer has contracted for printing
30		and that consists of the final printed product, property
31		that becomes a part of the final printed product, or copy
32		from which the printed product is produced shall not result
33		in the retailer being deemed to have or maintain an office,
34		distribution house, sales house, warehouse, or other place

1		of business within this State.
2		2. A retailer soliciting orders for tangible personal
3		property by means of a telecommunication or television
4		shopping system (which utilizes toll free numbers) which is
5		intended by the retailer to be broadcast by cable
6		television or other means of broadcasting, to consumers
7		located in this State.
8		3. A retailer, pursuant to a contract with a
9		broadcaster or publisher located in this State, soliciting
10		orders for tangible personal property by means of
11		advertising which is disseminated primarily to consumers
12		located in this State and only secondarily to bordering
13		jurisdictions.
14		4. A retailer soliciting orders for tangible personal
15		property by mail if the solicitations are substantial and
16		recurring and if the retailer benefits from any banking,
17		financing, debt collection, telecommunication, or
18		marketing activities occurring in this State or benefits
19		from the location in this State of authorized installation,
20		servicing, or repair facilities.
21		5. A retailer that is owned or controlled by the same
22		interests that own or control any retailer engaging in
23		business in the same or similar line of business in this
24		State.
25		6. A retailer having a franchisee or licensee operating
26		under its trade name if the franchisee or licensee is
27		required to collect the tax under this Section.
28		7. A retailer, pursuant to a contract with a cable
29		television operator located in this State, soliciting
30		orders for tangible personal property by means of
31		advertising which is transmitted or distributed over a
32		cable television system in this State.
33		8. A retailer engaging in activities in Illinois, which
34		activities in the state in which the retail business

1		engaging in such activities is located would constitute
2		maintaining a place of business in that state.
3		"Bulk vending machine" means a vending machine, containing
4		unsorted confections, nuts, toys, or other items designed
5		primarily to be used or played with by children which, when a
6		coin or coins of a denomination not larger than $0.50 are
7		inserted, are dispensed in equal portions, at random and
8		without selection by the customer.
9		(Source: P.A. 92-213, eff. 1-1-02.)

10		(35 ILCS 105/3-50 rep.) (from Ch. 120, par. 439.3-50)
11		Section 17. The Use Tax Act is amended by repealing Section
12		3-50.

13		Section 20. The Service Use Tax Act is amended by changing
14		Section 2 as follows:
15		(35 ILCS 110/2) (from Ch. 120, par. 439.32)
16		Sec. 2. "Use" means the exercise by any person of any right
17		or power over tangible personal property incident to the
18		ownership of that property, but does not include the sale or
19		use for demonstration by him of that property in any form as
20		tangible personal property in the regular course of business.
21		"Use" does not mean the interim use of tangible personal
22		property nor the physical incorporation of tangible personal
23		property, as an ingredient or constituent, into other tangible
24		personal property, (a) which is sold in the regular course of
25		business or (b) which the person incorporating such ingredient
26		or constituent therein has undertaken at the time of such
27		purchase to cause to be transported in interstate commerce to
28		destinations outside the State of Illinois.
29		"Purchased from a serviceman" means the acquisition of the
30		ownership of, or title to, tangible personal property through a
31		sale of service.

1		"Purchaser" means any person who, through a sale of
2		service, acquires the ownership of, or title to, any tangible
3		personal property.
4		"Cost price" means the consideration paid by the serviceman
5		for a purchase valued in money, whether paid in money or
6		otherwise, including cash, credits and services, and shall be
7		determined without any deduction on account of the supplier's
8		cost of the property sold or on account of any other expense
9		incurred by the supplier. When a serviceman contracts out part
10		or all of the services required in his sale of service, it
11		shall be presumed that the cost price to the serviceman of the
12		property transferred to him or her by his or her subcontractor
13		is equal to 50% of the subcontractor's charges to the
14		serviceman in the absence of proof of the consideration paid by
15		the subcontractor for the purchase of such property.
16		"Selling price" means the consideration for a sale valued
17		in money whether received in money or otherwise, including
18		cash, credits and service, and shall be determined without any
19		deduction on account of the serviceman's cost of the property
20		sold, the cost of materials used, labor or service cost or any
21		other expense whatsoever, but does not include interest or
22		finance charges which appear as separate items on the bill of
23		sale or sales contract nor charges that are added to prices by
24		sellers on account of the seller's duty to collect, from the
25		purchaser, the tax that is imposed by this Act.
26		"Department" means the Department of Revenue.
27		"Person" means any natural individual, firm, partnership,
28		association, joint stock company, joint venture, public or
29		private corporation, limited liability company, and any
30		receiver, executor, trustee, guardian or other representative
31		appointed by order of any court.
32		"Sale of service" means any transaction except:
33		(1) a retail sale of tangible personal property taxable
34		under the Retailers' Occupation Tax Act or under the Use

1		Tax Act.
2		(2) a sale of tangible personal property for the
3		purpose of resale made in compliance with Section 2c of the
4		Retailers' Occupation Tax Act.
5		(3) except as hereinafter provided, a sale or transfer
6		of tangible personal property as an incident to the
7		rendering of service for or by any governmental body, or
8		for or by any corporation, society, association,
9		foundation or institution organized and operated
10		exclusively for charitable, religious or educational
11		purposes or any not-for-profit corporation, society,
12		association, foundation, institution or organization which
13		has no compensated officers or employees and which is
14		organized and operated primarily for the recreation of
15		persons 55 years of age or older. A limited liability
16		company may qualify for the exemption under this paragraph
17		only if the limited liability company is organized and
18		operated exclusively for educational purposes.
19		(4) a sale or transfer of tangible personal property as
20		an incident to the rendering of service for interstate
21		carriers for hire for use as rolling stock moving in
22		interstate commerce or by lessors under a lease of one year
23		or longer, executed or in effect at the time of purchase of
24		personal property, to interstate carriers for hire for use
25		as rolling stock moving in interstate commerce so long as
26		so used by such interstate carriers for hire, and equipment
27		operated by a telecommunications provider, licensed as a
28		common carrier by the Federal Communications Commission,
29		which is permanently installed in or affixed to aircraft
30		moving in interstate commerce.
31		(4a) a sale or transfer of tangible personal property
32		as an incident to the rendering of service for owners,
33		lessors, or shippers of tangible personal property which is
34		utilized by interstate carriers for hire for use as rolling

1		stock moving in interstate commerce so long as so used by
2		interstate carriers for hire, and equipment operated by a
3		telecommunications provider, licensed as a common carrier
4		by the Federal Communications Commission, which is
5		permanently installed in or affixed to aircraft moving in
6		interstate commerce.
7		(4a-5) on and after July 1, 2003, a sale or transfer of
8		a motor vehicle of the second division with a gross vehicle
9		weight in excess of 8,000 pounds as an incident to the
10		rendering of service if that motor vehicle is subject to
11		the commercial distribution fee imposed under Section
12		3-815.1 of the Illinois Vehicle Code. This exemption
13		applies to repair and replacement parts added after the
14		initial purchase of such a motor vehicle if that motor
15		vehicle is used in a manner that would qualify for the
16		rolling stock exemption otherwise provided for in this Act.
17		(5) a sale or transfer of machinery and equipment used
18		primarily in the process of the manufacturing or
19		assembling, either in an existing, an expanded or a new
20		manufacturing facility, of tangible personal property for
21		wholesale or retail sale or lease, whether such sale or
22		lease is made directly by the manufacturer or by some other
23		person, whether the materials used in the process are owned
24		by the manufacturer or some other person, or whether such
25		sale or lease is made apart from or as an incident to the
26		seller's engaging in a service occupation and the
27		applicable tax is a Service Use Tax or Service Occupation
28		Tax, rather than Use Tax or Retailers' Occupation Tax.
29		(5a) the repairing, reconditioning or remodeling, for
30		a common carrier by rail, of tangible personal property
31		which belongs to such carrier for hire, and as to which
32		such carrier receives the physical possession of the
33		repaired, reconditioned or remodeled item of tangible
34		personal property in Illinois, and which such carrier

1		transports, or shares with another common carrier in the
2		transportation of such property, out of Illinois on a
3		standard uniform bill of lading showing the person who
4		repaired, reconditioned or remodeled the property to a
5		destination outside Illinois, for use outside Illinois.
6		(5b) a sale or transfer of tangible personal property
7		which is produced by the seller thereof on special order in
8		such a way as to have made the applicable tax the Service
9		Occupation Tax or the Service Use Tax, rather than the
10		Retailers' Occupation Tax or the Use Tax, for an interstate
11		carrier by rail which receives the physical possession of
12		such property in Illinois, and which transports such
13		property, or shares with another common carrier in the
14		transportation of such property, out of Illinois on a
15		standard uniform bill of lading showing the seller of the
16		property as the shipper or consignor of such property to a
17		destination outside Illinois, for use outside Illinois.
18		(6) until July 1, 2003, a sale or transfer of
19		distillation machinery and equipment, sold as a unit or kit
20		and assembled or installed by the retailer, which machinery
21		and equipment is certified by the user to be used only for
22		the production of ethyl alcohol that will be used for
23		consumption as motor fuel or as a component of motor fuel
24		for the personal use of such user and not subject to sale
25		or resale.
26		(7) at the election of any serviceman not required to
27		be otherwise registered as a retailer under Section 2a of
28		the Retailers' Occupation Tax Act, made for each fiscal
29		year sales of service in which the aggregate annual cost
30		price of tangible personal property transferred as an
31		incident to the sales of service is less than 35%, or 75%
32		in the case of servicemen transferring prescription drugs
33		or servicemen engaged in graphic arts production, of the
34		aggregate annual total gross receipts from all sales of

1		service. The purchase of such tangible personal property by
2		the serviceman shall be subject to tax under the Retailers'
3		Occupation Tax Act and the Use Tax Act. However, if a
4		primary serviceman who has made the election described in
5		this paragraph subcontracts service work to a secondary
6		serviceman who has also made the election described in this
7		paragraph, the primary serviceman does not incur a Use Tax
8		liability if the secondary serviceman (i) has paid or will
9		pay Use Tax on his or her cost price of any tangible
10		personal property transferred to the primary serviceman
11		and (ii) certifies that fact in writing to the primary
12		serviceman.
13		Tangible personal property transferred incident to the
14		completion of a maintenance agreement is exempt from the tax
15		imposed pursuant to this Act.
16		Exemption (5) also includes machinery and equipment used in
17		the general maintenance or repair of such exempt machinery and
18		equipment or for in-house manufacture of exempt machinery and
19		equipment. For the purposes of exemption (5), each of these
20		terms shall have the following meanings: (1) "manufacturing
21		process" shall mean the production of any article of tangible
22		personal property, whether such article is a finished product
23		or an article for use in the process of manufacturing or
24		assembling a different article of tangible personal property,
25		by procedures commonly regarded as manufacturing, processing,
26		fabricating, or refining which changes some existing material
27		or materials into a material with a different form, use or
28		name. In relation to a recognized integrated business composed
29		of a series of operations which collectively constitute
30		manufacturing, or individually constitute manufacturing
31		operations, the manufacturing process shall be deemed to
32		commence with the first operation or stage of production in the
33		series, and shall not be deemed to end until the completion of
34		the final product in the last operation or stage of production

1		in the series; and further, for purposes of exemption (5),
2		photoprocessing is deemed to be a manufacturing process of
3		tangible personal property for wholesale or retail sale; (2)
4		"assembling process" shall mean the production of any article
5		of tangible personal property, whether such article is a
6		finished product or an article for use in the process of
7		manufacturing or assembling a different article of tangible
8		personal property, by the combination of existing materials in
9		a manner commonly regarded as assembling which results in a
10		material of a different form, use or name; (3) "machinery"
11		shall mean major mechanical machines or major components of
12		such machines contributing to a manufacturing or assembling
13		process; and (4) "equipment" shall include any independent
14		device or tool separate from any machinery but essential to an
15		integrated manufacturing or assembly process; including
16		computers used primarily in a manufacturer's computer assisted
17		design, computer assisted manufacturing (CAD/CAM) system; or
18		any subunit or assembly comprising a component of any machinery
19		or auxiliary, adjunct or attachment parts of machinery, such as
20		tools, dies, jigs, fixtures, patterns and molds; or any parts
21		which require periodic replacement in the course of normal
22		operation; but shall not include hand tools. Equipment includes
23		chemicals or chemicals acting as catalysts but only if the
24		chemicals or chemicals acting as catalysts effect a direct and
25		immediate change upon a product being manufactured or assembled
26		for wholesale or retail sale or lease. The purchaser of such
27		machinery and equipment who has an active resale registration
28		number shall furnish such number to the seller at the time of
29		purchase. The user of such machinery and equipment and tools
30		without an active resale registration number shall prepare a
31		certificate of exemption for each transaction stating facts
32		establishing the exemption for that transaction, which
33		certificate shall be available to the Department for inspection
34		or audit. The Department shall prescribe the form of the

1		certificate.
2		Any informal rulings, opinions or letters issued by the
3		Department in response to an inquiry or request for any opinion
4		from any person regarding the coverage and applicability of
5		exemption (5) to specific devices shall be published,
6		maintained as a public record, and made available for public
7		inspection and copying. If the informal ruling, opinion or
8		letter contains trade secrets or other confidential
9		information, where possible the Department shall delete such
10		information prior to publication. Whenever such informal
11		rulings, opinions, or letters contain any policy of general
12		applicability, the Department shall formulate and adopt such
13		policy as a rule in accordance with the provisions of the
14		Illinois Administrative Procedure Act.
15		On and after July 1, 1987, no entity otherwise eligible
16		under exemption (3) of this Section shall make tax free
17		purchases unless it has an active exemption identification
18		number issued by the Department.
19		The purchase, employment and transfer of such tangible
20		personal property as newsprint and ink for the primary purpose
21		of conveying news (with or without other information) is not a
22		purchase, use or sale of service or of tangible personal
23		property within the meaning of this Act.
24		"Serviceman" means any person who is engaged in the
25		occupation of making sales of service.
26		"Sale at retail" means "sale at retail" as defined in the
27		Retailers' Occupation Tax Act.
28		"Supplier" means any person who makes sales of tangible
29		personal property to servicemen for the purpose of resale as an
30		incident to a sale of service.
31		"Serviceman maintaining a place of business in this State",
32		or any like term, means and includes any serviceman:
33		1. having or maintaining within this State, directly or
34		by a subsidiary, an office, distribution house, sales

1		house, warehouse or other place of business, or any agent
2		or other representative operating within this State under
3		the authority of the serviceman or its subsidiary,
4		irrespective of whether such place of business or agent or
5		other representative is located here permanently or
6		temporarily, or whether such serviceman or subsidiary is
7		licensed to do business in this State;
8		2. soliciting orders for tangible personal property by
9		means of a telecommunication or television shopping system
10		(which utilizes toll free numbers) which is intended by the
11		retailer to be broadcast by cable television or other means
12		of broadcasting, to consumers located in this State;
13		3. pursuant to a contract with a broadcaster or
14		publisher located in this State, soliciting orders for
15		tangible personal property by means of advertising which is
16		disseminated primarily to consumers located in this State
17		and only secondarily to bordering jurisdictions;
18		4. soliciting orders for tangible personal property by
19		mail if the solicitations are substantial and recurring and
20		if the retailer benefits from any banking, financing, debt
21		collection, telecommunication, or marketing activities
22		occurring in this State or benefits from the location in
23		this State of authorized installation, servicing, or
24		repair facilities;
25		5. being owned or controlled by the same interests
26		which own or control any retailer engaging in business in
27		the same or similar line of business in this State;
28		6. having a franchisee or licensee operating under its
29		trade name if the franchisee or licensee is required to
30		collect the tax under this Section;
31		7. pursuant to a contract with a cable television
32		operator located in this State, soliciting orders for
33		tangible personal property by means of advertising which is
34		transmitted or distributed over a cable television system

1		in this State; or
2		8. engaging in activities in Illinois, which
3		activities in the state in which the supply business
4		engaging in such activities is located would constitute
5		maintaining a place of business in that state.
6		(Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24,
7		eff. 6-20-03; revised 8-21-03.)

8		Section 25. The Service Occupation Tax Act is amended by
9		changing Section 2 as follows:
10		(35 ILCS 115/2) (from Ch. 120, par. 439.102)
11		Sec. 2. "Transfer" means any transfer of the title to
12		property or of the ownership of property whether or not the
13		transferor retains title as security for the payment of amounts
14		due him from the transferee.
15		"Cost Price" means the consideration paid by the serviceman
16		for a purchase valued in money, whether paid in money or
17		otherwise, including cash, credits and services, and shall be
18		determined without any deduction on account of the supplier's
19		cost of the property sold or on account of any other expense
20		incurred by the supplier. When a serviceman contracts out part
21		or all of the services required in his sale of service, it
22		shall be presumed that the cost price to the serviceman of the
23		property transferred to him by his or her subcontractor is
24		equal to 50% of the subcontractor's charges to the serviceman
25		in the absence of proof of the consideration paid by the
26		subcontractor for the purchase of such property.
27		"Department" means the Department of Revenue.
28		"Person" means any natural individual, firm, partnership,
29		association, joint stock company, joint venture, public or
30		private corporation, limited liability company, and any
31		receiver, executor, trustee, guardian or other representative
32		appointed by order of any court.

1		"Sale of Service" means any transaction except:
2		(a) A retail sale of tangible personal property taxable
3		under the Retailers' Occupation Tax Act or under the Use Tax
4		Act.
5		(b) A sale of tangible personal property for the purpose of
6		resale made in compliance with Section 2c of the Retailers'
7		Occupation Tax Act.
8		(c) Except as hereinafter provided, a sale or transfer of
9		tangible personal property as an incident to the rendering of
10		service for or by any governmental body or for or by any
11		corporation, society, association, foundation or institution
12		organized and operated exclusively for charitable, religious
13		or educational purposes or any not-for-profit corporation,
14		society, association, foundation, institution or organization
15		which has no compensated officers or employees and which is
16		organized and operated primarily for the recreation of persons
17		55 years of age or older. A limited liability company may
18		qualify for the exemption under this paragraph only if the
19		limited liability company is organized and operated
20		exclusively for educational purposes.
21		(d) A sale or transfer of tangible personal property as an
22		incident to the rendering of service for interstate carriers
23		for hire for use as rolling stock moving in interstate commerce
24		or lessors under leases of one year or longer, executed or in
25		effect at the time of purchase, to interstate carriers for hire
26		for use as rolling stock moving in interstate commerce, and
27		equipment operated by a telecommunications provider, licensed
28		as a common carrier by the Federal Communications Commission,
29		which is permanently installed in or affixed to aircraft moving
30		in interstate commerce.
31		(d-1) A sale or transfer of tangible personal property as
32		an incident to the rendering of service for owners, lessors or
33		shippers of tangible personal property which is utilized by
34		interstate carriers for hire for use as rolling stock moving in

1		interstate commerce, and equipment operated by a
2		telecommunications provider, licensed as a common carrier by
3		the Federal Communications Commission, which is permanently
4		installed in or affixed to aircraft moving in interstate
5		commerce.
6		(d-1.1) On and after July 1, 2003, a sale or transfer of a
7		motor vehicle of the second division with a gross vehicle
8		weight in excess of 8,000 pounds as an incident to the
9		rendering of service if that motor vehicle is subject to the
10		commercial distribution fee imposed under Section 3-815.1 of
11		the Illinois Vehicle Code. This exemption applies to repair and
12		replacement parts added after the initial purchase of such a
13		motor vehicle if that motor vehicle is used in a manner that
14		would qualify for the rolling stock exemption otherwise
15		provided for in this Act.
16		(d-2) The repairing, reconditioning or remodeling, for a
17		common carrier by rail, of tangible personal property which
18		belongs to such carrier for hire, and as to which such carrier
19		receives the physical possession of the repaired,
20		reconditioned or remodeled item of tangible personal property
21		in Illinois, and which such carrier transports, or shares with
22		another common carrier in the transportation of such property,
23		out of Illinois on a standard uniform bill of lading showing
24		the person who repaired, reconditioned or remodeled the
25		property as the shipper or consignor of such property to a
26		destination outside Illinois, for use outside Illinois.
27		(d-3) A sale or transfer of tangible personal property
28		which is produced by the seller thereof on special order in
29		such a way as to have made the applicable tax the Service
30		Occupation Tax or the Service Use Tax, rather than the
31		Retailers' Occupation Tax or the Use Tax, for an interstate
32		carrier by rail which receives the physical possession of such
33		property in Illinois, and which transports such property, or
34		shares with another common carrier in the transportation of

1		such property, out of Illinois on a standard uniform bill of
2		lading showing the seller of the property as the shipper or
3		consignor of such property to a destination outside Illinois,
4		for use outside Illinois.
5		(d-4) Until January 1, 1997, a sale, by a registered
6		serviceman paying tax under this Act to the Department, of
7		special order printed materials delivered outside Illinois and
8		which are not returned to this State, if delivery is made by
9		the seller or agent of the seller, including an agent who
10		causes the product to be delivered outside Illinois by a common
11		carrier or the U.S. postal service.
12		(e) A sale or transfer of machinery and equipment used
13		primarily in the process of the manufacturing or assembling,
14		either in an existing, an expanded or a new manufacturing
15		facility, of tangible personal property for wholesale or retail
16		sale or lease, whether such sale or lease is made directly by
17		the manufacturer or by some other person, whether the materials
18		used in the process are owned by the manufacturer or some other
19		person, or whether such sale or lease is made apart from or as
20		an incident to the seller's engaging in a service occupation
21		and the applicable tax is a Service Occupation Tax or Service
22		Use Tax, rather than Retailers' Occupation Tax or Use Tax.
23		(f) Until July 1, 2003, the sale or transfer of
24		distillation machinery and equipment, sold as a unit or kit and
25		assembled or installed by the retailer, which machinery and
26		equipment is certified by the user to be used only for the
27		production of ethyl alcohol that will be used for consumption
28		as motor fuel or as a component of motor fuel for the personal
29		use of such user and not subject to sale or resale.
30		(g) At the election of any serviceman not required to be
31		otherwise registered as a retailer under Section 2a of the
32		Retailers' Occupation Tax Act, made for each fiscal year sales
33		of service in which the aggregate annual cost price of tangible
34		personal property transferred as an incident to the sales of

1		service is less than 35% (75% in the case of servicemen
2		transferring prescription drugs or servicemen engaged in
3		graphic arts production) of the aggregate annual total gross
4		receipts from all sales of service. The purchase of such
5		tangible personal property by the serviceman shall be subject
6		to tax under the Retailers' Occupation Tax Act and the Use Tax
7		Act. However, if a primary serviceman who has made the election
8		described in this paragraph subcontracts service work to a
9		secondary serviceman who has also made the election described
10		in this paragraph, the primary serviceman does not incur a Use
11		Tax liability if the secondary serviceman (i) has paid or will
12		pay Use Tax on his or her cost price of any tangible personal
13		property transferred to the primary serviceman and (ii)
14		certifies that fact in writing to the primary serviceman.
15		Tangible personal property transferred incident to the
16		completion of a maintenance agreement is exempt from the tax
17		imposed pursuant to this Act.
18		Exemption (e) also includes machinery and equipment used in
19		the general maintenance or repair of such exempt machinery and
20		equipment or for in-house manufacture of exempt machinery and
21		equipment. For the purposes of exemption (e), each of these
22		terms shall have the following meanings: (1) "manufacturing
23		process" shall mean the production of any article of tangible
24		personal property, whether such article is a finished product
25		or an article for use in the process of manufacturing or
26		assembling a different article of tangible personal property,
27		by procedures commonly regarded as manufacturing, processing,
28		fabricating, or refining which changes some existing material
29		or materials into a material with a different form, use or
30		name. In relation to a recognized integrated business composed
31		of a series of operations which collectively constitute
32		manufacturing, or individually constitute manufacturing
33		operations, the manufacturing process shall be deemed to
34		commence with the first operation or stage of production in the

1		series, and shall not be deemed to end until the completion of
2		the final product in the last operation or stage of production
3		in the series; and further for purposes of exemption (e),
4		photoprocessing is deemed to be a manufacturing process of
5		tangible personal property for wholesale or retail sale; (2)
6		"assembling process" shall mean the production of any article
7		of tangible personal property, whether such article is a
8		finished product or an article for use in the process of
9		manufacturing or assembling a different article of tangible
10		personal property, by the combination of existing materials in
11		a manner commonly regarded as assembling which results in a
12		material of a different form, use or name; (3) "machinery"
13		shall mean major mechanical machines or major components of
14		such machines contributing to a manufacturing or assembling
15		process; and (4) "equipment" shall include any independent
16		device or tool separate from any machinery but essential to an
17		integrated manufacturing or assembly process; including
18		computers used primarily in a manufacturer's computer assisted
19		design, computer assisted manufacturing (CAD/CAM) system; or
20		any subunit or assembly comprising a component of any machinery
21		or auxiliary, adjunct or attachment parts of machinery, such as
22		tools, dies, jigs, fixtures, patterns and molds; or any parts
23		which require periodic replacement in the course of normal
24		operation; but shall not include hand tools. Equipment includes
25		chemicals or chemicals acting as catalysts but only if the
26		chemicals or chemicals acting as catalysts effect a direct and
27		immediate change upon a product being manufactured or assembled
28		for wholesale or retail sale or lease. The purchaser of such
29		machinery and equipment who has an active resale registration
30		number shall furnish such number to the seller at the time of
31		purchase. The purchaser of such machinery and equipment and
32		tools without an active resale registration number shall
33		furnish to the seller a certificate of exemption for each
34		transaction stating facts establishing the exemption for that

1		transaction, which certificate shall be available to the
2		Department for inspection or audit.
3		Except as provided in Section 2d of this Act, the rolling
4		stock exemption applies to rolling stock used by an interstate
5		carrier for hire, even just between points in Illinois, if such
6		rolling stock transports, for hire, persons whose journeys or
7		property whose shipments originate or terminate outside
8		Illinois.
9		Any informal rulings, opinions or letters issued by the
10		Department in response to an inquiry or request for any opinion
11		from any person regarding the coverage and applicability of
12		exemption (e) to specific devices shall be published,
13		maintained as a public record, and made available for public
14		inspection and copying. If the informal ruling, opinion or
15		letter contains trade secrets or other confidential
16		information, where possible the Department shall delete such
17		information prior to publication. Whenever such informal
18		rulings, opinions, or letters contain any policy of general
19		applicability, the Department shall formulate and adopt such
20		policy as a rule in accordance with the provisions of the
21		Illinois Administrative Procedure Act.
22		On and after July 1, 1987, no entity otherwise eligible
23		under exemption (c) of this Section shall make tax free
24		purchases unless it has an active exemption identification
25		number issued by the Department.
26		"Serviceman" means any person who is engaged in the
27		occupation of making sales of service.
28		"Sale at Retail" means "sale at retail" as defined in the
29		Retailers' Occupation Tax Act.
30		"Supplier" means any person who makes sales of tangible
31		personal property to servicemen for the purpose of resale as an
32		incident to a sale of service.
33		(Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24,
34		eff. 6-20-03; revised 8-21-03.)

1		Section 30. The Retailers' Occupation Tax Act is amended by
2		changing Sections 1 and 2-5 as follows:
3		(35 ILCS 120/1) (from Ch. 120, par. 440)
4		Sec. 1. Definitions. "Sale at retail" means any transfer of
5		the ownership of or title to tangible personal property to a
6		purchaser, for the purpose of use or consumption, and not for
7		the purpose of resale in any form as tangible personal property
8		to the extent not first subjected to a use for which it was
9		purchased, for a valuable consideration: Provided that the
10		property purchased is deemed to be purchased for the purpose of
11		resale, despite first being used, to the extent to which it is
12		resold as an ingredient of an intentionally produced product or
13		byproduct of manufacturing. For this purpose, slag produced as
14		an incident to manufacturing pig iron or steel and sold is
15		considered to be an intentionally produced byproduct of
16		manufacturing. Transactions whereby the possession of the
17		property is transferred but the seller retains the title as
18		security for payment of the selling price shall be deemed to be
19		sales.
20		"Sale at retail" shall be construed to include any transfer
21		of the ownership of or title to tangible personal property to a
22		purchaser, for use or consumption by any other person to whom
23		such purchaser may transfer the tangible personal property
24		without a valuable consideration, and to include any transfer,
25		whether made for or without a valuable consideration, for
26		resale in any form as tangible personal property unless made in
27		compliance with Section 2c of this Act.
28		Sales of tangible personal property, which property, to the
29		extent not first subjected to a use for which it was purchased,
30		as an ingredient or constituent, goes into and forms a part of
31		tangible personal property subsequently the subject of a "Sale
32		at retail", are not sales at retail as defined in this Act:

1		Provided that the property purchased is deemed to be purchased
2		for the purpose of resale, despite first being used, to the
3		extent to which it is resold as an ingredient of an
4		intentionally produced product or byproduct of manufacturing.
5		"Sale at retail" shall be construed to include the
6		following Arts, Entertainment, and Recreation services, as
7		enumerated in the North American Industry Classification
8		System Manual (NAICS), 2002, prepared by the United States
9		Office of Management and Budget:
10		(1) Arts, Entertainment, and Recreation (NAICS sector
11		71); and
12		(2) Other Services (NAICS sector 81), except
13		Electronic and Precision Equipment Repair and Maintenance
14		(NAICS 8112), Commercial and Industry Machinery and
15		Equipment (except Automotive and Electronic) Repair and
16		Maintenance (NAICS 8113), Linen and Uniform Supply (NAICS
17		81233).
18		"Sale at retail" shall be construed to include any Illinois
19		florist's sales transaction in which the purchase order is
20		received in Illinois by a florist and the sale is for use or
21		consumption, but the Illinois florist has a florist in another
22		state deliver the property to the purchaser or the purchaser's
23		donee in such other state.
24		Nonreusable tangible personal property that is used by
25		persons engaged in the business of operating a restaurant,
26		cafeteria, or drive-in is a sale for resale when it is
27		transferred to customers in the ordinary course of business as
28		part of the sale of food or beverages and is used to deliver,
29		package, or consume food or beverages, regardless of where
30		consumption of the food or beverages occurs. Examples of those
31		items include, but are not limited to nonreusable, paper and
32		plastic cups, plates, baskets, boxes, sleeves, buckets or other
33		containers, utensils, straws, placemats, napkins, doggie bags,
34		and wrapping or packaging materials that are transferred to

1		customers as part of the sale of food or beverages in the
2		ordinary course of business.
3		The purchase, employment and transfer of such tangible
4		personal property as newsprint and ink for the primary purpose
5		of conveying news (with or without other information) is not a
6		purchase, use or sale of tangible personal property.
7		A person whose activities are organized and conducted
8		primarily as a not-for-profit service enterprise, and who
9		engages in selling tangible personal property at retail
10		(whether to the public or merely to members and their guests)
11		is engaged in the business of selling tangible personal
12		property at retail with respect to such transactions, excepting
13		only a person organized and operated exclusively for
14		charitable, religious or educational purposes either (1), to
15		the extent of sales by such person to its members, students,
16		patients or inmates of tangible personal property to be used
17		primarily for the purposes of such person, or (2), to the
18		extent of sales by such person of tangible personal property
19		which is not sold or offered for sale by persons organized for
20		profit. The selling of school books and school supplies by
21		schools at retail to students is not "primarily for the
22		purposes of" the school which does such selling. The provisions
23		of this paragraph shall not apply to nor subject to taxation
24		occasional dinners, socials or similar activities of a person
25		organized and operated exclusively for charitable, religious
26		or educational purposes, whether or not such activities are
27		open to the public.
28		A person who is the recipient of a grant or contract under
29		Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
30		serves meals to participants in the federal Nutrition Program
31		for the Elderly in return for contributions established in
32		amount by the individual participant pursuant to a schedule of
33		suggested fees as provided for in the federal Act is not
34		engaged in the business of selling tangible personal property

1		at retail with respect to such transactions.
2		"Purchaser" means anyone who, through a sale at retail,
3		acquires the ownership of or title to tangible personal
4		property for a valuable consideration.
5		"Reseller of motor fuel" means any person engaged in the
6		business of selling or delivering or transferring title of
7		motor fuel to another person other than for use or consumption.
8		No person shall act as a reseller of motor fuel within this
9		State without first being registered as a reseller pursuant to
10		Section 2c or a retailer pursuant to Section 2a.
11		"Selling price" or the "amount of sale" means the
12		consideration for a sale valued in money whether received in
13		money or otherwise, including cash, credits, property, other
14		than as hereinafter provided, and services, but not including
15		the value of or credit given for traded-in tangible personal
16		property where the item that is traded-in is of like kind and
17		character as that which is being sold, and shall be determined
18		without any deduction on account of the cost of the property
19		sold, the cost of materials used, labor or service cost or any
20		other expense whatsoever, but does not include charges that are
21		added to prices by sellers on account of the seller's tax
22		liability under this Act, or on account of the seller's duty to
23		collect, from the purchaser, the tax that is imposed by the Use
24		Tax Act, or on account of the seller's tax liability under
25		Section 8-11-1 of the Illinois Municipal Code, as heretofore
26		and hereafter amended, or on account of the seller's tax
27		liability under the County Retailers' Occupation Tax Act, or on
28		account of the seller's tax liability under the Home Rule
29		Municipal Soft Drink Retailers' Occupation Tax, or on account
30		of the seller's tax liability under any tax imposed under the
31		"Regional Transportation Authority Act", approved December 12,
32		1973. Effective December 1, 1985, "selling price" shall include
33		charges that are added to prices by sellers on account of the
34		seller's tax liability under the Cigarette Tax Act, on account

1		of the sellers' duty to collect, from the purchaser, the tax
2		imposed under the Cigarette Use Tax Act, and on account of the
3		seller's duty to collect, from the purchaser, any cigarette tax
4		imposed by a home rule unit.
5		The phrase "like kind and character" shall be liberally
6		construed (including but not limited to any form of motor
7		vehicle for any form of motor vehicle, or any kind of farm or
8		agricultural implement for any other kind of farm or
9		agricultural implement), while not including a kind of item
10		which, if sold at retail by that retailer, would be exempt from
11		retailers' occupation tax and use tax as an isolated or
12		occasional sale.
13		"Gross receipts" from the sales of tangible personal
14		property at retail means the total selling price or the amount
15		of such sales, as hereinbefore defined. In the case of charge
16		and time sales, the amount thereof shall be included only as
17		and when payments are received by the seller. Receipts or other
18		consideration derived by a seller from the sale, transfer or
19		assignment of accounts receivable to a wholly owned subsidiary
20		will not be deemed payments prior to the time the purchaser
21		makes payment on such accounts.
22		"Department" means the Department of Revenue.
23		"Person" means any natural individual, firm, partnership,
24		association, joint stock company, joint adventure, public or
25		private corporation, limited liability company, or a receiver,
26		executor, trustee, guardian or other representative appointed
27		by order of any court.
28		The isolated or occasional sale of tangible personal
29		property at retail by a person who does not hold himself out as
30		being engaged (or who does not habitually engage) in selling
31		such tangible personal property at retail, or a sale through a
32		bulk vending machine, does not constitute engaging in a
33		business of selling such tangible personal property at retail
34		within the meaning of this Act; provided that any person who is

1		engaged in a business which is not subject to the tax imposed
2		by this Act because of involving the sale of or a contract to
3		sell real estate or a construction contract to improve real
4		estate or a construction contract to engineer, install, and
5		maintain an integrated system of products, but who, in the
6		course of conducting such business, transfers tangible
7		personal property to users or consumers in the finished form in
8		which it was purchased, and which does not become real estate
9		or was not engineered and installed, under any provision of a
10		construction contract or real estate sale or real estate sales
11		agreement entered into with some other person arising out of or
12		because of such nontaxable business, is engaged in the business
13		of selling tangible personal property at retail to the extent
14		of the value of the tangible personal property so transferred.
15		If, in such a transaction, a separate charge is made for the
16		tangible personal property so transferred, the value of such
17		property, for the purpose of this Act, shall be the amount so
18		separately charged, but not less than the cost of such property
19		to the transferor; if no separate charge is made, the value of
20		such property, for the purposes of this Act, is the cost to the
21		transferor of such tangible personal property. Construction
22		contracts for the improvement of real estate consisting of
23		engineering, installation, and maintenance of voice, data,
24		video, security, and all telecommunication systems do not
25		constitute engaging in a business of selling tangible personal
26		property at retail within the meaning of this Act if they are
27		sold at one specified contract price.
28		A person who holds himself or herself out as being engaged
29		(or who habitually engages) in selling tangible personal
30		property at retail is a person engaged in the business of
31		selling tangible personal property at retail hereunder with
32		respect to such sales (and not primarily in a service
33		occupation) notwithstanding the fact that such person designs
34		and produces such tangible personal property on special order

1		for the purchaser and in such a way as to render the property
2		of value only to such purchaser, if such tangible personal
3		property so produced on special order serves substantially the
4		same function as stock or standard items of tangible personal
5		property that are sold at retail.
6		Persons who engage in the business of transferring tangible
7		personal property upon the redemption of trading stamps are
8		engaged in the business of selling such property at retail and
9		shall be liable for and shall pay the tax imposed by this Act
10		on the basis of the retail value of the property transferred
11		upon redemption of such stamps.
12		"Bulk vending machine" means a vending machine, containing
13		unsorted confections, nuts, toys, or other items designed
14		primarily to be used or played with by children which, when a
15		coin or coins of a denomination not larger than $0.50 are
16		inserted, are dispensed in equal portions, at random and
17		without selection by the customer.
18		(Source: P.A. 92-213, eff. 1-1-02.)
19		(35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
20		Sec. 2-5. Exemptions. Gross receipts from proceeds from the
21		sale of the following tangible personal property are exempt
22		from the tax imposed by this Act:
23		(1) Farm chemicals.
24		(2) Farm machinery and equipment, both new and used,
25		including that manufactured on special order, certified by the
26		purchaser to be used primarily for production agriculture or
27		State or federal agricultural programs, including individual
28		replacement parts for the machinery and equipment, including
29		machinery and equipment purchased for lease, and including
30		implements of husbandry defined in Section 1-130 of the
31		Illinois Vehicle Code, farm machinery and agricultural
32		chemical and fertilizer spreaders, and nurse wagons required to
33		be registered under Section 3-809 of the Illinois Vehicle Code,

1		but excluding other motor vehicles required to be registered
2		under the Illinois Vehicle Code. Horticultural polyhouses or
3		hoop houses used for propagating, growing, or overwintering
4		plants shall be considered farm machinery and equipment under
5		this item (2). Agricultural chemical tender tanks and dry boxes
6		shall include units sold separately from a motor vehicle
7		required to be licensed and units sold mounted on a motor
8		vehicle required to be licensed, if the selling price of the
9		tender is separately stated.
10		Farm machinery and equipment shall include precision
11		farming equipment that is installed or purchased to be
12		installed on farm machinery and equipment including, but not
13		limited to, tractors, harvesters, sprayers, planters, seeders,
14		or spreaders. Precision farming equipment includes, but is not
15		limited to, soil testing sensors, computers, monitors,
16		software, global positioning and mapping systems, and other
17		such equipment.
18		Farm machinery and equipment also includes computers,
19		sensors, software, and related equipment used primarily in the
20		computer-assisted operation of production agriculture
21		facilities, equipment, and activities such as, but not limited
22		to, the collection, monitoring, and correlation of animal and
23		crop data for the purpose of formulating animal diets and
24		agricultural chemicals. This item (7) is exempt from the
25		provisions of Section 2-70.
26		(3) Until July 1, 2003, distillation machinery and
27		equipment, sold as a unit or kit, assembled or installed by the
28		retailer, certified by the user to be used only for the
29		production of ethyl alcohol that will be used for consumption
30		as motor fuel or as a component of motor fuel for the personal
31		use of the user, and not subject to sale or resale.
32		(4) Until July 1, 2003, graphic arts machinery and
33		equipment, including repair and replacement parts, both new and
34		used, and including that manufactured on special order or

1		purchased for lease, certified by the purchaser to be used
2		primarily for graphic arts production. Equipment includes
3		chemicals or chemicals acting as catalysts but only if the
4		chemicals or chemicals acting as catalysts effect a direct and
5		immediate change upon a graphic arts product.
6		(5) (Blank). A motor vehicle of the first division, a motor
7		vehicle of the second division that is a self-contained motor
8		vehicle designed or permanently converted to provide living
9		quarters for recreational, camping, or travel use, with direct
10		walk through access to the living quarters from the driver's
11		seat, or a motor vehicle of the second division that is of the
12		van configuration designed for the transportation of not less
13		than 7 nor more than 16 passengers, as defined in Section 1-146
14		of the Illinois Vehicle Code, that is used for automobile
15		renting, as defined in the Automobile Renting Occupation and
16		Use Tax Act.
17		(6) Personal property sold by a teacher-sponsored student
18		organization affiliated with an elementary or secondary school
19		located in Illinois.
20		(7) Until July 1, 2003, proceeds of that portion of the
21		selling price of a passenger car the sale of which is subject
22		to the Replacement Vehicle Tax.
23		(8) Personal property sold to an Illinois county fair
24		association for use in conducting, operating, or promoting the
25		county fair.
26		(9) Personal property sold to a not-for-profit arts or
27		cultural organization that establishes, by proof required by
28		the Department by rule, that it has received an exemption under
29		Section 501(c)(3) of the Internal Revenue Code and that is
30		organized and operated primarily for the presentation or
31		support of arts or cultural programming, activities, or
32		services. These organizations include, but are not limited to,
33		music and dramatic arts organizations such as symphony
34		orchestras and theatrical groups, arts and cultural service

1		organizations, local arts councils, visual arts organizations,
2		and media arts organizations. On and after the effective date
3		of this amendatory Act of the 92nd General Assembly, however,
4		an entity otherwise eligible for this exemption shall not make
5		tax-free purchases unless it has an active identification
6		number issued by the Department.
7		(10) Personal property sold by a corporation, society,
8		association, foundation, institution, or organization, other
9		than a limited liability company, that is organized and
10		operated as a not-for-profit service enterprise for the benefit
11		of persons 65 years of age or older if the personal property
12		was not purchased by the enterprise for the purpose of resale
13		by the enterprise.
14		(11) Personal property sold to a governmental body, to a
15		corporation, society, association, foundation, or institution
16		organized and operated exclusively for charitable, religious,
17		or educational purposes, or to a not-for-profit corporation,
18		society, association, foundation, institution, or organization
19		that has no compensated officers or employees and that is
20		organized and operated primarily for the recreation of persons
21		55 years of age or older. A limited liability company may
22		qualify for the exemption under this paragraph only if the
23		limited liability company is organized and operated
24		exclusively for educational purposes. On and after July 1,
25		1987, however, no entity otherwise eligible for this exemption
26		shall make tax-free purchases unless it has an active
27		identification number issued by the Department.
28		(12) Tangible personal property sold to interstate
29		carriers for hire for use as rolling stock moving in interstate
30		commerce or to lessors under leases of one year or longer
31		executed or in effect at the time of purchase by interstate
32		carriers for hire for use as rolling stock moving in interstate
33		commerce and equipment operated by a telecommunications
34		provider, licensed as a common carrier by the Federal

1		Communications Commission, which is permanently installed in
2		or affixed to aircraft moving in interstate commerce.
3		(12-5) On and after July 1, 2003, motor vehicles of the
4		second division with a gross vehicle weight in excess of 8,000
5		pounds that are subject to the commercial distribution fee
6		imposed under Section 3-815.1 of the Illinois Vehicle Code.
7		This exemption applies to repair and replacement parts added
8		after the initial purchase of such a motor vehicle if that
9		motor vehicle is used in a manner that would qualify for the
10		rolling stock exemption otherwise provided for in this Act.
11		(13) Proceeds from sales to owners, lessors, or shippers of
12		tangible personal property that is utilized by interstate
13		carriers for hire for use as rolling stock moving in interstate
14		commerce and equipment operated by a telecommunications
15		provider, licensed as a common carrier by the Federal
16		Communications Commission, which is permanently installed in
17		or affixed to aircraft moving in interstate commerce.
18		(14) (Blank). Machinery and equipment that will be used by
19		the purchaser, or a lessee of the purchaser, primarily in the
20		process of manufacturing or assembling tangible personal
21		property for wholesale or retail sale or lease, whether the
22		sale or lease is made directly by the manufacturer or by some
23		other person, whether the materials used in the process are
24		owned by the manufacturer or some other person, or whether the
25		sale or lease is made apart from or as an incident to the
26		seller's engaging in the service occupation of producing
27		machines, tools, dies, jigs, patterns, gauges, or other similar
28		items of no commercial value on special order for a particular
29		purchaser.
30		(15) Proceeds of mandatory service charges separately
31		stated on customers' bills for purchase and consumption of food
32		and beverages, to the extent that the proceeds of the service
33		charge are in fact turned over as tips or as a substitute for
34		tips to the employees who participate directly in preparing,

1		serving, hosting or cleaning up the food or beverage function
2		with respect to which the service charge is imposed.
3		(16) Petroleum products sold to a purchaser if the seller
4		is prohibited by federal law from charging tax to the
5		purchaser.
6		(17) Tangible personal property sold to a common carrier by
7		rail or motor that receives the physical possession of the
8		property in Illinois and that transports the property, or
9		shares with another common carrier in the transportation of the
10		property, out of Illinois on a standard uniform bill of lading
11		showing the seller of the property as the shipper or consignor
12		of the property to a destination outside Illinois, for use
13		outside Illinois.
14		(18) Legal tender, currency, medallions, or gold or silver
15		coinage issued by the State of Illinois, the government of the
16		United States of America, or the government of any foreign
17		country, and bullion.
18		(19) Until July 1 2003, oil field exploration, drilling,
19		and production equipment, including (i) rigs and parts of rigs,
20		rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
21		tubular goods, including casing and drill strings, (iii) pumps
22		and pump-jack units, (iv) storage tanks and flow lines, (v) any
23		individual replacement part for oil field exploration,
24		drilling, and production equipment, and (vi) machinery and
25		equipment purchased for lease; but excluding motor vehicles
26		required to be registered under the Illinois Vehicle Code.
27		(20) Photoprocessing machinery and equipment, including
28		repair and replacement parts, both new and used, including that
29		manufactured on special order, certified by the purchaser to be
30		used primarily for photoprocessing, and including
31		photoprocessing machinery and equipment purchased for lease.
32		(21) Until July 1, 2003, coal exploration, mining,
33		offhighway hauling, processing, maintenance, and reclamation
34		equipment, including replacement parts and equipment, and

1		including equipment purchased for lease, but excluding motor
2		vehicles required to be registered under the Illinois Vehicle
3		Code.
4		(22) Fuel and petroleum products sold to or used by an air
5		carrier, certified by the carrier to be used for consumption,
6		shipment, or storage in the conduct of its business as an air
7		common carrier, for a flight destined for or returning from a
8		location or locations outside the United States without regard
9		to previous or subsequent domestic stopovers.
10		(23) A transaction in which the purchase order is received
11		by a florist who is located outside Illinois, but who has a
12		florist located in Illinois deliver the property to the
13		purchaser or the purchaser's donee in Illinois.
14		(24) Fuel consumed or used in the operation of ships,
15		barges, or vessels that are used primarily in or for the
16		transportation of property or the conveyance of persons for
17		hire on rivers bordering on this State if the fuel is delivered
18		by the seller to the purchaser's barge, ship, or vessel while
19		it is afloat upon that bordering river.
20		(25) A motor vehicle sold in this State to a nonresident
21		even though the motor vehicle is delivered to the nonresident
22		in this State, if the motor vehicle is not to be titled in this
23		State, and if a drive-away permit is issued to the motor
24		vehicle as provided in Section 3-603 of the Illinois Vehicle
25		Code or if the nonresident purchaser has vehicle registration
26		plates to transfer to the motor vehicle upon returning to his
27		or her home state. The issuance of the drive-away permit or
28		having the out-of-state registration plates to be transferred
29		is prima facie evidence that the motor vehicle will not be
30		titled in this State.
31		(26) Semen used for artificial insemination of livestock
32		for direct agricultural production.
33		(27) Horses, or interests in horses, registered with and
34		meeting the requirements of any of the Arabian Horse Club

1		Registry of America, Appaloosa Horse Club, American Quarter
2		Horse Association, United States Trotting Association, or
3		Jockey Club, as appropriate, used for purposes of breeding or
4		racing for prizes.
5		(28) Computers and communications equipment utilized for
6		any hospital purpose and equipment used in the diagnosis,
7		analysis, or treatment of hospital patients sold to a lessor
8		who leases the equipment, under a lease of one year or longer
9		executed or in effect at the time of the purchase, to a
10		hospital that has been issued an active tax exemption
11		identification number by the Department under Section 1g of
12		this Act.
13		(29) Personal property sold to a lessor who leases the
14		property, under a lease of one year or longer executed or in
15		effect at the time of the purchase, to a governmental body that
16		has been issued an active tax exemption identification number
17		by the Department under Section 1g of this Act.
18		(30) Beginning with taxable years ending on or after
19		December 31, 1995 and ending with taxable years ending on or
20		before December 31, 2004, personal property that is donated for
21		disaster relief to be used in a State or federally declared
22		disaster area in Illinois or bordering Illinois by a
23		manufacturer or retailer that is registered in this State to a
24		corporation, society, association, foundation, or institution
25		that has been issued a sales tax exemption identification
26		number by the Department that assists victims of the disaster
27		who reside within the declared disaster area.
28		(31) Beginning with taxable years ending on or after
29		December 31, 1995 and ending with taxable years ending on or
30		before December 31, 2004, personal property that is used in the
31		performance of infrastructure repairs in this State, including
32		but not limited to municipal roads and streets, access roads,
33		bridges, sidewalks, waste disposal systems, water and sewer
34		line extensions, water distribution and purification

1		facilities, storm water drainage and retention facilities, and
2		sewage treatment facilities, resulting from a State or
3		federally declared disaster in Illinois or bordering Illinois
4		when such repairs are initiated on facilities located in the
5		declared disaster area within 6 months after the disaster.
6		(32) Beginning July 1, 1999, game or game birds sold at a
7		"game breeding and hunting preserve area" or an "exotic game
8		hunting area" as those terms are used in the Wildlife Code or
9		at a hunting enclosure approved through rules adopted by the
10		Department of Natural Resources. This paragraph is exempt from
11		the provisions of Section 2-70.
12		(33) A motor vehicle, as that term is defined in Section
13		1-146 of the Illinois Vehicle Code, that is donated to a
14		corporation, limited liability company, society, association,
15		foundation, or institution that is determined by the Department
16		to be organized and operated exclusively for educational
17		purposes. For purposes of this exemption, "a corporation,
18		limited liability company, society, association, foundation,
19		or institution organized and operated exclusively for
20		educational purposes" means all tax-supported public schools,
21		private schools that offer systematic instruction in useful
22		branches of learning by methods common to public schools and
23		that compare favorably in their scope and intensity with the
24		course of study presented in tax-supported schools, and
25		vocational or technical schools or institutes organized and
26		operated exclusively to provide a course of study of not less
27		than 6 weeks duration and designed to prepare individuals to
28		follow a trade or to pursue a manual, technical, mechanical,
29		industrial, business, or commercial occupation.
30		(34) Beginning January 1, 2000, personal property,
31		including food, purchased through fundraising events for the
32		benefit of a public or private elementary or secondary school,
33		a group of those schools, or one or more school districts if
34		the events are sponsored by an entity recognized by the school

1		district that consists primarily of volunteers and includes
2		parents and teachers of the school children. This paragraph
3		does not apply to fundraising events (i) for the benefit of
4		private home instruction or (ii) for which the fundraising
5		entity purchases the personal property sold at the events from
6		another individual or entity that sold the property for the
7		purpose of resale by the fundraising entity and that profits
8		from the sale to the fundraising entity. This paragraph is
9		exempt from the provisions of Section 2-70.
10		(35) Beginning January 1, 2000 and through December 31,
11		2001, new or used automatic vending machines that prepare and
12		serve hot food and beverages, including coffee, soup, and other
13		items, and replacement parts for these machines. Beginning
14		January 1, 2002 and through June 30, 2003, machines and parts
15		for machines used in commercial, coin-operated amusement and
16		vending business if a use or occupation tax is paid on the
17		gross receipts derived from the use of the commercial,
18		coin-operated amusement and vending machines. This paragraph
19		is exempt from the provisions of Section 2-70.
20		(35-5) Food for human consumption that is to be consumed
21		off the premises where it is sold (other than alcoholic
22		beverages, soft drinks, and food that has been prepared for
23		immediate consumption) and prescription and nonprescription
24		medicines, drugs, medical appliances, and insulin, urine
25		testing materials, syringes, and needles used by diabetics, for
26		human use, when purchased for use by a person receiving medical
27		assistance under Article 5 of the Illinois Public Aid Code who
28		resides in a licensed long-term care facility, as defined in
29		the Nursing Home Care Act.
30		(36) Beginning August 2, 2001, computers and
31		communications equipment utilized for any hospital purpose and
32		equipment used in the diagnosis, analysis, or treatment of
33		hospital patients sold to a lessor who leases the equipment,
34		under a lease of one year or longer executed or in effect at

1		the time of the purchase, to a hospital that has been issued an
2		active tax exemption identification number by the Department
3		under Section 1g of this Act. This paragraph is exempt from the
4		provisions of Section 2-70.
5		(37) Beginning August 2, 2001, personal property sold to a
6		lessor who leases the property, under a lease of one year or
7		longer executed or in effect at the time of the purchase, to a
8		governmental body that has been issued an active tax exemption
9		identification number by the Department under Section 1g of
10		this Act. This paragraph is exempt from the provisions of
11		Section 2-70.
12		(38) Beginning on January 1, 2002, tangible personal
13		property purchased from an Illinois retailer by a taxpayer
14		engaged in centralized purchasing activities in Illinois who
15		will, upon receipt of the property in Illinois, temporarily
16		store the property in Illinois (i) for the purpose of
17		subsequently transporting it outside this State for use or
18		consumption thereafter solely outside this State or (ii) for
19		the purpose of being processed, fabricated, or manufactured
20		into, attached to, or incorporated into other tangible personal
21		property to be transported outside this State and thereafter
22		used or consumed solely outside this State. The Director of
23		Revenue shall, pursuant to rules adopted in accordance with the
24		Illinois Administrative Procedure Act, issue a permit to any
25		taxpayer in good standing with the Department who is eligible
26		for the exemption under this paragraph (38). The permit issued
27		under this paragraph (38) shall authorize the holder, to the
28		extent and in the manner specified in the rules adopted under
29		this Act, to purchase tangible personal property from a
30		retailer exempt from the taxes imposed by this Act. Taxpayers
31		shall maintain all necessary books and records to substantiate
32		the use and consumption of all such tangible personal property
33		outside of the State of Illinois.
34		(Source: P.A. 92-16, eff. 6-28-01; 92-35, eff. 7-1-01; 92-227,

1		eff. 8-2-01; 92-337, eff. 8-10-01; 92-484, eff. 8-23-01;
2		92-488, eff. 8-23-01; 92-651, eff. 7-11-02; 92-680, eff.
3		7-16-02; 93-23, eff. 6-20-03; 93-24, eff. 6-20-03; revised
4		9-11-03.)

5		(35 ILCS 120/1d rep.) (from Ch. 120, par. 440d)
6		(35 ILCS 120/1f rep.) (from Ch. 120, par. 440f)
7		Section 33. The Retailers' Occupation Tax Act is amended by
8		repealing Sections 1d and 1f.

9		Section 35. The Property Tax Code is amended by changing
10		Sections 18-255, 20-15, and 21-30 and by adding Section 18-178
11		as follows:
12		(35 ILCS 200/18-178 new)
13		Sec. 18-178. Education tax abatement. Beginning with taxes
14		levied for 2003 (payable in 2004), the county clerk must
15		determine the final extension for educational purposes for all
16		taxable property in a school district located in the county or
17		for the taxable property of that part of a school district
18		located in the county, taking into account the maximum rate,
19		levy, and extension authorized under the Property Tax Extension
20		Limitation Law, the Truth in Taxation Law, and any other
21		statute. The county clerk must then abate the extension for
22		educational purposes for each school district or part of a
23		school district in the county by the amount of the minimum
24		property tax relief grant and, if applicable, the supplemental
25		property tax relief grant, certified to the county clerk for
26		that school district or part of a school district by the
27		Department of Revenue under Section 6z-65 of the State Finance
28		Act. When the final extension for educational purposes has been
29		determined and abated, the county clerk must notify the
30		Department of Revenue. The county clerk must determine the
31		prorated portion of the certified minimum and, if applicable,

1		supplemental property tax relief grants allocable to each
2		taxpayer in a given school district based on the tax rate for
3		educational purposes for that school district and the aggregate
4		relief granted to that school district. The extension amount
5		for educational purposes, as originally calculated before
6		abatement, is the official, final extension for educational
7		purposes and must be used for all other purposes, including
8		determining the maximum rate, levy, and extension authorized
9		under the Property Tax Extension Limitation Law, the Truth in
10		Taxation Law, and any other statute and the maximum amount of
11		tax anticipation warrants under Sections 17-16 and 34-23 of the
12		School Code.
13		(35 ILCS 200/18-255)
14		Sec. 18-255. Abstract of assessments and extensions. When
15		the collector's books are completed, the county clerk shall
16		make a complete statement of the assessment and extensions, in
17		conformity to the instructions of the Department. The clerk
18		shall certify the statement to the Department. Beginning with
19		the 2003 levy year, the Department shall require the statement
20		to include a separate listing of the amount of any extension
21		that is abated under Section 18-178 of this Act.
22		(Source: Laws 1943, vol. 1, p. 1136; P.A. 88-455.)
23		(35 ILCS 200/20-15)
24		Sec. 20-15. Information on bill or separate statement. The
25		amount of tax due and rates shown on the tax bill pursuant to
26		this Section shall be net of any abatement under Section
27		18-178. There shall be printed on each bill, or on a separate
28		slip which shall be mailed with the bill:
29		(a) a statement itemizing the rate at which taxes have
30		been extended for each of the taxing districts in the
31		county in whose district the property is located, and in
32		those counties utilizing electronic data processing

1		equipment the dollar amount of tax due from the person
2		assessed allocable to each of those taxing districts,
3		including a separate statement of the dollar amount of tax
4		due which is allocable to a tax levied under the Illinois
5		Local Library Act or to any other tax levied by a
6		municipality or township for public library purposes,
7		(b) a separate statement for each of the taxing
8		districts of the dollar amount of tax due which is
9		allocable to a tax levied under the Illinois Pension Code
10		or to any other tax levied by a municipality or township
11		for public pension or retirement purposes,
12		(c) the total tax rate,
13		(d) the total amount of tax due, and
14		(e) the amount by which the total tax and the tax
15		allocable to each taxing district differs from the
16		taxpayer's last prior tax bill, and
17		(f) the amount of tax abated under Section 18-178
18		labeled "Portion of your Education Related Property Taxes
19		paid by the State of Illinois".
20		The county treasurer shall ensure that only those taxing
21		districts in which a parcel of property is located shall be
22		listed on the bill for that property.
23		In all counties the statement shall also provide:
24		(1) the property index number or other suitable
25		description,
26		(2) the assessment of the property,
27		(3) the equalization factors imposed by the county and
28		by the Department, and
29		(4) the equalized assessment resulting from the
30		application of the equalization factors to the basic
31		assessment.
32		In all counties which do not classify property for purposes
33		of taxation, for property on which a single family residence is
34		situated the statement shall also include a statement to

1		reflect the fair cash value determined for the property. In all
2		counties which classify property for purposes of taxation in
3		accordance with Section 4 of Article IX of the Illinois
4		Constitution, for parcels of residential property in the lowest
5		assessment classification the statement shall also include a
6		statement to reflect the fair cash value determined for the
7		property.
8		In all counties, the statement shall include information
9		that certain taxpayers may be eligible for the Senior Citizens
10		and Disabled Persons Property Tax Relief and Pharmaceutical
11		Assistance Act and that applications are available from the
12		Illinois Department of Revenue.
13		In counties which use the estimated or accelerated billing
14		methods, these statements shall only be provided with the final
15		installment of taxes due, except that the statement under item
16		(f) shall be included with both installments in those counties
17		under estimated or accelerated billing methods, the first
18		billing showing the amount deducted from the first installment,
19		and the final billing showing the total tax abated for the levy
20		year under Section 18-178. The provisions of this Section
21		create a mandatory statutory duty. They are not merely
22		directory or discretionary. The failure or neglect of the
23		collector to mail the bill, or the failure of the taxpayer to
24		receive the bill, shall not affect the validity of any tax, or
25		the liability for the payment of any tax.
26		(Source: P.A. 91-699, eff. 1-1-01.)
27		(35 ILCS 200/21-30)
28		Sec. 21-30. Accelerated billing. Except as provided in this
29		Section, Section 9-260, and Section 21-40, in counties with
30		3,000,000 or more inhabitants, by January 31 annually,
31		estimated tax bills setting out the first installment of
32		property taxes for the preceding year, payable in that year,
33		shall be prepared and mailed. The first installment of taxes on

1		the estimated tax bills shall be computed at 50% of the total
2		of each tax bill before the abatement of taxes under Section
3		18-178 for the preceding year, less an estimate of one-half of
4		the minimum school district property tax relief grant for the
5		current year determined based on information available. If,
6		prior to the preparation of the estimated tax bills, a
7		certificate of error has been either approved by a court on or
8		before November 30 of the preceding year or certified pursuant
9		to Section 14-15 on or before November 30 of the preceding
10		year, then the first installment of taxes on the estimated tax
11		bills shall be computed at 50% of the total taxes before the
12		abatement of taxes under Section 18-178 for the preceding year
13		as corrected by the certificate of error, less an estimate of
14		one-half of the minimum school district property tax relief
15		grant for the current year determined based on information
16		available. By June 30 annually, actual tax bills shall be
17		prepared and mailed. These bills shall set out total taxes due
18		and the amount of estimated taxes billed in the first
19		installment, and shall state the balance of taxes due for that
20		year as represented by the sum derived from subtracting the
21		amount of the first installment from the total taxes due for
22		that year.
23		The county board may provide by ordinance, in counties with
24		3,000,000 or more inhabitants, for taxes to be paid in 4
25		installments. For the levy year for which the ordinance is
26		first effective and each subsequent year, estimated tax bills
27		setting out the first, second, and third installment of taxes
28		for the preceding year, payable in that year, shall be prepared
29		and mailed not later than the date specified by ordinance. Each
30		installment on estimated tax bills shall be computed at 25% of
31		the total of each tax bill for the preceding year. By the date
32		specified in the ordinance, actual tax bills shall be prepared
33		and mailed. These bills shall set out total taxes due and the
34		amount of estimated taxes billed in the first, second, and

1		third installments and shall state the balance of taxes due for
2		that year as represented by the sum derived from subtracting
3		the amount of the estimated installments from the total taxes
4		due for that year.
5		The county board of any county with less than 3,000,000
6		inhabitants may, by ordinance or resolution, adopt an
7		accelerated method of tax billing. The county board may
8		subsequently rescind the ordinance or resolution and revert to
9		the method otherwise provided for in this Code.
10		Taxes levied on homestead property in which a member of the
11		National Guard or reserves of the armed forces of the United
12		States who was called to active duty on or after August 1,
13		1990, and who has an ownership interest shall not be deemed
14		delinquent and no interest shall accrue or be charged as a
15		penalty on such taxes due and payable in 1991 or 1992 until one
16		year after that member returns to civilian status.
17		(Source: P.A. 92-475, eff. 8-23-01; 93-560, eff. 8-20-03.)

18		Section 40. The Motor Fuel Tax Law is amended by changing
19		Section 2b as follows:
20		(35 ILCS 505/2b) (from Ch. 120, par. 418b)
21		Sec. 2b. In addition to the tax collection and reporting
22		responsibilities imposed elsewhere in this Act, a person who is
23		required to pay the tax imposed by Section 2a of this Act shall
24		pay the tax to the Department by return showing all fuel
25		purchased, acquired or received and sold, distributed or used
26		during the preceding calendar month including losses of fuel as
27		the result of evaporation or shrinkage due to temperature
28		variations, and such other reasonable information as the
29		Department may require. Losses of fuel as the result of
30		evaporation or shrinkage due to temperature variations may not
31		exceed 1% of the total gallons in storage at the beginning of
32		the month, plus the receipts of gallonage during the month,

1		minus the gallonage remaining in storage at the end of the
2		month. Any loss reported that is in excess of this amount shall
3		be subject to the tax imposed by Section 2a of this Law. On and
4		after July 1, 2001, for each 6-month period January through
5		June, net losses of fuel (for each category of fuel that is
6		required to be reported on a return) as the result of
7		evaporation or shrinkage due to temperature variations may not
8		exceed 1% of the total gallons in storage at the beginning of
9		each January, plus the receipts of gallonage each January
10		through June, minus the gallonage remaining in storage at the
11		end of each June. On and after July 1, 2001, for each 6-month
12		period July through December, net losses of fuel (for each
13		category of fuel that is required to be reported on a return)
14		as the result of evaporation or shrinkage due to temperature
15		variations may not exceed 1% of the total gallons in storage at
16		the beginning of each July, plus the receipts of gallonage each
17		July through December, minus the gallonage remaining in storage
18		at the end of each December. Any net loss reported that is in
19		excess of this amount shall be subject to the tax imposed by
20		Section 2a of this Law. For purposes of this Section, "net
21		loss" means the number of gallons gained through temperature
22		variations minus the number of gallons lost through temperature
23		variations or evaporation for each of the respective 6-month
24		periods.
25		The return shall be prescribed by the Department and shall
26		be filed between the 1st and 20th days of each calendar month.
27		The Department may, in its discretion, combine the returns
28		filed under this Section, Section 5, and Section 5a of this
29		Act. The return must be accompanied by appropriate
30		computer-generated magnetic media supporting schedule data in
31		the format required by the Department, unless, as provided by
32		rule, the Department grants an exception upon petition of a
33		taxpayer. If the return is filed timely, the seller shall take
34		a discount of 2% through June 30, 2003 and 1.75% thereafter

1		which is allowed to reimburse the seller for the expenses
2		incurred in keeping records, preparing and filing returns,
3		collecting and remitting the tax and supplying data to the
4		Department on request. The discount, however, shall be
5		applicable only to the amount of payment which accompanies a
6		return that is filed timely in accordance with this Section.
7		(Source: P.A. 92-30, eff. 7-1-01; 93-32, eff. 6-20-03.)

8		Section 45. The School Code is amended by changing Section
9		18-8.05 and by adding Sections 18-8.10 and 18-25 as follows:
10		(105 ILCS 5/18-8.05)
11		Sec. 18-8.05. Basis for apportionment of general State
12		financial aid and supplemental general State aid to the common
13		schools for the 1998-1999 and subsequent school years.
14		(A) General Provisions.
15		(1) The provisions of this Section apply to the 1998-1999
16		and subsequent school years. The system of general State
17		financial aid provided for in this Section is designed to
18		assure that, through a combination of State financial aid and
19		required local resources, the financial support provided each
20		pupil in Average Daily Attendance equals or exceeds a
21		prescribed per pupil Foundation Level. This formula approach
22		imputes a level of per pupil Available Local Resources and
23		provides for the basis to calculate a per pupil level of
24		general State financial aid that, when added to Available Local
25		Resources, equals or exceeds the Foundation Level. The amount
26		of per pupil general State financial aid for school districts,
27		in general, varies in inverse relation to Available Local
28		Resources. Per pupil amounts are based upon each school
29		district's Average Daily Attendance as that term is defined in
30		this Section.
31		(2) In addition to general State financial aid, school

1		districts with specified levels or concentrations of pupils
2		from low income households are eligible to receive supplemental
3		general State financial aid grants as provided pursuant to
4		subsection (H). The supplemental State aid grants provided for
5		school districts under subsection (H) shall be appropriated for
6		distribution to school districts as part of the same line item
7		in which the general State financial aid of school districts is
8		appropriated under this Section.
9		(3) To receive financial assistance under this Section,
10		school districts are required to file claims with the State
11		Board of Education, subject to the following requirements:
12		(a) Any school district which fails for any given
13		school year to maintain school as required by law, or to
14		maintain a recognized school is not eligible to file for
15		such school year any claim upon the Common School Fund. In
16		case of nonrecognition of one or more attendance centers in
17		a school district otherwise operating recognized schools,
18		the claim of the district shall be reduced in the
19		proportion which the Average Daily Attendance in the
20		attendance center or centers bear to the Average Daily
21		Attendance in the school district. A "recognized school"
22		means any public school which meets the standards as
23		established for recognition by the State Board of
24		Education. A school district or attendance center not
25		having recognition status at the end of a school term is
26		entitled to receive State aid payments due upon a legal
27		claim which was filed while it was recognized.
28		(b) School district claims filed under this Section are
29		subject to Sections 18-9, 18-10, and 18-12, except as
30		otherwise provided in this Section.
31		(c) If a school district operates a full year school
32		under Section 10-19.1, the general State aid to the school
33		district shall be determined by the State Board of
34		Education in accordance with this Section as near as may be

1		applicable.
2		(d) (Blank).
3		(4) Except as provided in subsections (H) and (L), the
4		board of any district receiving any of the grants provided for
5		in this Section may apply those funds to any fund so received
6		for which that board is authorized to make expenditures by law.
7		School districts are not required to exert a minimum
8		Operating Tax Rate in order to qualify for assistance under
9		this Section.
10		(5) As used in this Section the following terms, when
11		capitalized, shall have the meaning ascribed herein:
12		(a) "Average Daily Attendance": A count of pupil
13		attendance in school, averaged as provided for in
14		subsection (C) and utilized in deriving per pupil financial
15		support levels.
16		(b) "Available Local Resources": A computation of
17		local financial support, calculated on the basis of Average
18		Daily Attendance and derived as provided pursuant to
19		subsection (D).
20		(c) "Corporate Personal Property Replacement Taxes":
21		Funds paid to local school districts pursuant to "An Act in
22		relation to the abolition of ad valorem personal property
23		tax and the replacement of revenues lost thereby, and
24		amending and repealing certain Acts and parts of Acts in
25		connection therewith", certified August 14, 1979, as
26		amended (Public Act 81-1st S.S.-1).
27		(c-5) "ECI" means the Employment Cost Index as
28		published by the U.S. Bureau of Labor Statistics.
29		(d) "Foundation Level": A prescribed level of per pupil
30		financial support as provided for in subsection (B).
31		(e) "Operating Tax Rate": All school district property
32		taxes extended for all purposes, except Bond and Interest,
33		Summer School, Rent, Capital Improvement, and Vocational
34		Education Building purposes.

1		(B) Foundation Level.
2		(1) The Foundation Level is a figure established by the
3		State representing the minimum level of per pupil financial
4		support that should be available to provide for the basic
5		education of each pupil in Average Daily Attendance. As set
6		forth in this Section, each school district is assumed to exert
7		a sufficient local taxing effort such that, in combination with
8		the aggregate of general State financial aid provided the
9		district, an aggregate of State and local resources are
10		available to meet the basic education needs of pupils in the
11		district.
12		(2) For the 1998-1999 school year, the Foundation Level of
13		support is $4,225. For the 1999-2000 school year, the
14		Foundation Level of support is $4,325. For the 2000-2001 school
15		year, the Foundation Level of support is $4,425.
16		(3) For the 2001-2002 school year and 2002-2003 school
17		year, the Foundation Level of support is $4,560.
18		(4) For the 2003-2004 and 2004-2005 school years year and
19		each school year thereafter, the Foundation Level of support is
20		$4,810 or such greater amount as may be established by law by
21		the General Assembly.
22		(5) For the 2005-2006 school year, the Foundation Level of
23		support is $5,952. For each school year thereafter, the
24		Foundation Level of support shall be equal to the Foundation
25		Level of support for the immediately preceding school year,
26		increased by the percentage increase, if any, in the ECI
27		published for the immediately preceding school year, or such
28		greater amount as may be established by law by the General
29		Assembly.
30		(C) Average Daily Attendance.
31		(1) For purposes of calculating general State aid pursuant
32		to subsection (E), an Average Daily Attendance figure shall be

1		utilized. The Average Daily Attendance figure for formula
2		calculation purposes shall be the monthly average of the actual
3		number of pupils in attendance of each school district, as
4		further averaged for the best 3 months of pupil attendance for
5		each school district. In compiling the figures for the number
6		of pupils in attendance, school districts and the State Board
7		of Education shall, for purposes of general State aid funding,
8		conform attendance figures to the requirements of subsection
9		(F).
10		(2) The Average Daily Attendance figures utilized in
11		subsection (E) shall be the requisite attendance data for the
12		school year immediately preceding the school year for which
13		general State aid is being calculated or the average of the
14		attendance data for the 3 preceding school years, whichever is
15		greater. The Average Daily Attendance figures utilized in
16		subsection (H) shall be the requisite attendance data for the
17		school year immediately preceding the school year for which
18		general State aid is being calculated.
19		(D) Available Local Resources.
20		(1) For purposes of calculating general State aid pursuant
21		to subsection (E), a representation of Available Local
22		Resources per pupil, as that term is defined and determined in
23		this subsection, shall be utilized. Available Local Resources
24		per pupil shall include a calculated dollar amount representing
25		local school district revenues from local property taxes and
26		from Corporate Personal Property Replacement Taxes, expressed
27		on the basis of pupils in Average Daily Attendance.
28		(2) In determining a school district's revenue from local
29		property taxes, the State Board of Education shall utilize the
30		equalized assessed valuation of all taxable property of each
31		school district as of September 30 of the previous year. The
32		equalized assessed valuation utilized shall be obtained and
33		determined as provided in subsection (G).

1		(3) For school districts maintaining grades kindergarten
2		through 12, local property tax revenues per pupil shall be
3		calculated as the product of the applicable equalized assessed
4		valuation for the district multiplied by 3.00%, and divided by
5		the district's Average Daily Attendance figure. For school
6		districts maintaining grades kindergarten through 8, local
7		property tax revenues per pupil shall be calculated as the
8		product of the applicable equalized assessed valuation for the
9		district multiplied by 2.30%, and divided by the district's
10		Average Daily Attendance figure. For school districts
11		maintaining grades 9 through 12, local property tax revenues
12		per pupil shall be the applicable equalized assessed valuation
13		of the district multiplied by 1.05%, and divided by the
14		district's Average Daily Attendance figure.
15		(4) The Corporate Personal Property Replacement Taxes paid
16		to each school district during the calendar year 2 years before
17		the calendar year in which a school year begins, divided by the
18		Average Daily Attendance figure for that district, shall be
19		added to the local property tax revenues per pupil as derived
20		by the application of the immediately preceding paragraph (3).
21		The sum of these per pupil figures for each school district
22		shall constitute Available Local Resources as that term is
23		utilized in subsection (E) in the calculation of general State
24		aid.
25		(E) Computation of General State Aid.
26		(1) For each school year, the amount of general State aid
27		allotted to a school district shall be computed by the State
28		Board of Education as provided in this subsection.
29		(2) For any school district for which Available Local
30		Resources per pupil is less than the product of 0.93 times the
31		Foundation Level, general State aid for that district shall be
32		calculated as an amount equal to the Foundation Level minus
33		Available Local Resources, multiplied by the Average Daily

1		Attendance of the school district.
2		(3) For any school district for which Available Local
3		Resources per pupil is equal to or greater than the product of
4		0.93 times the Foundation Level and less than the product of
5		1.75 times the Foundation Level, the general State aid per
6		pupil shall be a decimal proportion of the Foundation Level
7		derived using a linear algorithm. Under this linear algorithm,
8		the calculated general State aid per pupil shall decline in
9		direct linear fashion from 0.07 times the Foundation Level for
10		a school district with Available Local Resources equal to the
11		product of 0.93 times the Foundation Level, to 0.05 times the
12		Foundation Level for a school district with Available Local
13		Resources equal to the product of 1.75 times the Foundation
14		Level. The allocation of general State aid for school districts
15		subject to this paragraph 3 shall be the calculated general
16		State aid per pupil figure multiplied by the Average Daily
17		Attendance of the school district.
18		(4) For any school district for which Available Local
19		Resources per pupil equals or exceeds the product of 1.75 times
20		the Foundation Level, the general State aid for the school
21		district shall be calculated as the product of $218 multiplied
22		by the Average Daily Attendance of the school district.
23		(5) The amount of general State aid allocated to a school
24		district for the 1999-2000 school year meeting the requirements
25		set forth in paragraph (4) of subsection (G) shall be increased
26		by an amount equal to the general State aid that would have
27		been received by the district for the 1998-1999 school year by
28		utilizing the Extension Limitation Equalized Assessed
29		Valuation as calculated in paragraph (4) of subsection (G) less
30		the general State aid allotted for the 1998-1999 school year.
31		This amount shall be deemed a one time increase, and shall not
32		affect any future general State aid allocations.
33		(F) Compilation of Average Daily Attendance.

1		(1) Each school district shall, by July 1 of each year,
2		submit to the State Board of Education, on forms prescribed by
3		the State Board of Education, attendance figures for the school
4		year that began in the preceding calendar year. The attendance
5		information so transmitted shall identify the average daily
6		attendance figures for each month of the school year. Beginning
7		with the general State aid claim form for the 2002-2003 school
8		year, districts shall calculate Average Daily Attendance as
9		provided in subdivisions (a), (b), and (c) of this paragraph
10		(1).
11		(a) In districts that do not hold year-round classes,
12		days of attendance in August shall be added to the month of
13		September and any days of attendance in June shall be added
14		to the month of May.
15		(b) In districts in which all buildings hold year-round
16		classes, days of attendance in July and August shall be
17		added to the month of September and any days of attendance
18		in June shall be added to the month of May.
19		(c) In districts in which some buildings, but not all,
20		hold year-round classes, for the non-year-round buildings,
21		days of attendance in August shall be added to the month of
22		September and any days of attendance in June shall be added
23		to the month of May. The average daily attendance for the
24		year-round buildings shall be computed as provided in
25		subdivision (b) of this paragraph (1). To calculate the
26		Average Daily Attendance for the district, the average
27		daily attendance for the year-round buildings shall be
28		multiplied by the days in session for the non-year-round
29		buildings for each month and added to the monthly
30		attendance of the non-year-round buildings.
31		Except as otherwise provided in this Section, days of
32		attendance by pupils shall be counted only for sessions of not
33		less than 5 clock hours of school work per day under direct
34		supervision of: (i) teachers, or (ii) non-teaching personnel or

1		volunteer personnel when engaging in non-teaching duties and
2		supervising in those instances specified in subsection (a) of
3		Section 10-22.34 and paragraph 10 of Section 34-18, with pupils
4		of legal school age and in kindergarten and grades 1 through
5		12.
6		Days of attendance by tuition pupils shall be accredited
7		only to the districts that pay the tuition to a recognized
8		school.
9		(2) Days of attendance by pupils of less than 5 clock hours
10		of school shall be subject to the following provisions in the
11		compilation of Average Daily Attendance.
12		(a) Pupils regularly enrolled in a public school for
13		only a part of the school day may be counted on the basis
14		of 1/6 day for every class hour of instruction of 40
15		minutes or more attended pursuant to such enrollment,
16		unless a pupil is enrolled in a block-schedule format of 80
17		minutes or more of instruction, in which case the pupil may
18		be counted on the basis of the proportion of minutes of
19		school work completed each day to the minimum number of
20		minutes that school work is required to be held that day.
21		(b) Days of attendance may be less than 5 clock hours
22		on the opening and closing of the school term, and upon the
23		first day of pupil attendance, if preceded by a day or days
24		utilized as an institute or teachers' workshop.
25		(c) A session of 4 or more clock hours may be counted
26		as a day of attendance upon certification by the regional
27		superintendent, and approved by the State Superintendent
28		of Education to the extent that the district has been
29		forced to use daily multiple sessions.
30		(d) A session of 3 or more clock hours may be counted
31		as a day of attendance (1) when the remainder of the school
32		day or at least 2 hours in the evening of that day is
33		utilized for an in-service training program for teachers,
34		up to a maximum of 5 days per school year of which a

1		maximum of 4 days of such 5 days may be used for
2		parent-teacher conferences, provided a district conducts
3		an in-service training program for teachers which has been
4		approved by the State Superintendent of Education; or, in
5		lieu of 4 such days, 2 full days may be used, in which
6		event each such day may be counted as a day of attendance;
7		and (2) when days in addition to those provided in item (1)
8		are scheduled by a school pursuant to its school
9		improvement plan adopted under Article 34 or its revised or
10		amended school improvement plan adopted under Article 2,
11		provided that (i) such sessions of 3 or more clock hours
12		are scheduled to occur at regular intervals, (ii) the
13		remainder of the school days in which such sessions occur
14		are utilized for in-service training programs or other
15		staff development activities for teachers, and (iii) a
16		sufficient number of minutes of school work under the
17		direct supervision of teachers are added to the school days
18		between such regularly scheduled sessions to accumulate
19		not less than the number of minutes by which such sessions
20		of 3 or more clock hours fall short of 5 clock hours. Any
21		full days used for the purposes of this paragraph shall not
22		be considered for computing average daily attendance. Days
23		scheduled for in-service training programs, staff
24		development activities, or parent-teacher conferences may
25		be scheduled separately for different grade levels and
26		different attendance centers of the district.
27		(e) A session of not less than one clock hour of
28		teaching hospitalized or homebound pupils on-site or by
29		telephone to the classroom may be counted as 1/2 day of
30		attendance, however these pupils must receive 4 or more
31		clock hours of instruction to be counted for a full day of
32		attendance.
33		(f) A session of at least 4 clock hours may be counted
34		as a day of attendance for first grade pupils, and pupils

1		in full day kindergartens, and a session of 2 or more hours
2		may be counted as 1/2 day of attendance by pupils in
3		kindergartens which provide only 1/2 day of attendance.
4		(g) For children with disabilities who are below the
5		age of 6 years and who cannot attend 2 or more clock hours
6		because of their disability or immaturity, a session of not
7		less than one clock hour may be counted as 1/2 day of
8		attendance; however for such children whose educational
9		needs so require a session of 4 or more clock hours may be
10		counted as a full day of attendance.
11		(h) A recognized kindergarten which provides for only
12		1/2 day of attendance by each pupil shall not have more
13		than 1/2 day of attendance counted in any one day. However,
14		kindergartens may count 2 1/2 days of attendance in any 5
15		consecutive school days. When a pupil attends such a
16		kindergarten for 2 half days on any one school day, the
17		pupil shall have the following day as a day absent from
18		school, unless the school district obtains permission in
19		writing from the State Superintendent of Education.
20		Attendance at kindergartens which provide for a full day of
21		attendance by each pupil shall be counted the same as
22		attendance by first grade pupils. Only the first year of
23		attendance in one kindergarten shall be counted, except in
24		case of children who entered the kindergarten in their
25		fifth year whose educational development requires a second
26		year of kindergarten as determined under the rules and
27		regulations of the State Board of Education.
28		(G) Equalized Assessed Valuation Data.
29		(1) For purposes of the calculation of Available Local
30		Resources required pursuant to subsection (D), the State Board
31		of Education shall secure from the Department of Revenue the
32		value as equalized or assessed by the Department of Revenue of
33		all taxable property of every school district, together with

1		(i) the applicable tax rate used in extending taxes for the
2		funds of the district as of September 30 of the previous year
3		and (ii) the limiting rate for all school districts subject to
4		property tax extension limitations as imposed under the
5		Property Tax Extension Limitation Law.
6		This equalized assessed valuation, as adjusted further by
7		the requirements of this subsection, shall be utilized in the
8		calculation of Available Local Resources.
9		(2) The equalized assessed valuation in paragraph (1) shall
10		be adjusted, as applicable, in the following manner:
11		(a) For the purposes of calculating State aid under
12		this Section, with respect to any part of a school district
13		within a redevelopment project area in respect to which a
14		municipality has adopted tax increment allocation
15		financing pursuant to the Tax Increment Allocation
16		Redevelopment Act, Sections 11-74.4-1 through 11-74.4-11
17		of the Illinois Municipal Code or the Industrial Jobs
18		Recovery Law, Sections 11-74.6-1 through 11-74.6-50 of the
19		Illinois Municipal Code, no part of the current equalized
20		assessed valuation of real property located in any such
21		project area which is attributable to an increase above the
22		total initial equalized assessed valuation of such
23		property shall be used as part of the equalized assessed
24		valuation of the district, until such time as all
25		redevelopment project costs have been paid, as provided in
26		Section 11-74.4-8 of the Tax Increment Allocation
27		Redevelopment Act or in Section 11-74.6-35 of the
28		Industrial Jobs Recovery Law. For the purpose of the
29		equalized assessed valuation of the district, the total
30		initial equalized assessed valuation or the current
31		equalized assessed valuation, whichever is lower, shall be
32		used until such time as all redevelopment project costs
33		have been paid.
34		(b) The real property equalized assessed valuation for

1		a school district shall be adjusted by subtracting from the
2		real property value as equalized or assessed by the
3		Department of Revenue for the district an amount computed
4		by dividing the amount of any abatement of taxes under
5		Section 18-170 of the Property Tax Code by 3.00% for a
6		district maintaining grades kindergarten through 12, by
7		2.30% for a district maintaining grades kindergarten
8		through 8, or by 1.05% for a district maintaining grades 9
9		through 12 and adjusted by an amount computed by dividing
10		the amount of any abatement of taxes under subsection (a)
11		of Section 18-165 of the Property Tax Code by the same
12		percentage rates for district type as specified in this
13		subparagraph (b).
14		(3) For the 1999-2000 school year and each school year
15		thereafter, if a school district meets all of the criteria of
16		this subsection (G)(3), the school district's Available Local
17		Resources shall be calculated under subsection (D) using the
18		district's Extension Limitation Equalized Assessed Valuation
19		as calculated under this subsection (G)(3).
20		For purposes of this subsection (G)(3) the following terms
21		shall have the following meanings:
22		"Budget Year": The school year for which general State
23		aid is calculated and awarded under subsection (E).
24		"Base Tax Year": The property tax levy year used to
25		calculate the Budget Year allocation of general State aid.
26		"Preceding Tax Year": The property tax levy year
27		immediately preceding the Base Tax Year.
28		"Base Tax Year's Tax Extension": The product of the
29		equalized assessed valuation utilized by the County Clerk
30		in the Base Tax Year multiplied by the limiting rate as
31		calculated by the County Clerk and defined in the Property
32		Tax Extension Limitation Law.
33		"Preceding Tax Year's Tax Extension": The product of
34		the equalized assessed valuation utilized by the County

1		Clerk in the Preceding Tax Year multiplied by the Operating
2		Tax Rate as defined in subsection (A).
3		"Extension Limitation Ratio": A numerical ratio,
4		certified by the County Clerk, in which the numerator is
5		the Base Tax Year's Tax Extension and the denominator is
6		the Preceding Tax Year's Tax Extension.
7		"Operating Tax Rate": The operating tax rate as defined
8		in subsection (A).
9		If a school district is subject to property tax extension
10		limitations as imposed under the Property Tax Extension
11		Limitation Law, the State Board of Education shall calculate
12		the Extension Limitation Equalized Assessed Valuation of that
13		district. For the 1999-2000 school year, the Extension
14		Limitation Equalized Assessed Valuation of a school district as
15		calculated by the State Board of Education shall be equal to
16		the product of the district's 1996 Equalized Assessed Valuation
17		and the district's Extension Limitation Ratio. For the
18		2000-2001 school year and each school year thereafter, the
19		Extension Limitation Equalized Assessed Valuation of a school
20		district as calculated by the State Board of Education shall be
21		equal to the product of the Equalized Assessed Valuation last
22		used in the calculation of general State aid and the district's
23		Extension Limitation Ratio. If the Extension Limitation
24		Equalized Assessed Valuation of a school district as calculated
25		under this subsection (G)(3) is less than the district's
26		equalized assessed valuation as calculated pursuant to
27		subsections (G)(1) and (G)(2), then for purposes of calculating
28		the district's general State aid for the Budget Year pursuant
29		to subsection (E), that Extension Limitation Equalized
30		Assessed Valuation shall be utilized to calculate the
31		district's Available Local Resources under subsection (D).
32		(4) For the purposes of calculating general State aid for
33		the 1999-2000 school year only, if a school district
34		experienced a triennial reassessment on the equalized assessed

1		valuation used in calculating its general State financial aid
2		apportionment for the 1998-1999 school year, the State Board of
3		Education shall calculate the Extension Limitation Equalized
4		Assessed Valuation that would have been used to calculate the
5		district's 1998-1999 general State aid. This amount shall equal
6		the product of the equalized assessed valuation used to
7		calculate general State aid for the 1997-1998 school year and
8		the district's Extension Limitation Ratio. If the Extension
9		Limitation Equalized Assessed Valuation of the school district
10		as calculated under this paragraph (4) is less than the
11		district's equalized assessed valuation utilized in
12		calculating the district's 1998-1999 general State aid
13		allocation, then for purposes of calculating the district's
14		general State aid pursuant to paragraph (5) of subsection (E),
15		that Extension Limitation Equalized Assessed Valuation shall
16		be utilized to calculate the district's Available Local
17		Resources.
18		(5) For school districts having a majority of their
19		equalized assessed valuation in any county except Cook, DuPage,
20		Kane, Lake, McHenry, or Will, if the amount of general State
21		aid allocated to the school district for the 1999-2000 school
22		year under the provisions of subsection (E), (H), and (J) of
23		this Section is less than the amount of general State aid
24		allocated to the district for the 1998-1999 school year under
25		these subsections, then the general State aid of the district
26		for the 1999-2000 school year only shall be increased by the
27		difference between these amounts. The total payments made under
28		this paragraph (5) shall not exceed $14,000,000. Claims shall
29		be prorated if they exceed $14,000,000.
30		(H) Supplemental General State Aid.
31		(1) In addition to the general State aid a school district
32		is allotted pursuant to subsection (E), qualifying school
33		districts shall receive a grant, paid in conjunction with a

1		district's payments of general State aid, for supplemental
2		general State aid based upon the concentration level of
3		children from low-income households within the school
4		district. Supplemental State aid grants provided for school
5		districts under this subsection shall be appropriated for
6		distribution to school districts as part of the same line item
7		in which the general State financial aid of school districts is
8		appropriated under this Section. If the appropriation in any
9		fiscal year for general State aid and supplemental general
10		State aid is insufficient to pay the amounts required under the
11		general State aid and supplemental general State aid
12		calculations, then the State Board of Education shall ensure
13		that each school district receives the full amount due for
14		general State aid and the remainder of the appropriation shall
15		be used for supplemental general State aid, which the State
16		Board of Education shall calculate and pay to eligible
17		districts on a prorated basis.
18		(1.5) This paragraph (1.5) applies only to those school
19		years preceding the 2003-2004 school year. For purposes of this
20		subsection (H), the term "Low-Income Concentration Level"
21		shall be the low-income eligible pupil count from the most
22		recently available federal census divided by the Average Daily
23		Attendance of the school district. If, however, (i) the
24		percentage decrease from the 2 most recent federal censuses in
25		the low-income eligible pupil count of a high school district
26		with fewer than 400 students exceeds by 75% or more the
27		percentage change in the total low-income eligible pupil count
28		of contiguous elementary school districts, whose boundaries
29		are coterminous with the high school district, or (ii) a high
30		school district within 2 counties and serving 5 elementary
31		school districts, whose boundaries are coterminous with the
32		high school district, has a percentage decrease from the 2 most
33		recent federal censuses in the low-income eligible pupil count
34		and there is a percentage increase in the total low-income

1		eligible pupil count of a majority of the elementary school
2		districts in excess of 50% from the 2 most recent federal
3		censuses, then the high school district's low-income eligible
4		pupil count from the earlier federal census shall be the number
5		used as the low-income eligible pupil count for the high school
6		district, for purposes of this subsection (H). The changes made
7		to this paragraph (1) by Public Act 92-28 shall apply to
8		supplemental general State aid grants for school years
9		preceding the 2003-2004 school year that are paid in fiscal
10		year 1999 or thereafter and to any State aid payments made in
11		fiscal year 1994 through fiscal year 1998 pursuant to
12		subsection 1(n) of Section 18-8 of this Code (which was
13		repealed on July 1, 1998), and any high school district that is
14		affected by Public Act 92-28 is entitled to a recomputation of
15		its supplemental general State aid grant or State aid paid in
16		any of those fiscal years. This recomputation shall not be
17		affected by any other funding.
18		(1.10) This paragraph (1.10) applies to the 2003-2004
19		school year and each school year thereafter. For purposes of
20		this subsection (H), the term "Low-Income Concentration Level"
21		shall, for each fiscal year, be the low-income eligible pupil
22		count as of July 1 of the immediately preceding fiscal year (as
23		determined by the Department of Human Services based on the
24		number of pupils who are eligible for at least one of the
25		following low income programs: Medicaid, KidCare, TANF, or Food
26		Stamps, excluding pupils who are eligible for services provided
27		by the Department of Children and Family Services, averaged
28		over the 2 immediately preceding fiscal years for fiscal year
29		2004 and over the 3 immediately preceding fiscal years for each
30		fiscal year thereafter) divided by the Average Daily Attendance
31		of the school district.
32		(2) Supplemental general State aid pursuant to this
33		subsection (H) shall be provided as follows for the 1998-1999,
34		1999-2000, and 2000-2001 school years only:

1		(a) For any school district with a Low Income
2		Concentration Level of at least 20% and less than 35%, the
3		grant for any school year shall be $800 multiplied by the
4		low income eligible pupil count.
5		(b) For any school district with a Low Income
6		Concentration Level of at least 35% and less than 50%, the
7		grant for the 1998-1999 school year shall be $1,100
8		multiplied by the low income eligible pupil count.
9		(c) For any school district with a Low Income
10		Concentration Level of at least 50% and less than 60%, the
11		grant for the 1998-99 school year shall be $1,500
12		multiplied by the low income eligible pupil count.
13		(d) For any school district with a Low Income
14		Concentration Level of 60% or more, the grant for the
15		1998-99 school year shall be $1,900 multiplied by the low
16		income eligible pupil count.
17		(e) For the 1999-2000 school year, the per pupil amount
18		specified in subparagraphs (b), (c), and (d) immediately
19		above shall be increased to $1,243, $1,600, and $2,000,
20		respectively.
21		(f) For the 2000-2001 school year, the per pupil
22		amounts specified in subparagraphs (b), (c), and (d)
23		immediately above shall be $1,273, $1,640, and $2,050,
24		respectively.
25		(2.5) Supplemental general State aid pursuant to this
26		subsection (H) shall be provided as follows for the 2002-2003
27		school year:
28		(a) For any school district with a Low Income
29		Concentration Level of less than 10%, the grant for each
30		school year shall be $355 multiplied by the low income
31		eligible pupil count.
32		(b) For any school district with a Low Income
33		Concentration Level of at least 10% and less than 20%, the
34		grant for each school year shall be $675 multiplied by the

1		low income eligible pupil count.
2		(c) For any school district with a Low Income
3		Concentration Level of at least 20% and less than 35%, the
4		grant for each school year shall be $1,330 multiplied by
5		the low income eligible pupil count.
6		(d) For any school district with a Low Income
7		Concentration Level of at least 35% and less than 50%, the
8		grant for each school year shall be $1,362 multiplied by
9		the low income eligible pupil count.
10		(e) For any school district with a Low Income
11		Concentration Level of at least 50% and less than 60%, the
12		grant for each school year shall be $1,680 multiplied by
13		the low income eligible pupil count.
14		(f) For any school district with a Low Income
15		Concentration Level of 60% or more, the grant for each
16		school year shall be $2,080 multiplied by the low income
17		eligible pupil count.
18		(2.10) Except as otherwise provided, supplemental general
19		State aid pursuant to this subsection (H) shall be provided as
20		follows for the 2003-2004 school year and each school year
21		thereafter:
22		(a) For any school district with a Low Income
23		Concentration Level of 15% or less, the grant for the
24		2003-2004 school year and 2004-2005 each school year shall
25		be $355 multiplied by the low income eligible pupil count.
26		For the 2005-2006 school year and each school year
27		thereafter, the grant shall be $355, increased by the
28		percentage increase, if any, in the ECI published for the
29		immediately preceding school year, and then multiplied by
30		the low income eligible pupil count.
31		(b) For any school district with a Low Income
32		Concentration Level greater than 15%, the grant for the
33		2003-2004 school year and 2004-2005 each school year shall
34		be $294.25 added to the product of $2,700 and the square of

1		the Low Income Concentration Level, all multiplied by the
2		low income eligible pupil count. For the 2005-2006 school
3		year and each school year thereafter, the grant shall be
4		$294.25, increased by the percentage increase, if any, in
5		the ECI published for the immediately preceding school
6		year, then added to the product of (i) $2,700, which amount
7		shall be increased by the percentage increase, if any, in
8		the ECI published for the immediately preceding school
9		year, and (ii) the square of the Low Income Concentration
10		Level, and then all multiplied by the low income eligible
11		pupil count.
12		For the 2003-2004 school year only, the grant shall be no
13		less than the grant for the 2002-2003 school year. For the
14		2004-2005 school year only, the grant shall be no less than the
15		grant for the 2002-2003 school year multiplied by 0.66. For the
16		2005-2006 school year only, the grant shall be no less than the
17		grant for the 2002-2003 school year multiplied by 0.33.
18		For the 2003-2004 school year only, the grant shall be no
19		greater than the grant received during the 2002-2003 school
20		year added to the product of 0.25 multiplied by the difference
21		between the grant amount calculated under subsection (a) or (b)
22		of this paragraph (2.10), whichever is applicable, and the
23		grant received during the 2002-2003 school year. For the
24		2004-2005 school year only, the grant shall be no greater than
25		the grant received during the 2002-2003 school year added to
26		the product of 0.50 multiplied by the difference between the
27		grant amount calculated under subsection (a) or (b) of this
28		paragraph (2.10), whichever is applicable, and the grant
29		received during the 2002-2003 school year. For the 2005-2006
30		school year only, the grant shall be no greater than the grant
31		received during the 2002-2003 school year added to the product
32		of 0.75 multiplied by the difference between the grant amount
33		calculated under subsection (a) or (b) of this paragraph
34		(2.10), whichever is applicable, and the grant received during

1		the 2002-2003 school year.
2		(3) School districts with an Average Daily Attendance of
3		more than 1,000 and less than 50,000 that qualify for
4		supplemental general State aid pursuant to this subsection
5		shall submit a plan to the State Board of Education prior to
6		October 30 of each year for the use of the funds resulting from
7		this grant of supplemental general State aid for the
8		improvement of instruction in which priority is given to
9		meeting the education needs of disadvantaged children. Such
10		plan shall be submitted in accordance with rules and
11		regulations promulgated by the State Board of Education.
12		(4) School districts with an Average Daily Attendance of
13		50,000 or more that qualify for supplemental general State aid
14		pursuant to this subsection shall be required to distribute
15		from funds available pursuant to this Section, no less than
16		$261,000,000 in accordance with the following requirements:
17		(a) The required amounts shall be distributed to the
18		attendance centers within the district in proportion to the
19		number of pupils enrolled at each attendance center who are
20		eligible to receive free or reduced-price lunches or
21		breakfasts under the federal Child Nutrition Act of 1966
22		and under the National School Lunch Act during the
23		immediately preceding school year.
24		(b) The distribution of these portions of supplemental
25		and general State aid among attendance centers according to
26		these requirements shall not be compensated for or
27		contravened by adjustments of the total of other funds
28		appropriated to any attendance centers, and the Board of
29		Education shall utilize funding from one or several sources
30		in order to fully implement this provision annually prior
31		to the opening of school.
32		(c) Each attendance center shall be provided by the
33		school district a distribution of noncategorical funds and
34		other categorical funds to which an attendance center is

1		entitled under law in order that the general State aid and
2		supplemental general State aid provided by application of
3		this subsection supplements rather than supplants the
4		noncategorical funds and other categorical funds provided
5		by the school district to the attendance centers.
6		(d) Any funds made available under this subsection that
7		by reason of the provisions of this subsection are not
8		required to be allocated and provided to attendance centers
9		may be used and appropriated by the board of the district
10		for any lawful school purpose.
11		(e) Funds received by an attendance center pursuant to
12		this subsection shall be used by the attendance center at
13		the discretion of the principal and local school council
14		for programs to improve educational opportunities at
15		qualifying schools through the following programs and
16		services: early childhood education, reduced class size or
17		improved adult to student classroom ratio, enrichment
18		programs, remedial assistance, attendance improvement, and
19		other educationally beneficial expenditures which
20		supplement the regular and basic programs as determined by
21		the State Board of Education. Funds provided shall not be
22		expended for any political or lobbying purposes as defined
23		by board rule.
24		(f) Each district subject to the provisions of this
25		subdivision (H)(4) shall submit an acceptable plan to meet
26		the educational needs of disadvantaged children, in
27		compliance with the requirements of this paragraph, to the
28		State Board of Education prior to July 15 of each year.
29		This plan shall be consistent with the decisions of local
30		school councils concerning the school expenditure plans
31		developed in accordance with part 4 of Section 34-2.3. The
32		State Board shall approve or reject the plan within 60 days
33		after its submission. If the plan is rejected, the district
34		shall give written notice of intent to modify the plan

1		within 15 days of the notification of rejection and then
2		submit a modified plan within 30 days after the date of the
3		written notice of intent to modify. Districts may amend
4		approved plans pursuant to rules promulgated by the State
5		Board of Education.
6		Upon notification by the State Board of Education that
7		the district has not submitted a plan prior to July 15 or a
8		modified plan within the time period specified herein, the
9		State aid funds affected by that plan or modified plan
10		shall be withheld by the State Board of Education until a
11		plan or modified plan is submitted.
12		If the district fails to distribute State aid to
13		attendance centers in accordance with an approved plan, the
14		plan for the following year shall allocate funds, in
15		addition to the funds otherwise required by this
16		subsection, to those attendance centers which were
17		underfunded during the previous year in amounts equal to
18		such underfunding.
19		For purposes of determining compliance with this
20		subsection in relation to the requirements of attendance
21		center funding, each district subject to the provisions of
22		this subsection shall submit as a separate document by
23		December 1 of each year a report of expenditure data for
24		the prior year in addition to any modification of its
25		current plan. If it is determined that there has been a
26		failure to comply with the expenditure provisions of this
27		subsection regarding contravention or supplanting, the
28		State Superintendent of Education shall, within 60 days of
29		receipt of the report, notify the district and any affected
30		local school council. The district shall within 45 days of
31		receipt of that notification inform the State
32		Superintendent of Education of the remedial or corrective
33		action to be taken, whether by amendment of the current
34		plan, if feasible, or by adjustment in the plan for the

1		following year. Failure to provide the expenditure report
2		or the notification of remedial or corrective action in a
3		timely manner shall result in a withholding of the affected
4		funds.
5		The State Board of Education shall promulgate rules and
6		regulations to implement the provisions of this
7		subsection. No funds shall be released under this
8		subdivision (H)(4) to any district that has not submitted a
9		plan that has been approved by the State Board of
10		Education.
11		(I) General State Aid for Newly Configured School Districts.
12		(1) For a new school district formed by combining property
13		included totally within 2 or more previously existing school
14		districts, for its first year of existence the general State
15		aid and supplemental general State aid calculated under this
16		Section shall be computed for the new district and for the
17		previously existing districts for which property is totally
18		included within the new district. If the computation on the
19		basis of the previously existing districts is greater, a
20		supplementary payment equal to the difference shall be made for
21		the first 4 years of existence of the new district.
22		(2) For a school district which annexes all of the
23		territory of one or more entire other school districts, for the
24		first year during which the change of boundaries attributable
25		to such annexation becomes effective for all purposes as
26		determined under Section 7-9 or 7A-8, the general State aid and
27		supplemental general State aid calculated under this Section
28		shall be computed for the annexing district as constituted
29		after the annexation and for the annexing and each annexed
30		district as constituted prior to the annexation; and if the
31		computation on the basis of the annexing and annexed districts
32		as constituted prior to the annexation is greater, a
33		supplementary payment equal to the difference shall be made for

1		the first 4 years of existence of the annexing school district
2		as constituted upon such annexation.
3		(3) For 2 or more school districts which annex all of the
4		territory of one or more entire other school districts, and for
5		2 or more community unit districts which result upon the
6		division (pursuant to petition under Section 11A-2) of one or
7		more other unit school districts into 2 or more parts and which
8		together include all of the parts into which such other unit
9		school district or districts are so divided, for the first year
10		during which the change of boundaries attributable to such
11		annexation or division becomes effective for all purposes as
12		determined under Section 7-9 or 11A-10, as the case may be, the
13		general State aid and supplemental general State aid calculated
14		under this Section shall be computed for each annexing or
15		resulting district as constituted after the annexation or
16		division and for each annexing and annexed district, or for
17		each resulting and divided district, as constituted prior to
18		the annexation or division; and if the aggregate of the general
19		State aid and supplemental general State aid as so computed for
20		the annexing or resulting districts as constituted after the
21		annexation or division is less than the aggregate of the
22		general State aid and supplemental general State aid as so
23		computed for the annexing and annexed districts, or for the
24		resulting and divided districts, as constituted prior to the
25		annexation or division, then a supplementary payment equal to
26		the difference shall be made and allocated between or among the
27		annexing or resulting districts, as constituted upon such
28		annexation or division, for the first 4 years of their
29		existence. The total difference payment shall be allocated
30		between or among the annexing or resulting districts in the
31		same ratio as the pupil enrollment from that portion of the
32		annexed or divided district or districts which is annexed to or
33		included in each such annexing or resulting district bears to
34		the total pupil enrollment from the entire annexed or divided

1		district or districts, as such pupil enrollment is determined
2		for the school year last ending prior to the date when the
3		change of boundaries attributable to the annexation or division
4		becomes effective for all purposes. The amount of the total
5		difference payment and the amount thereof to be allocated to
6		the annexing or resulting districts shall be computed by the
7		State Board of Education on the basis of pupil enrollment and
8		other data which shall be certified to the State Board of
9		Education, on forms which it shall provide for that purpose, by
10		the regional superintendent of schools for each educational
11		service region in which the annexing and annexed districts, or
12		resulting and divided districts are located.
13		(3.5) Claims for financial assistance under this
14		subsection (I) shall not be recomputed except as expressly
15		provided under this Section.
16		(4) Any supplementary payment made under this subsection
17		(I) shall be treated as separate from all other payments made
18		pursuant to this Section.
19		(J) Supplementary Grants in Aid.
20		(1) Notwithstanding any other provisions of this Section,
21		the amount of the aggregate general State aid in combination
22		with supplemental general State aid under this Section for
23		which each school district is eligible shall be no less than
24		the amount of the aggregate general State aid entitlement that
25		was received by the district under Section 18-8 (exclusive of
26		amounts received under subsections 5(p) and 5(p-5) of that
27		Section) for the 1997-98 school year, pursuant to the
28		provisions of that Section as it was then in effect. If a
29		school district qualifies to receive a supplementary payment
30		made under this subsection (J), the amount of the aggregate
31		general State aid in combination with supplemental general
32		State aid under this Section which that district is eligible to
33		receive for each school year shall be no less than the amount

1		of the aggregate general State aid entitlement that was
2		received by the district under Section 18-8 (exclusive of
3		amounts received under subsections 5(p) and 5(p-5) of that
4		Section) for the 1997-1998 school year, pursuant to the
5		provisions of that Section as it was then in effect.
6		(2) If, as provided in paragraph (1) of this subsection
7		(J), a school district is to receive aggregate general State
8		aid in combination with supplemental general State aid under
9		this Section for the 1998-99 school year and any subsequent
10		school year that in any such school year is less than the
11		amount of the aggregate general State aid entitlement that the
12		district received for the 1997-98 school year, the school
13		district shall also receive, from a separate appropriation made
14		for purposes of this subsection (J), a supplementary payment
15		that is equal to the amount of the difference in the aggregate
16		State aid figures as described in paragraph (1).
17		(3) (Blank).
18		(K) Grants to Laboratory and Alternative Schools.
19		In calculating the amount to be paid to the governing board
20		of a public university that operates a laboratory school under
21		this Section or to any alternative school that is operated by a
22		regional superintendent of schools, the State Board of
23		Education shall require by rule such reporting requirements as
24		it deems necessary.
25		As used in this Section, "laboratory school" means a public
26		school which is created and operated by a public university and
27		approved by the State Board of Education. The governing board
28		of a public university which receives funds from the State
29		Board under this subsection (K) may not increase the number of
30		students enrolled in its laboratory school from a single
31		district, if that district is already sending 50 or more
32		students, except under a mutual agreement between the school
33		board of a student's district of residence and the university

1		which operates the laboratory school. A laboratory school may
2		not have more than 1,000 students, excluding students with
3		disabilities in a special education program.
4		As used in this Section, "alternative school" means a
5		public school which is created and operated by a Regional
6		Superintendent of Schools and approved by the State Board of
7		Education. Such alternative schools may offer courses of
8		instruction for which credit is given in regular school
9		programs, courses to prepare students for the high school
10		equivalency testing program or vocational and occupational
11		training. A regional superintendent of schools may contract
12		with a school district or a public community college district
13		to operate an alternative school. An alternative school serving
14		more than one educational service region may be established by
15		the regional superintendents of schools of the affected
16		educational service regions. An alternative school serving
17		more than one educational service region may be operated under
18		such terms as the regional superintendents of schools of those
19		educational service regions may agree.
20		Each laboratory and alternative school shall file, on forms
21		provided by the State Superintendent of Education, an annual
22		State aid claim which states the Average Daily Attendance of
23		the school's students by month. The best 3 months' Average
24		Daily Attendance shall be computed for each school. The general
25		State aid entitlement shall be computed by multiplying the
26		applicable Average Daily Attendance by the Foundation Level as
27		determined under this Section.
28		(L) Payments, Additional Grants in Aid and Other Requirements.
29		(1) For a school district operating under the financial
30		supervision of an Authority created under Article 34A, the
31		general State aid otherwise payable to that district under this
32		Section, but not the supplemental general State aid, shall be
33		reduced by an amount equal to the budget for the operations of

1		the Authority as certified by the Authority to the State Board
2		of Education, and an amount equal to such reduction shall be
3		paid to the Authority created for such district for its
4		operating expenses in the manner provided in Section 18-11. The
5		remainder of general State school aid for any such district
6		shall be paid in accordance with Article 34A when that Article
7		provides for a disposition other than that provided by this
8		Article.
9		(2) (Blank).
10		(3) Summer school. Summer school payments shall be made as
11		provided in Section 18-4.3.
12		(M) Education Funding Advisory Board.
13		The Education Funding Advisory Board, hereinafter in this
14		subsection (M) referred to as the "Board", is hereby created.
15		The Board shall consist of 5 members who are appointed by the
16		Governor, by and with the advice and consent of the Senate. The
17		members appointed shall include representatives of education,
18		business, and the general public. One of the members so
19		appointed shall be designated by the Governor at the time the
20		appointment is made as the chairperson of the Board. The
21		initial members of the Board may be appointed any time after
22		the effective date of this amendatory Act of 1997. The regular
23		term of each member of the Board shall be for 4 years from the
24		third Monday of January of the year in which the term of the
25		member's appointment is to commence, except that of the 5
26		initial members appointed to serve on the Board, the member who
27		is appointed as the chairperson shall serve for a term that
28		commences on the date of his or her appointment and expires on
29		the third Monday of January, 2002, and the remaining 4 members,
30		by lots drawn at the first meeting of the Board that is held
31		after all 5 members are appointed, shall determine 2 of their
32		number to serve for terms that commence on the date of their
33		respective appointments and expire on the third Monday of

1		January, 2001, and 2 of their number to serve for terms that
2		commence on the date of their respective appointments and
3		expire on the third Monday of January, 2000. All members
4		appointed to serve on the Board shall serve until their
5		respective successors are appointed and confirmed. Vacancies
6		shall be filled in the same manner as original appointments. If
7		a vacancy in membership occurs at a time when the Senate is not
8		in session, the Governor shall make a temporary appointment
9		until the next meeting of the Senate, when he or she shall
10		appoint, by and with the advice and consent of the Senate, a
11		person to fill that membership for the unexpired term. If the
12		Senate is not in session when the initial appointments are
13		made, those appointments shall be made as in the case of
14		vacancies.
15		The Education Funding Advisory Board shall be deemed
16		established, and the initial members appointed by the Governor
17		to serve as members of the Board shall take office, on the date
18		that the Governor makes his or her appointment of the fifth
19		initial member of the Board, whether those initial members are
20		then serving pursuant to appointment and confirmation or
21		pursuant to temporary appointments that are made by the
22		Governor as in the case of vacancies.
23		The State Board of Education shall provide such staff
24		assistance to the Education Funding Advisory Board as is
25		reasonably required for the proper performance by the Board of
26		its responsibilities.
27		For school years after the 2000-2001 school year, the
28		Education Funding Advisory Board, in consultation with the
29		State Board of Education, shall make recommendations as
30		provided in this subsection (M) to the General Assembly for the
31		foundation level under subsection (B) subdivision (B)(3) of
32		this Section and for the supplemental general State aid grant
33		level under subsection (H) of this Section for districts with
34		high concentrations of children from poverty. The recommended

1		foundation level shall be determined based on a methodology
2		which incorporates the basic education expenditures of
3		low-spending schools exhibiting high academic performance. The
4		Education Funding Advisory Board shall make such
5		recommendations to the General Assembly on January 1 of odd
6		numbered years, beginning January 1, 2001.
7		(N) (Blank).
8		(O) References.
9		(1) References in other laws to the various subdivisions of
10		Section 18-8 as that Section existed before its repeal and
11		replacement by this Section 18-8.05 shall be deemed to refer to
12		the corresponding provisions of this Section 18-8.05, to the
13		extent that those references remain applicable.
14		(2) References in other laws to State Chapter 1 funds shall
15		be deemed to refer to the supplemental general State aid
16		provided under subsection (H) of this Section.
17		(Source: P.A. 92-16, eff. 6-28-01; 92-28, eff. 7-1-01; 92-29,
18		eff. 7-1-01; 92-269, eff. 8-7-01; 92-604, eff. 7-1-02; 92-636,
19		eff. 7-11-02; 92-651, eff. 7-11-02; 93-21, eff. 7-1-03.)
20		(105 ILCS 5/18-8.10 new)
21		Sec. 18-8.10. Supplemental State aid for rapidly expanding
22		school districts.
23		(a) If there has been an increase in a school district's
24		student population over any 2 consecutive school years of (i)
25		over 1.5% in a district with 10,000 or more pupils in average
26		daily attendance, as defined in Section 18-8.05 of this Code,
27		or (ii) over 10% in any other district, then, subject to
28		appropriation, the district is eligible for a grant under this
29		Section.
30		(b) The State Board of Education shall determine a per
31		pupil grant amount for each school district based on the needs

1		of each district. The total grant amount for a district for any
2		given school year shall equal the per pupil grant amount
3		multiplied by the difference between the number of pupils in
4		average daily attendance for the first 3 months of the school
5		year and the number of pupils in average daily attendance for
6		the immediately preceding school year.
7		(c) Each fiscal year, the General Assembly shall
8		appropriate at least $40 million of the aggregate Common School
9		Fund appropriation to funding supplemental grants under this
10		Section. Funds for grants under this Section must be
11		appropriated to the State Board of Education in a separate line
12		item for this purpose. As soon as possible after funds have
13		been appropriated to the State Board of Education, the State
14		Board of Education shall distribute the grants to eligible
15		districts.
16		(d) If a school district intentionally reports incorrect
17		average daily attendance numbers to receive a grant under this
18		Section, then the district shall be denied State aid for
19		intentional incorrect reporting of average daily attendance
20		numbers under Section 18-8.05 of this Code.
21		(e) The State Board of Education may adopt any rules
22		necessary to implement this Section.
23		(105 ILCS 5/18-25 new)
24		Sec. 18-25. Education appropriation minimum. At a minimum,
25		the General Assembly shall appropriate to the Common School
26		Fund for fiscal year 2006 and each fiscal year thereafter, an
27		amount equal to the following (the "Education Appropriation
28		Minimum"):
29		(1) For fiscal year 2006, a total appropriation equal
30		to the sum of (A) all amounts appropriated to the Common
31		School Fund for fiscal year 2005, plus (B) the amount
32		necessary to increase the Foundation Level of support per
33		student to $5,952 under Section 18-8.05 of this Code, plus

1		(C) $2.4 billion to fund the School District Property Tax
2		Relief Fund described in Section 6z-65 of the State Finance
3		Act.
4		(2) For each fiscal year thereafter, a total
5		appropriation equal to (A) the Education Appropriation
6		Minimum for the immediately preceding fiscal year,
7		increased by the percentage increase, if any, in the
8		Employment Cost Index published by the U.S. Bureau of Labor
9		Statistics for the immediately preceding fiscal year, or
10		(B) such greater amount as the General Assembly may
11		appropriate.".