What is Illinois General Information Letter IT 21-0008-GIL, and what does it say about corporate income tax nexus, apportionment, and combined reporting?
Apply this to your situation
This page answers the general question as of 2021. Ezel answers yours, under current Illinois tax law, with citations.
Subject
Corporate Income Tax Survey Response
Plain-English summary
This is not a ruling on any taxpayer's situation. IT 21-0008-GIL is the Illinois Department of Revenue's response to an email asking it to complete an annual questionnaire -- a "Survey of State Tax Departments" style form -- covering corporate income tax nexus, tax base and rates, apportionment, and administrative issues. The requester's name, email, and the survey's publisher are redacted (shown only as "NAME" and "E-MAIL" in the text), but the letter itself says it responds to "an annual survey," instructs Illinois to answer "based on your state's laws in effect on July 1, 2021," and asks for the completed questionnaire back within about six weeks.
The Department's entire "response" is the completed survey, which the letter reproduces question-by-question with mostly checkbox and short-answer replies. It spans four sections: (A) Income Tax Nexus (property/employee activities that create nexus, de minimis presence, remote workers, economic and factor-presence nexus, internet activities); (B) Tax Base and Tax Rates (LLC/partnership/S-corp entity-level taxes, the new pass-through entity tax workaround for the federal SALT cap at a 4.95% rate, depreciation and bonus-depreciation conformity, net operating losses, addition/subtraction modifications, GILTI and IRC section 965 treatment, and tax credits); (C) Apportionment (UDITPA conformity, the single-sales-factor formula, sourcing rules for tangible property/services/intangibles, the throwback rule, Joyce treatment, and industry-specific formulas for airlines, financial institutions, pipelines, railroads, telecommunications, and broadcasters); and (D) Administrative Issues (filing deadlines, extensions, estimated payments, penalties/interest, federal partnership audit conformity, and common filing mistakes).
Because this is a GIL, not a Private Letter Ruling, none of it is binding on the Department and it doesn't resolve any specific taxpayer's facts -- it is simply Illinois's self-description of its own general corporate tax regime as of mid-2021, submitted for inclusion in a third-party publication comparing states.
What this means for you
Multistate businesses assessing Illinois nexus and apportionment
If your company is evaluating Illinois corporate income tax exposure, this letter is a dense index of Illinois's own stated positions as of July 2021 -- for example, that Illinois has a single-sales-factor apportionment formula with special mileage- or service-address-based formulas for airlines, financial institutions, pipelines, railroads, trucking companies, telecommunications companies, and broadcasters, and that combined unitary filing has been mandatory (not elective) for corporations since tax years ending on or after December 31, 1993. Treat it as a snapshot summary current only to mid-2021, not authority for your own facts.
Accountants and multistate tax professionals
The letter is a convenient one-stop reference to several Illinois positions as the Department itself described them: the bonus-depreciation addback and subtraction mechanics under 35 ILCS 5/203, Public Act 102-16's decoupling from 100% federal bonus depreciation and its new GILTI addback, the definitions of "unitary business group" and business/nonbusiness income under 35 ILCS 5/1501, the newly effective elective pass-through entity tax (4.95% rate, effective for tax years ending on or after December 31, 2021) enacted as a SALT-cap workaround, and several Informational Bulletins cited for federal conformity issues (IRC sections 965, 163(j), and 250 GILTI). Because these are survey answers rather than adjudicated positions, always verify current-year rules directly against the statutes and bulletins cited.
Anyone expecting a substantive taxpayer ruling
If you came looking for a ruling that resolves a specific tax dispute or question, this isn't it. The Department explicitly frames its reply as a GIL responding to "an annual survey," and the substance is Illinois filling in someone else's standardized questionnaire. There is no taxpayer-specific fact pattern, no issue, and no conclusion beyond the survey answers themselves.
Common questions
Q: Is this letter binding on the Illinois Department of Revenue?
A: No. It is a General Information Letter issued under 2 Ill. Adm. Code 1200.120, which by definition does not state Department policy and is not binding on the Department. It responds to a third-party survey request rather than a taxpayer's own question, so it is even further removed from a binding ruling than a typical GIL.
Q: Who asked for this letter, and why?
A: The requester's name and the survey publisher are redacted in the published text (shown as "NAME" and "E-MAIL"). The letter states it is a response to "an annual survey" -- a standardized multistate questionnaire asking Illinois to answer as of its laws in effect on July 1, 2021, covering corporate income tax nexus, tax base, apportionment, and administrative rules, apparently for compilation into a comparative multistate publication.
Q: What topics does the survey response actually cover?
A: Four broad sections: income tax nexus (property ownership, employee activities, remote workers, economic/factor-presence nexus, internet activities); tax base and tax rates (LLC/partnership/S-corp treatment, the new elective pass-through entity tax, depreciation, net operating losses, addition/subtraction modifications, GILTI, and IRC section 965); apportionment (UDITPA conformity, single-sales-factor formula, sourcing rules, throwback, Joyce vs. Finnigan, and industry-specific formulas); and administrative issues (filing deadlines, extensions, estimated payments, penalties, interest, and federal partnership-audit conformity).
Q: Does this letter answer a specific company's nexus or apportionment question?
A: No. There is no taxpayer, no fact pattern, and no specific issue presented -- the entire substance is Illinois's general, self-reported answers to a standardized survey questionnaire, current only as of Illinois law in effect on July 1, 2021.
Q: Can I rely on this letter for how Illinois currently treats a particular nexus or apportionment issue?
A: Use caution. It is a helpful pointer to the relevant statutes, regulations, and Informational Bulletins (which you should verify are still current), but as a non-binding GIL answering a 2021 survey, it carries no authority and may be outdated by later statutory or regulatory changes -- for example, Public Act 102-16's bonus-depreciation and GILTI changes were already brand-new at the time this letter was written.
Source
- Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/income-tax/2021.html
- Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/income-tax/2021/it21-0008-gil.pdf
Original ruling text
IT-21-0008 10/01/2021 MISCELLANEOUS
This letter responds to an annual survey. (This is a GIL.)
October 1, 2021
Dear XXXX:
This letter is in response to your email dated June 15, 2021, in which you requested
information. Department of Revenue (“Department”) regulations require that the Department issue
only two types of letter rulings, Private Letter Rulings (“PLRs”) and General Information Letters
(“GILs”). PLRs are issued by the Department in response to specific taxpayer inquiries concerning
the application of a tax statute or rule to a particular fact situation. A PLR is binding against the
Department, but only as to the taxpayer issued the ruling and only to the extent the facts recited in
the PLR are correct and complete. The purpose of GILs is to direct taxpayers to Department
regulations or other sources of information regarding the topic about which they have inquired. GILs
do not constitute statements of Department policy that apply, interpret, or prescribe the tax laws,
and are not binding on the Department. See 2 Illinois Administrative Code 1200 for more
information. You may access our website at www.tax.illinois.gov to review regulations, letter rulings,
and other types of information relevant to your inquiry. The nature of your inquiry and the information
you have provided require that we respond with a GIL. In your letter you have stated and made
inquiry as follows:
Instructions:
Provide answers based on your state’s laws in effect on July 1, 2021.
Please list the state employee(s) to contact if we have a question regarding a response.
Please email the completed questionnaire to E-MAIL by August 2, 2021.
If you have any questions, contact NAME at E-MAIL or NAME at PHONE #.
Thank you for your cooperation on this project!
IT-21-0008
Page 2
New questions marked in red
A. INCOME TAX NEXUS
- Nexus
1.a. Property in State
1.b. Employees in State
1.c. Other In-State Activities
1.d. Financial Institutions
1.e. Trucking Companies - De Minimis Presence
- Franchisers
- Qualified to Do Business
- Remote Workers
- Foreign (non-U.S.) Corporations
- Economic Nexus
- Factor Presence Nexus
- Internet Activities
QUESTION TOPICS
- Passive Loss Limitations
- Depletion
- Cancellation of Debt Income
- IRC §199 Deduction (repealed)
27a. IRC §163(j) Limitation
27b. IRC §250 FDII Deduction
27c. IRC §250 GILTI Deduction - Investment Tax Credit
- Jobs, Research & Energy Credits
- Enterprise Zones
- Other Tax Incentives
- Unused Credits or Incentives
- Family/Medical Leave Credit
- Contributions to Capital
-
PPP Loans
-
Combined Reporting
- Combined Reporting Group
- Combined Income
34a. Elective Combination of
Consolidation
34b. Tax Haven Operations - Consolidated Returns
- Consolidated Group
36a. Consolidated Income - Business/Nonbusiness Income
- Allocating Nonbusiness Income
- Intercorporate Transactions
- Related Party Interest Expense
- Related Party Intangibles Expense
- Other Related Party Expenses
D. ADMINISTRATIVE ISSUES
C. APPORTIONMENT
B. TAX BASE AND TAX RATES
- Due Dates for Filing Returns
- Conformity to UDITPA
1 Limited Liability Companies - Filing Extensions
- Apportionment Formula.
- Partnerships
- Maximum Extension
- Alternative Methods Relief
- Subchapter S Corporations
- Extension Form
- State Use of Alternative Methods
SALT Limitation Workarounds - U.S. Mail
- Zero Numerator or Denominator
3.a. IRC §199A QBI Deduction - Payment of Tax
- Ownership Interest in PTE
- Piggyback on Federal Tax Base
- Credit Cards
- Property Factor: Valuation
- Tax Rates
- Underpayment Penalty Exceptions
- Property Factor: Average Value
- Minimum Taxes
- Interest and Penalties
- Property Factor: Exclusions
6.a. State Alternative Minimum Tax - Change in Accounting Method
- Property Factor: Leased Assets
6.b. IRC §55 AMT (repealed) - Conformity to Federal Tax Year
- Property Factor: Inventory
6.c. IRC §59A Base Erosion Tax - Conformity to Federal Methods
- Property Factor: Other Assets
- IRC §179 Asset Expensing
- Audits
- Payroll Factor
- Depreciation
- Reporting Federal Adjustments
- Payroll Factor: Inclusions
8.a. Federal Bonus Depreciation - Statute of Limitations
- Sales Factor: Meaning of Sales
- Net Operating Loss Deductions
- Notification to Represent Client
- Sales Factor: Inclusions
- Addition Modifications
- Required Federal Attachments
- Sales of Electricity
- Subtraction Modifications
- Short Year Due to Acquisition
- Post-Filing Adjustments
- Dividends
- Amended Returns
21.a. Sourcing Sales of TPP - Income from Foreign Subsidiaries
- Private Contractors
21.b. Sourcing Rental Income
13.a. GILTI Inclusions - Offers in Compromise
21.c. Sourcing Sales of Services
13.b. IRC §965 Transition Tax - Voluntary Disclosure Programs
21.d. Sourcing Intangible Income - Foreign Income Taxes
- Form 1099 Requirements
- Throwback Rule
- State and Local Taxes
- Multistate Tax Commission
- Throwback for Foreign Sales
- Municipal Bonds
- Nonresident Employees
- Throw-out Rule
- Federal Bonds
- Federal Schedule UTP
- Contested Sales
- Capital Gains
27.
Partnership Audit Rules - U.S. Government Sales
- Capital Losses
- Common Mistakes
- Joyce versus Finnegan
- IRC §338 Election
- Jurisdictional Standards
- IRC §338(h)(10) Election
- Specialized Industry Formulas
- Nontaxable Exchanges
IT-21-0008
Page 3
DEPARTMENT’S RESPONSE:
A. NEXUS
[1.] Nexus. Is an out-of-state corporation subject to your state’s income-based tax if its only activity in your state is the
activity described below (check each activity that would, by itself, create nexus)?
[1.a.] Ownership or Use of Property in State
Ownership of real estate
Ownership of display racks
Ownership of stock of goods in a public warehouse
Ownership of stock of goods on consignment
Tooling, molds or dies located at in-state manufacturer
Operation of mobile stores
Company-owned trucks regularly used to make deliveries to in-state customers
Company-owned trucks occasionally (1-3 times per year) used to make deliveries to in-state customers
Company-owned cars used by salespersons soliciting sales of tangible personal property
Raw materials or finished goods located at in-state printer and occasional (1-3 times per year) quality control
visitations by employees
Temporary presence of inventory for purposes of processing by an unrelated third party
Leasing of tangible personal property used regularly by lessee in state
Leasing of tangible personal property used occasionally (1-3 times per year) by lessee in state
Leasing of mobile assets (e.g., trucks, airplanes) used occasionally (1-3 times per year) by lessee in state
Ownership of limited interest in a limited partnership doing business in state
Ownership of general interest in a partnership doing business in state
Ownership of interest in an LLC doing business in state
Ownership of interest in a board-managed LLC doing business in state (member is not on board)
Holding title to electricity flowing through power lines (transmission does not originate or terminate in state)
▪ For purposes of P.L. 86-272, is electricity considered tangible personal property?
Yes
No
Holding title to natural gas flowing through pipelines (transport does not originate or terminate in state)
▪ For purposes of P.L. 86-272, is natural gas considered tangible personal property?
Yes
No
[1.b.] In-State Activities of Employees
Solicit sales of tangible personal property
Solicit sales of real estate
Solicit sales of services (e.g., computer consulting)
Solicit sales of intangibles (e.g., securities)
Inspect customer installations of products (goods)
Inspect customer’s inventory
Set up promotional items related to products (goods)
Perform consulting services for customers
Perform non-solicitation activities (i.e., administration) in home offices
Attend trade shows for 14 days or less per year, and products are tangible personal property
Attend trade shows for 14 days or less per year, and products are not tangible personal property
Perform repairs and maintenance of the taxpayer’s products
Perform engineering or design services related to sales of taxpayer’s customized products
Occasionally (1-3 times per year) provide training seminars for customers
Occasionally (1-3 times per year) attend meetings at customer’s location
Occasionally (1-3 times per year) attend training seminars sponsored by unrelated parties
Present for 20 days or less solely to purchase goods from in-state vendors
IT-21-0008
Page 4
[1.c.] Other In-State Activities
Hire unrelated third party to install products
Hire unrelated third party to repossess property
Hire unrelated third party to collect accounts
Lease employees to in-state company
Maintain telephone answering service
Listing in phone book
Hire unrelated third party to perform warranty repairs (customer is not separately charged for service)
Hire unrelated third party to perform warranty repairs (customer is separately charged for service)
In-state fulfillment company fills orders from taxpayer-owned inventory located at fulfillment company
Occasionally (1-3 times per year) hold board of director meetings
Maintain a web site that is accessible in, but not located on a server in state
Maintain a web site that is accessible and located on a server in state
Maintain a security interest in property sold until contract price has been paid
[1.d.] Financial Institutions
State residents hold credit cards issued by the financial institution
Make mortgage loans to state residents secured by in-state real property
Make unsecured consumer loans to state residents
Make commercial loans to state residents
Make consumer loans to state residents secured by in-state tangible personal property
Purchase, in secondary market, mortgages on in-state real property
Purchase, in secondary market, consumer loans to state residents secured by in-state tangible personal property
Purchase, in secondary market, credit card receivables of state residents
Hire in-state telemarketing firm to market credit cards or loans
Hire in-state unrelated party to service loans
Hire in-state related party to service loans
Hire in-state unrelated party to close mortgages
Foreclose on property in state
Solicit loans or credit cards through the mail
Solicit loans or credit cards via Internet web site
[1.e.] Trucking Companies
▪ Company-owned trucks pass through your state, but do not deliver or pick-up goods in state:
More than 6 times per year
More than 12 times per year
Other, explain:
Company-owned trucks are used to deliver or pick-up goods in state
Company-owned trucks are used to backhaul goods originating in state
Taxpayer hires unrelated trucking company to deliver or pick-up goods in state
[2.] De Minimis Presence
▪ Has your state defined occasional or de minimis in-state activity that does not create income tax nexus?
▪ If YES, what is definition?
▪ If a taxpayer establishes nexus during the year, is it taxable for the entire year, i.e., must the taxpayer file a
full-year return and include in the sales factor sales that occurred prior to establishing nexus?
▪ Has your state developed an income tax nexus questionnaire that is sent to taxpayers which the state believes
may be doing business?
Yes No
IT-21-0008
Page 5
[3.] Franchisers. Is an out-of-state franchiser subject to your state’s income-based tax if its only in-state activity is
performing this service for the benefit of an in-state franchisee (check each activity that would, by itself, create nexus)?
In-state management training courses
In-state regional meetings
Bookkeeping that is sent out of state for processing
Central purchasing
Field operations evaluations
Field training
Frequent visits to advise on business matters
Licensing of trademarks or trade names
Occasional (1-3 times per year) visits to advise on business matters
Occasional (1-3 times per year) “secret shopper” visits by employees for quality control purposes
Occasional (1-3 times per year) “secret shopper” visits by unrelated third parties for quality control purposes
Providing supplies or equipment for special events (e.g., outside displays), free-of-charge
Delivery of products via company-owned vehicles
[4.] Qualified to Do Business. For a corporation that is qualified to do business in your state:
▪ Does the mere holding of a certificate of authority to do business subject the corporation to:
▪ Income-based tax?
▪ Flat dollar amount minimum tax?
Yes No
▪ Must the corporation file a tax return, even if it has not yet begun to do business in your state?
▪ Must the corporation file a tax return, even if its activities are protected by P.L. 86-272 (i.e., the corporation
must file a return noting that it is protected by P.L. 86-272)?
[5.] Remote Workers
Yes No
▪ Does the presence in the state of a non-salesperson employee working from home create nexus for an out-ofstate employer? Assume the employee has no contact or involvement with in-state customers or suppliers, the
employer does not provide the employee with equipment or an office allowance, and the employee’s home is not
used as a place of business for the employer.
▪ Is an out-of-state corporation subject to your state’s income-based tax if the corporation’s only activity in your
state is the presence of an employee who works from his or her home within the state and whose duties include
activities other than solicitation of orders for sales of tangible personal property?
COVID-19 Emergency.
▪ Has your state announced a relief provision which provides that the state will not seek to impose
nexus on an out-of-state corporation based solely on a change in an employee’s work location that
is temporary in nature and attributable to the COVID-19 emergency?
▪ If YES, what are the requirements for qualifying for the relief provision?
▪ If YES, on what date does the relief provision take effect?
▪ If YES, on what date does the relief provision end?
▪ If YES, has your state department of revenue issued guidance regarding these relief provisions?
▪ If YES, please provide citation(s):
Yes No
Yes No
[6.] Foreign (non-U.S.) Corporations.
▪ If a foreign (non-U.S.) corporation has income tax nexus in your state but is exempt from federal income tax
pursuant to an income tax treaty, is the foreign corporation:
▪ Required to file an income tax return in your state?
Yes
▪ Subject to income tax in your state?
▪ If YES, what is the starting point for computing state taxable income?
Federal taxable income computed as if the corporation was subject to federal income tax
Other, explain:
Yes
No
No
IT-21-0008
Page 6
▪ If employees of a foreign corporation enter your state to solicit sales of tangible personal
property which are approved and shipped from outside your state, does P.L. 86-272 protect
the foreign corporation from income tax nexus in your state?
Yes
No
[7.] Economic Nexus. Assume an out-of-state corporation does not have any tangible property, employees, representatives
or any other type of physical presence in your state. Is that out-of-state corporation subject to your state’s income-based tax
if its only activity in your state is the activity described below (check each activity that would, by itself, create nexus)?
Licensing of trademarks or trade names to related entities located in state
Licensing of trademarks or trade names to unrelated entities located in state
Licensing of software to entities located in state
Licensing of franchises (e.g., fast-food franchises) to entities located in state
Licensing of other intangibles (e.g., patents or copyrights) to entities located in state
Other, explain:
[8.] Factor Presence Nexus. Under a factor presence nexus standard, an out-of-state corporation has income tax nexus if its
in-state sales, payroll, property or some other measure of in-state economic activity exceed a specified threshold level.
▪ Is an out-of-state corporation subject to your state’s income-based tax if its only activity in
your state is IN-STATE SALES that exceed a certain threshold amount?
▪ If YES, what is the threshold amount of sales?
▪ If YES, what amounts are treated as in-state sales (check all that apply)?
Sales of real property located in your state
Rents or royalties from leasing or licensing real property located in your state
Sales of tangible personal property for delivery or shipment to a purchaser in your state
Rents from leasing tangible personal property located in your state
Sales of services used by a purchaser in your state
Sales of intangible property used by a purchaser in your state
Royalties from licensing intangible property used by a purchaser in your state
Other, explain:
Yes No
▪ Is an out-of-state corporation subject to your state’s income-based tax if its only activity in
your state is IN-STATE PAYROLL that exceeds a certain threshold amount?
Yes No
▪ If YES, what is the threshold amount of payroll?
▪ Is an out-of-state corporation subject to your state’s income-based tax if its only activity in
your state is IN-STATE PROPERTY that exceeds a certain threshold amount?
Yes No
▪ If YES, what is the threshold amount of property?
▪ If the taxpayer is a member of a combined group of corporations engaged in a unitary business,
does the taxpayer include the sales, property and payroll of the other group members when
determining whether a threshold is met?
Yes No
▪ If the taxpayer is a partner in a partnership, does the taxpayer include its distributive share of the sales, property and
payroll of the partnership when determining whether a threshold is met? Yes No
[9.] Internet Activities. The MTC is updating its statement of practices regarding P.L. 86-272 to provide
guidance regarding the application of P.L. 86-272 to business activities conducted via the internet. Assume that
an out-of-state corporation operates a website offering for sale only items of tangible personal property and its
only activity in your state is the activity described below. Orders are sent outside your state for approval or
rejection, and if approved, are shipped from a point outside your state. For each independent scenario, determine
if the out-of-state corporation would be subject to your state’s income-based tax.
▪ Basic website. The website enables in-state customers to search for items, read product descriptions, select
items for purchase, choose among delivery options, and pay for the items.
▪ Post-sale assistance provided by posting static FAQs. The business provides post-sale assistance to in-state
customers by posting a list of static FAQs with answers on the business’s website.
Yes No
IT-21-0008
Page 7
▪ Post-sale assistance provided via electronic chat or website email. The business provides post-sale assistance
to in-state customers via either electronic chat or email (e.g., information regarding shipments) that customers
initiate by clicking on an icon on the business’s website.
▪ Cookies used for purposes ancillary to solicitation. The business places internet cookies onto the electronic
devices of in-state customers. These cookies gather customer information that is only used for purposes entirely
ancillary to the solicitation of orders for tangible personal property, such as to store personal information
customers have provided to avoid the need for the customers to re-input the information when they return to the
seller’s website.
▪ Cookies used for purposes other than solicitation. The business places internet cookies onto the electronic
devices of in-state customers. These cookies gather customer search information that will be used to adjust
production schedules and inventory amounts, develop new products, or identify new items to offer for sale.
▪ Remote repairs and upgrades. The business remotely upgrades or fixes products previously purchased by its instate customers by transmitting code or other electronic instructions to those products via the internet.
▪ Warranty plans. The business offers and sells extended warranty plans via its website to in-state customers who
purchase the business’s products.
▪ Credit cards. The business solicits and receives online applications for its branded credit card via the business’s
website. The issued cards will generate interest income and fees for the business.
▪ Job applications. The business’s website invites in-state viewers to apply for non-sales positions with the
business. The website enables viewers to fill out and submit an electronic application, as well as to upload a
cover letter and resume.
▪ Marketplace facilitators. The business contracts with a marketplace facilitator that facilitates the sale of the
business’s products on the facilitator’s online marketplace. The marketplace facilitator maintains inventory,
including some of the business’s products, at fulfillment centers in various states where the business’s customers
are located.
B. TAX BASE AND TAX RATES
Note: SAF means “Same as Federal”
[1.] Limited Liability Companies
▪ Does your state conform to the federal classification of a multi-member LLC?
Yes No
▪ Does your state conform to the federal classification of a single-member LLC?
Yes No
▪ Does your state impose an entity-level tax on a multi-member LLC classified as a partnership (check all that apply)?
Flat-dollar amount minimum tax or filing fee. Amount?
Income-based tax. Rate schedule? 1.5%
Franchise tax based on net worth or capital. Rate schedule?
Withholding tax on members
Other, explain:
▪ Does your state impose an entity-level tax on a single-member LLC treated as a disregarded entity (check all that apply)?
Flat-dollar amount minimum tax or filing fee. Amount?
Income-based tax. Rate schedule?
Franchise tax based on net worth or capital. Rate schedule?
Withholding tax on member Other, explain:
▪ If an LLC is treated as a partnership, does your state allow the LLC to file a composite return on behalf of:
▪ Nonresident members who are individuals?
Yes No If YES, Form:
▪ Nonresident members who are corporations? Yes No If YES, Form:
NOTE: Composite filings were only permitted for taxable years ending on or after December 31, 1987 and
ending prior to December 31, 2014. Partnerships must report all information on Form IL-1065 including the
pass-through withholding of nonresident partners.
IT-21-0008
Page 8
[2.] Partnerships
▪ Does your state impose an entity-level tax on a general partnership (check all that apply)?
Flat-dollar amount minimum tax or filing fee. Amount??
Income-based tax. Rate schedule? 1.5%
Franchise tax based on net worth or capital. Rate schedule?
Withholding tax on partners
Other, explain:
▪ Does your state impose an entity-level tax on a limited partnership (check all that apply)?
Flat-dollar amount minimum tax or filing fee. Amount?
Income-based tax. Rate schedule? 1.5%
Franchise tax based on net worth or capital. Rate schedule?
Withholding tax on partners
Other, explain:
▪ Does your state allow a partnership to file a composite return on behalf of:
▪ Nonresident partner who are individuals?
Yes No If YES, Form:
▪ Nonresident partners who are corporations?
Yes
No
If YES, Form:
NOTE: Composite filings were only permitted for taxable years ending on or after December 31, 1987 and
ending prior to December 31, 2014. Partnerships must report all information on Form IL-1065 including the
pass-through withholding of nonresident partners.
[3.] Subchapter S Corporations
▪ Does your state recognize S corporation status, as defined for federal purposes?
Yes No
▪ If YES, does your state require the filing of a separate state S corporation election?
Yes No
▪ If YES, does your state impose special eligibility requirements?
Yes No
▪ If YES, what are the additional state requirements:
Shareholder must agree to pay tax Shareholder must be state resident Other, explain:
▪ Does your state impose an entity-level tax on an S corporation (check all that apply)?
Flat-dollar amount minimum tax or filing fee. Amount?
Income-based tax. Rate schedule? 1.5%
Franchise tax based on net worth or capital. Rate schedule?
Built-in gains tax Excess net passive income tax LIFO recapture tax
Withholding tax on shareholders
Other, explain:
▪ Does your state conform to the federal treatment of a qualified Subchapter S subsidiary (QSSS) as a division
of its parent S corporation? Yes
No
▪ Does your state require the filing of a separate QSSS election? YES (Form:
) No
▪ If your state imposes a franchise tax based on net worth or capital, what type of returns do a QSSS and its parent S
corporation file? 2 separate returns Single combined return State does not impose such a tax
▪ Is a shareholder’s basis in the stock of an S corporation always the same for state and federal purposes?
Yes No If NO, explain:
▪ Can a nonresident shareholder carry forward a state (non-federal) net operating loss?
Yes No
▪ Can a federal S corporation elect not to be treated as an S corporation for state purposes?
Yes No
▪ If YES, how is the election made?
▪ Can an S corporation file a composite return on behalf of its nonresident shareholders? Yes (Form:
) No
NOTE: Composite filings were only permitted for taxable years ending on or after December 31, 1987 and
ending prior to December 31, 2014. S Corporations must report all information on Form IL-1120-ST including
the pass-through withholding of nonresident partners.
IT-21-0008
Page 9
SALT Limitation Workarounds. The federal Tax Cuts and Jobs Act of 2017 imposed a $10,000 limitation on the
deduction that an individual can claim for state and local taxes. Many states have enacted workarounds for state residents
who are owners of pass-through entities. These laws impose new entity-level taxes while reducing the related owner-level
taxes. In its Notice 2020-75, the IRS agreed that pass-through entities may claim entity-level deductions for state income tax
paid under state laws that shift the tax burden from the individual owners to the business entity.
▪ In response to the federal limitation on an individual’s ability to deduct state and local taxes,
has your state enacted an entity-level tax on pass-through entities?
Yes No
▪ If YES, what year does the new entity-level tax take effect? Tax years ending on or after 12/31/21
▪ If YES, is the entity-level tax mandatory or elective? Mandatory Elective
▪ If YES, what is the entity-level tax rate? 4.95%
▪ If YES, what is the mechanism for reducing the owner-level tax on the pass-through entity’s income?
Owner-level credit for owner’s share of entity-level tax
Owner-level exclusion for owner’s share of entity-level income
Other, explain:
▪ If YES, what types of pass-through entities are subject to the new entity-level tax?
S corporations Limited liability companies Partnerships Other, explain:
[3.a.] IRC §199A QBI Deduction. For purposes of computing an individual’s state taxable income, does your state
conform to the IRC §199A qualified business income deduction with respect to the following types of pass-through entities?
▪ Distributive share of partnership income
Yes No
▪ Pro-rata share of S corporation income
Yes No
▪ Income of an LLC treated as a disregarded entity
Yes No
[4.] Piggybacking on Federal Tax Base
▪ Does the computation of your state’s corporate taxable income start with an amount from federal Form 1120?
Yes, Line 28 of Form 1120 (taxable income before the NOL deduction and special deductions)
Yes, Line 30 of Form 1120 (taxable income)
No, explain:
▪ If the federal rules for computing gross income and deductions are followed, what is the state’s date of adoption of the
Internal Revenue Code?
[5.] Tax Rates
▪ What is your state’s corporate income tax rate schedule? 7.0% corporate income tax, 2.5% personal property
replacement tax (for corporations); 1.5% personal property replacement tax (for S corporations, partnerships,
trusts)
▪ Are there any temporary income tax surcharges? Yes No
▪ If YES, applicable tax years and surcharge rate?
[6.] Minimum Taxes. Does your state impose a minimum tax on C corporations (check all that apply)?
Flat-dollar amount minimum tax or filing fee. Amount?
Minimum tax similar to federal alternative minimum tax (AMT)
If applies, rate schedule?
Other minimum tax on income
If applies, rate schedule?
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[6a.] State Alternative Minimum Tax. If your state imposes an AMT-type tax, what are the tax preferences and
adjustments (check all that apply)?
Depreciation
Mining exploration and development costs
Gain or loss on sale of depreciable property
Adjusted current earnings (ACE)
Completed contract method
Depletion
Pollution control facility amortization
Bad debt reserves of financial institutions
Installment method for dealer sales
Intangible drilling costs
Tax-exempt private activity bond interest
[6b.] IRC §55 AMT (repealed). The Tax Cuts and Jobs Act of 2017 repealed the corporate alternative minimum tax
(AMT), effective for tax years beginning after 2017.
▪ How did the repeal of the federal AMT affect the determination of your state’s minimum tax?
Resulted in repeal of state minimum tax
Impacted calculation of state minimum tax. Explain:
No effect
[6c.] IRC §59A Base Erosion Tax
▪ Does your state conform to the IRC §59A tax on base erosion payments?
▪ If NO, does your state impose a similar type of minimum tax on base erosion payments?
▪ If YES, explain:
Yes No
Yes No
[7.] IRC §179 Asset Expensing. Does your state require an adjustment for the federal asset expensing for tax year:
▪ 2018? Yes No ▪ If YES, explain:
▪ 2019? Yes No ▪ If YES, explain:
▪ 2020? Yes No ▪ If YES, explain:
▪ 2021? Yes No ▪ If YES, explain:
[8.] Depreciation. Does your state conform to the following federal depreciation rules (check all that apply)?
MACRS system, post-1986 IRC §168
▪ Effective date of conformity? SAF Other:
ADS system, IRC §168[g]
▪ Effective date of conformity? SAF Other:
▪ If state does not conform, what depreciation methods are available?
[8a.] IRC §168(k) Bonus Depreciation. Does your state require an adjustment for federal bonus depreciation for tax year:
▪ 2018? Yes No ▪ If YES, explain:
▪ 2019? Yes No ▪ If YES, explain: Per 35 ILCS 5/203(a)(2)(D-15), (b)(2)(E-10), (c)(2)(G-10), (d)(2)(D-5), bonus
depreciation is added back. A subtraction modification is allowed for 30% and 50% bonus depreciation per 35 ILCS
5/203(a)(2)(Z), (b)(2)(T), (c)(2)(R), (d)(2)(O). All other percentages are adjusted in final year when the property becomes
fully depreciated federally, which effectively means Illinois is coupled to 100% bonus depreciation
▪ 2020? Yes No ▪ If YES, explain: Per 35 ILCS 5/203(a)(2)(D-15), (b)(2)(E-10), (c)(2)(G-10), (d)(2)(D-5), bonus
depreciation is added back. A subtraction modification is allowed for 30% and 50% bonus depreciation per 35 ILCS
5/203(a)(2)(Z), (b)(2)(T), (c)(2)(R), (d)(2)(O). All other percentages are adjusted in final year when the property becomes
fully depreciated federally, which effectively means Illinois is coupled to 100% bonus depreciation
▪ 2021? Yes No ▪ If YES, explain: Per 35 ILCS 5/203(a)(2)(D-15), (b)(2)(E-10), (c)(2)(G-10), (d)(2)(D-5),
bonus depreciation is added back. A subtraction modification is allowed for 30% and 50% bonus depreciation for
taxable years ending after December 31, 2005; 100% bonus depreciation for taxable years ending on or after
December 31, 2021; and for percentages other than 30%, 50%, or 100% bonus depreciation for taxable years on or
after December 31, 2021 per 35 ILS 5/203(a)(2)(Z), (b)(2)(T), (c)(2)(R), (d)(2)(O). PA 102-16 decoupled Illinois from
100% bonus depreciation.
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▪ Does your state require a special adjustment for the 100% federal bonus depreciation for property acquired and placed in
service after September 27, 2017, and on or before December 31, 2017? Yes No
▪ If YES, explain:
CARES Act Fixes the Retail Glitch. The Coronavirus Aid, Relief, and Economic Security Act of 2020 (P.L. 116-136), or
CARES Act, amended IRC §168 to reduce the MACRS recovery period of “qualified improvement property” from 39 years
to 15 years, which makes this property eligible for federal bonus depreciation.
▪ Does your state conform to the CARES Act provision which reduces the MACRS recovery period
of qualified improvement property from 39 years to 15 years?
Yes No
▪ If YES, does your state apply this provision retroactively to property placed in service
after December 31, 2017?
Yes No
▪ If YES, does your state allow bonus depreciation on this property?
Yes No
▪ Does your state have a special form for computing the state depreciation deduction?
▪ If YES, Form: IL-4562
Yes No
[9.] Net Operating Loss Deductions
▪ Does your state allow an NOL carryback deduction?
▪ If YES, number of years? SAF Other, explain:
▪ If YES, does your state impose a percentage limitation on the amount of the carryback deduction?
Yes, SAF Yes, other (Explain: ) No
▪ If YES, does your state impose a flat-dollar limitation on the amount of the carryback deduction?
▪ If YES, what is the limitation amount?
▪ If YES, can a taxpayer elect to forgo a carryback?
▪ If YES, if a federal election is made, is a separate state election also required?
Yes No
Yes No
Yes No
▪ Does your state allow an NOL carryforward deduction?
Yes No
▪ If YES, number of years? SAF Other, explain: 12 years
▪ If YES, does your state impose a percentage limitation on the amount of the carryforward deduction?
Yes, SAF Yes, other (Explain: ) No
▪ If YES, does your state impose a flat-dollar limitation on the amount of the carryback carryforward
deduction?
▪ If YES, what is the limitation amount?
Yes No
Section 207(d) of the IITA provides that in the case of a corporation (other than a Subchapter S
corporation), no carryover deduction shall exceed $100,000 for any taxable year ending on or after
December 31, 2012 and prior to December 31, 2014, and for any taxable year ending on or after December
31, 2021 and prior to December 31, 2024.
▪ Does your state allow an NOL carryover deduction for an NOL that was generated in a tax year
that the corporation was not doing business in the state?
Yes No
▪ Does your state conform to IRC §381, which permits NOLs carryovers in reorganizations?
Yes No
▪ Does your state conform to IRC §382, which restricts the use of NOLs carryovers in reorganizations?
Yes No
▪ If YES, does the state limitation amount match the IRC §382 limitation amount?
Yes No
▪ Is the amount of the NOL carryover deduction determined by the apportionment percentage in the year of the loss, or the
apportionment percentage in the carryover year? Loss year apportionment % Carryover year apportionment %
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Assume Q, a corporation with NOL carryforwards, is merged into R, a profitable corporation that currently is doing
business in your state. In each of the following independent fact patterns, indicate whether your state allows the surviving
entity (R) to deduct the NOL carryforwards of the merged entity (Q).
Case 1: Q was doing business in your state prior to the merger
Yes No
▪ If YES, what limitations apply? SAF Other, explain:
Case 2: Q was not doing business in your state prior to the merger
Yes No
▪ If YES, what limitations apply? SAF Other, explain:
Case 3: R was doing business in your state prior to the merger
Yes No
▪ If YES, what limitations apply? SAF Other, explain:
Case 4: R was not doing business in your state prior to the merger
Yes No
▪ If YES, what limitations apply? SAF Other, explain:
CARES Act NOL Reforms. The CARES Act of 2020 retroactively restored NOL carrybacks and extended the carryback
period to five years for NOLs arising in tax years beginning in 2018, 2019 and 2020. The CARES Act also postponed the
imposition of the 80% limitation until 2021 for NOLs arising in tax years beginning in 2018, 2019 and 2020.
▪ Does your state conform to the CARES Act provision which temporarily provides for a
five-year carryback for NOLs arising in tax years beginning in 2018, 2019 and 2020?
Yes No
▪ Prior to the CARES Act, did your state conform to the federal 80% of taxable income
limitation on deductions for NOLs arising in tax years beginning after 2017?
Yes No
▪ If YES, does your state conform to the CARES Act provision that postpones the
80% limitation until 2021 for NOLs arising in tax years beginning in 2018, 2019 and 2020?
Yes No
[10.] Addition Modifications. For corporate taxpayers, what addition modifications are required to convert federal taxable
income into state taxable income (check all that apply)?
Income
Interest income from state or local bonds issued by your state
Interest income from state or local bonds issued by other states
Gain or loss difference (due to lower state basis) on sale of depreciable property
Refund of federal income tax previously deducted on state return
Taxes
Foreign country income taxes deducted for federal purposes
State income taxes
Local income taxes (e.g., city or county)
State or local corporate franchise taxes based on income
State or local corporate franchise taxes based on capital or net worth
Depreciation Federal MACRS depreciation in excess of state allowed depreciation
Federal first-year bonus depreciation
IRC §179 asset expensing
Federal depletion in excess of state allowed depletion
Federal amortization in excess of state allowed amortization
Carryovers
Federal NOL carryover deduction
Federal net capital loss carryover deduction
Federal contribution carryover deduction
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Other
IRC §199 domestic production activities deduction (pre-2018 tax years)
IRC §250 deduction for foreign-derived intangible income (FDII)
IRC §250 deduction for global intangible low-taxed income (GILTI)
Certain royalties and intangible expenses paid to related parties
Certain interest expenses paid to related parties
Expenses related to state tax credits (e.g., jobs credit)
Federal dividends-received deduction
Expenses related to federal income amounts excluded from state income
Other, explain:
[11.] Subtraction Modifications. For corporate taxpayers, what subtraction modifications are required to convert federal
taxable income into state taxable income (check all that apply)?
Income
Interest income from Federal debt obligations
Gain or loss difference (due to higher state basis) on sale of depreciable property
Capital gain exclusion or deduction allowed by state
State income tax refunds included in federal return
Depreciation Subtraction for prior year addback of federal first-year bonus depreciation
Subtraction for prior year addback of IRC §179 asset expensing
Foreign
IRC §951 Subpart F income
IRC §951A inclusion for global intangible low-taxed income (GILTI)
IRC §965 one-time Subpart F inclusion for deferred foreign income (last tax year that begins before 2018)
IRC §78 gross up income
Other foreign-source income, explain:
Foreign income taxes for which a credit was taken for federal purposes
Other
Expenses related to federal tax credits (e.g., research credit)
State dividends-received deduction
State NOL carryover deduction
Federal income taxes
Business interest expense deductions denied by IRC §163(j) (post-2017 tax years)
Other, explain:
[12.] Dividends. For corporate taxpayers:
▪ Is an addition modification required for the federal dividends-received deduction? Yes No
PA 102-16 amends Section 203(b) of the IITA to require an addback for taxable years ending on or after June 30,
2021 for an amount equal to the deductions allowed under IRC Sections 243(e) and 245(a).
▪ What type of adjustment does your state allow for dividends received from other U.S. corporations?
Dividends-received deduction Other subtraction modification No adjustment Other, explain:
▪ What is the schedule for computing your state’s dividends-received deduction or subtraction modification?
SAF
Other, explain:
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▪ Are dividends from foreign (non-U.S.) corporations treated differently than dividends from U.S. corporations?
Yes No
▪ If YES, explain difference:
▪ What type of adjustment does your state allow for IRC §951 Subpart F income?
Dividends-received deduction Other subtraction modification No adjustment Other, explain:
▪ What type of adjustment does your state allow for IRC §78 gross up income?
Dividends-received deduction
Other subtraction modification
No adjustment Other, explain:
[13.] Income from Foreign Subsidiaries. For corporate taxpayers, what type of adjustment does your state require for:
▪ Dividend from foreign (non-U.S.) corporation? Dividends-received deduction
No adjustment
▪ IRC §951 Subpart F income?
▪ IRC §78 gross up income?
Other, explain:
Dividends-received deduction
No adjustment
Other subtraction modification
Other, explain:
Dividends-received deduction
No adjustment
Other subtraction modification
Other subtraction modification
Other, explain:
▪ Foreign source income of a “check-the-box” foreign branch (i.e., a 100%-owned foreign country corporation that is treated
as a disregarded entity for U.S. tax purposes) included in the taxpayer’s federal taxable income?
Dividends-received deduction Other subtraction modification No adjustment Other, explain:
▪ Does your state provide a subtraction modification for the following types of foreign source income derived from a foreign
(non-U.S.) subsidiary corporation (check all that apply)?
Interest income Royalty income Technical fees None Other, explain:
▪ Does your state conform to the IRC §245A 100% dividends-received deduction for the
foreign-source portion of dividends received from a 10%-or-more-owned foreign corporation?
Yes No
[13.a.] GILTI Inclusions
▪ What type of adjustment does your state provide for an IRC §951A GILTI inclusion?
Dividends-received deduction Other subtraction modification No adjustment Other, explain:
▪ After any state adjustment, what portion of the taxpayer’s federal GILTI income is included in state taxable income
(pre-apportionment)?
None
_ %
Other, explain:
▪ At what level does a taxpayer determine the amount of its GILTI income for state tax purposes?
Separate company basis
State consolidated group
State combined unitary group
Federal consolidated group
Other, explain:
▪ Has your state provided any legislative or administrative guidance regarding how federal GILTI income impacts
the calculation of state taxable income? Yes No
▪ If YES, please provide citation(s):
[13.b.] IRC §965 Transition Tax
▪ What type of adjustment does your state provide for the one-time income inclusion for deferred foreign earnings under
IRC §965?
Dividends-received deduction Other subtraction modification No adjustment Other, explain:
▪ After any state adjustment, what portion of the taxpayer’s IRC §965 income inclusion is included in
state taxable income (pre-apportionment)?
None ___ %
Other, explain:
▪ If your state taxes all or a portion of an IRC §965 deferred foreign income inclusion, can the taxpayer elect to pay
the tax in annual installments over multiple years?
Yes No
▪ If YES, how many years?
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▪ Has your state provided any legislative or administrative guidance regarding how an IRC §965 income inclusion
impacts the calculation of state taxable income? Yes No
▪ If YES, please provide citation(s): Informational Bulletin FY 2018-23
[14.] Foreign Income Taxes. For corporate taxpayers, does your state allow:
Yes
No
▪ A credit for foreign income taxes?
▪ A deduction for foreign income taxes, assuming a deduction is taken for federal tax purposes?
▪ A deduction for foreign income taxes, assuming a credit is taken for federal tax purposes?
[15.] State and Local Taxes. For corporate taxpayers, does your state allow a deduction for the following state and local
taxes (check all that apply)?
State income taxes – Other states
Washington business and occupation tax
State income taxes – Your state
Franchise taxes on net worth or capital – Your state
Local income taxes – Other states
Texas franchise tax on margin
Local income taxes – Your state
Kentucky limited liability entity tax
Franchise taxes on net worth or capital – Other states
New Hampshire business enterprise tax
Ohio commercial activity tax
Pennsylvania capital stock tax
[16.] Municipal Bonds. For corporate taxpayers, does your state tax the following (check all that apply)?
▪ Interest income from state or local bonds issued by:
Your state
Other states
▪ If exemption is available, must a municipal bond be registered in order to be tax exempt?
▪ How is a premium or discount on municipal bonds amortized?
▪ Gain or loss on the sale of state or local bonds issued by:
SAF
Your state
Yes
No
Other, explain:
Other states
[17.] Federal Bonds. For corporate taxpayers, does your state tax interest income received on debt obligations issued by the
following federal departments or agencies (check all that apply)?
U.S. Treasury Department
Federal Farm Credit Bank System
Federal National Mortgage Assn. (Fannie Mae)
Federal Home Loan Bank System (FHLBS)
Government National Mortgage Assn. (Ginnie Mae)
Student Loan Marketing Assn. (Sallie Mae)
Federal Agricultural Mortgage Corp. (Farmer Mac)
Federal Home Loan Mortgage Corp. (Freddie Mac)
Dividends from mutual fund which invests solely in U.S. Treasury obligations
Dividends from mutual fund to the extent the income is related to U.S. Treasury obligations
▪ How is a premium or discount on a federal debt obligation amortized?
SAF Other, explain:
▪ Does your state tax a gain or loss on the sale of a debt obligation issued by a U.S. federal department or agency?
Yes No
[18.] Capital Gains
▪ For corporate taxpayers, does your state provide a lower tax rate for long-term capital gains?
▪ If YES, rate:
▪ For corporate taxpayers, does your state provide an exclusion or deduction for long-term capital gains?
▪ If YES, explain:
▪ What is requisite holding period for “long-term” status? SAF Other, explain:
Yes No
Yes No
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[19.] Capital Losses
▪ Does your state allow corporate taxpayers to deduct a net capital loss against ordinary income?
Yes No
▪ If YES, is there a dollar limitation?
▪ Does your state provide corporate taxpayers with a net capital loss carryback deduction?
Yes No
▪ If YES, number of years? SAF Other, explain:
▪ Does your state provide corporate taxpayers with a net capital loss carryforward deduction?
Yes No
▪ If YES, number of years? SAF Other, explain:
▪ Can a capital loss carryforward deduction be claimed for a net capital loss that was generated in a tax year that the
corporation was not doing business in the state? Yes No
[20.] IRC §338 Election
▪ Does your state conform to the federal treatment of an IRC §338 transaction?
Yes No
▪ Does your state require the filing of a one-day return to report the gain from the deemed asset sale?
Yes No
▪ How does your state apportion the gain from the deemed asset sale? Standard short-period apportionment formula
Prior-year apportionment percentages Other, explain:
[21.] IRC §338(h)(10) Election
▪ Does your state generally conform to the federal treatment of an IRC §338(h)(10) transaction?
Yes
▪ Specifically, if an IRC §338(h)(10) election is made, how does your state:
▪ Tax the selling parent corporation on the gain from the sale of the Target corporation’s stock?
SAF Other, explain:
▪ Tax the Target corporation on the gain from the deemed asset sale?
SAF Other, explain:
▪ Treat the tax attributes (e.g., NOL carryforwards) of the Target corporation?
SAF Other, explain:
▪ Does your state conform to the federal treatment of an IRC §338(h)(10) election if the sellers are shareholders
of an S corporation (rather than a selling consolidated group)?
Yes
▪ How does your state treat the gain from the deemed asset sale?
Apportionable income Allocable nonbusiness income Other, explain:
▪ What amount from the deemed asset sale is included in the sales factor?
Gross proceeds Net gain None ($0) Other, explain:
No
No
▪ How does your state apportion the gain from the deemed asset sale? Standard short-period apportionment formula
Prior-year apportionment percentages Other, explain:
▪ Do the Target corporation’s state filing periods conform to the federal filing periods?
Yes No
▪ Can a corporation that makes an IRC §338(h)(10) election choose not to so elect for state purposes? Yes No
▪ If YES, explain:
▪ Does your state require a separate IRC §338(h)(10) election for state tax purposes?
Yes No
[23.] Nontaxable Exchanges
▪ Does your state conform to the IRC §1031 like-kind exchange rules?
▪ If YES, is gain deferral allowed only if both properties are located in your state?
▪ Does your state conform to the IRC §1033 involuntary conversion rules?
▪ If YES, is gain deferral allowed only if both properties are located in your state?
Yes
No
▪ The TCJA of 2017 amended IRC §1031 to limit the transactions that qualify for nontaxable treatment to
exchanges of real property. Does your state conform to this change in the like-kind exchange rules?
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[24.] Passive Loss Limitations. For corporate taxpayers, does your state:
▪ Conform to the IRC §469 limitations on passive activity losses?
▪ Conform to the IRC §469 limitations on passive activity credits?
Yes
No
▪ If YES, which types of corporations are subject to the limitations? SAF Other, explain:
▪ Conform to the federal carryforward rules for suspended passive losses or credits?
[25.] Depletion. Does your state conform to the IRC §§611-613 rules for computing depletion on the following types of
property (check all that apply)?
Cost depletion on in-state property
Cost depletion on out-of-state property
Percentage depletion on in-state property
Percentage depletion on out-of-state property
▪ Does your state allow the use of other methods of computing depletion?
▪ If YES, explain:
Yes
No
[26.] Cancellation of Debt Income
▪ Does your state conform to the IRC §108(a) exclusion for cancellation of debt (COD) income when the
taxpayer is bankrupt or insolvent?
▪ If NO, explain:
▪ If YES, is the exclusion available only if the taxpayer reduces its NOLs and other tax attributes by the
excluded amount, as required by IRC §108(b)?
▪ If NO, explain:
▪ If YES, can the taxpayer elect to reduce the basis of its depreciable property, rather than its tax
attributes, as provided by IRC §108(b)(5)?
▪ If NO, explain:
▪ Does your state conform to IRC §108(i), which permits a debtor to defer COD income arising in 2009 or
2010 from the purchase, exchange, or forgiveness of its debt instruments?
Yes
No
[27.] IRC §199 Deduction (repealed). The Tax Cuts and Jobs Act of 2017 repealed the domestic production activities
deduction, effective for tax years beginning after 2017.
▪ Did your state conform to the domestic production activities deduction for tax years beginning before 2018? Yes No
▪ If YES, does your state continue to offer a deduction similar to the pre-2018 IRC §199 deduction
for tax years beginning after 2017?
Yes No
▪ If YES, explain computation:
[27.a.] IRC §163(j) Limitation. The CARES ACT of 2020 retroactively loosened the limitation by increasing the ATI
threshold from 30% to 50% for tax years beginning in 2019 and 2020. Taxpayers may elect to use the lower 30% limitation
threshold. Taxpayers may also elect to base the 2020 limitation on 2019 ATI.
▪ Does your state conform to the IRC §163(j) limitation on business interest expense deductions?
Yes No
▪ If YES, does your state permit any disallowed interest to be carried forward indefinitely?
Yes No
▪ If YES, does your state provide an exception for small businesses?
Yes No
▪ If YES, at what level is the limitation applied?
Separate company basis
State consolidated group State combined unitary group
Federal consolidated group Other, explain:
▪ If YES, does your state conform to the CARES Act provision that temporarily increases the
adjusted taxable income percentage from 30% to 50% for tax years beginning in 2019 and 2020?
Yes No
▪ If YES, can taxpayers elect to use the lower 30% limitation threshold?
Yes No
▪ If YES, can taxpayers elect to base the 2020 limitation on 2019 adjusted taxable income?
Yes No
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▪ If the state consolidated or combined group differs from the federal group, how is the §163(j) limitation
recalculated for, or the allowable deduction allocated to, the members included in the state filing group?
▪ Has your state provided any legislative or administrative guidance regarding how the §163(j) limitation
impacts the calculation of state taxable income?
Yes No
▪ If YES, please provide citation(s): Informational Bulletin 2021-14-A
[27.b.] IRC §250 FDII Deduction
▪ Does your state conform to the IRC §250, which allows a corporation to claim a deduction equal to 37.5% of its foreignderived intangible income (FDII)? Yes No
▪ If YES, what is the deduction percentage? SAF Other, explain:
▪ At what level does a taxpayer compute the federal FDII deduction?
Separate company basis
State consolidated group
State combined unitary group
Federal consolidated group
Other, explain:
▪ Does your state conform to the federal consolidated group rule for allocating the federal FDII deduction to specific
members of the group? Yes No
▪ If a taxpayer is not eligible to claim a federal FDII deduction because the taxpayer is a member of a federal consolidated
group that is in a consolidated loss position, can the taxpayer claim a state FDII deduction if that taxpayer has both
qualified FDII and taxable income on a separate company basis? Yes No
▪ Has your state provided any legislative or administrative guidance regarding how the federal FDII deduction impacts the
calculation of state taxable income? Yes No
▪ If YES, please provide citation(s): 35 ILCS 5/203(b)(E-18)
[27.c.] IRC §250 GILTI Deduction
▪ Does your state conform to the IRC §250, which allows a corporation to claim a deduction equal to 50% of its global
intangible low-taxed income (GILTI)? Yes No
PA 102-16 amends Section 203(b)(2) of the IITA to add (E-19) that provides for taxable years ending on or
after June 30, 2021, an amount equal to the deduction allowed under Section 250(a)(1)(B)(i) of the Internal
Revenue Code for the taxable year must be added back to taxable income (35 ILCS 5/203(b)(2)(E-19)).
▪ If YES, what is the deduction percentage? SAF Other, explain:
▪ At what level does a taxpayer compute the IRC §250 deduction for GILTI?
Separate company basis
State consolidated group
State combined unitary group
Federal consolidated group
Other, explain:
▪ Does your state provide a dividends-received deduction or other subtraction modification for any federal
Section 78 gross-up income related to the GILTI income? Yes No
▪ If YES, does your state require an adjustment to the IRC §250 deduction for GILTI to prevent a 150% deduction
of the federal Section 78 gross-up amount? Yes No
▪ Has your state provided any legislative or administrative guidance regarding how the IRC §250 deduction for GILTI
impacts the calculation of state taxable income? Yes No
▪ If YES, please provide citation(s): Informational Bulletin FY 2021-27
[28.] Investment Tax Credit
▪ Does your state allow an investment tax credit?
Yes No
▪ If YES, what is rate? 0.5%
▪ If YES, what property qualifies (check all that apply)?
Manufacturing equipment Buildings and fixtures Pollution control equipment Other, explain:
Qualified property used in manufacturing, retailing, mining of coal or fluorite
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[29.] Jobs, Research & Energy Credits
▪ Does your state allow a jobs credit?
▪ Does your state allow a research credit?
Yes No ▪ If YES, how is it computed? Various
Yes No ▪ If YES, how is it computed? Similar to Federal
▪ Does your state allow an energy credit for businesses? Yes No ▪ If YES, how is it computed?
[30.] Enterprise Zones
▪ Does your state offer incentives for enterprise zones? Yes No
▪ If YES, what is the form of the incentives (check all that apply)? Credit Deduction Exemption
Other, explain:
▪ If YES, what types of incentives are available (check all that apply)? Income tax Franchise tax
Sales tax Property tax Unemployment tax Other, explain:
▪ If YES, what areas constitute your enterprise zones? See website
[31.] Other Tax Incentives
▪ Does your state offer tax incentives to businesses (other than those in Enterprise Zones) for relocating to or expanding
existing facilities within your state? Yes No
▪ If YES, what is the form of the incentives (check all that apply)? Credit Deduction Exemption
Other, explain:
▪ If YES, what types of incentives are available (check all that apply)? Income tax Franchise tax
Sales tax Property tax Unemployment tax Other, explain:
▪ What requirements must be met to qualify for these tax incentives (check all that apply)?
Increase productive output
Qualify project before undertaking expansion or relocation
Increase employment
Other, explain:
[32.] Unused Credits or Incentives
▪ Does your state provide a mechanism whereby one taxpayer may sell, transfer or assign unused credits or incentives to
another taxpayer? Yes No ▪ If YES, how does the mechanism work? IITA provides for transferability of
certain credits.
[33.] IRC §45S Family/Medical Leave Credit
▪ Does your state conform to the IRC §45S employer credit for paid family and medical leave?
▪ Does your state provide some other type of employer credit for paid family and medical leave?
▪ If YES, what are the eligibility requirements?
▪ If YES, how is the credit computed?
Yes No
Yes No
[34.] Contributions to Capital. The Tax Cuts and Jobs Act of 2017 revised IRC §118(b)(2) to provide that nontaxable
contributions to capital do not include “any contribution by any governmental entity or civic group (other than a contribution
made by a shareholder as such).”
▪ For purposes of computing corporate taxable income, does your state conform to the
Tax Cuts and Jobs Act of 2017 revisions to IRC §118(b)(2)?
Yes No
[35.] PPP Loans. The CARES Act of 2020 included the Paycheck Protection Program (PPP) under which SBA loans were
made to employers and the loans were forgiven if the employer documented certain payroll, rent, utility and other eligible
expenses. For federal tax purposes, forgiveness of a PPP loan is excluded from gross income and the related covered
expenses paid with PPP funds are deductible.
▪ Does your state conform to the CARES Act exclusion from gross income for forgiveness of a PPP loan? Yes No
▪ If NO, explain:
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▪ How does your state treat the funds received and expenses incurred with respect to forgiven PPP loans?
SAF – Exclude forgiven PPP loans from taxable income and allow deductions for the related business expenses
Exclude forgiven PPP loans from taxable income but deny deductions for the related business expenses
Treat forgiven PPP loans as taxable income and allow deductions for the related business expenses
Other, explain: Under Federal law, PPP loan forgiveness is not considered taxable income and the business
expenses covered by the PPP loan proceeds are deductible business expenses. Currently, Illinois tax law has
no addition modification to change this; therefore, the same treatment flows through to the Illinois return and
is included as part of federal taxable income.
▪ Was your state’s tax treatment of the funds received or expenses incurred with respect to forgiven PPP loans different in
prior years? Yes No
▪ If YES, explain:
▪ Does your state conform to Rev. Proc. 2021-20, which provides that PPP loan recipients who relied on prior IRS guidance
and did not deduct eligible business expenses may deduct these eligible business expenses in a subsequent tax year instead
of filing an amended return? Yes No
▪ If NO, explain:
C. APPORTIONMENT
[1.] Conformity to UDITPA. Does your state conform to UDITPA?
after UDIPTA
Yes No Partly, explain: IITA modeled
UDITPA was promulgated in 1957. Consequently, many of its provisions are outdated. In July 2014, the MTC voted to
amend five provisions of UDITPA, including the definitions of business income and sales, factor weighting, sales factor
sourcing rules, and equitable apportionment.
Does your state conform to the following amendments to UDITPA?
YES NO
▪ Definition of business income (Section 1(a))
▪ Definition of sales (Section 1(g))
▪ Factor weighting in apportionment formula (Section 9)
▪ Sales factor sourcing rules for sales other than sales of tangible personal property (Section 17)
▪ Equitable apportionment provision (Section 18)
[2.] Apportionment Formula
▪ What amount of weight (0-100%) does your state’s general-purpose apportionment formula place on each of the factors?
▪ Sales factor 100% ▪ Property factor _% ▪ Payroll factor ___% ▪ Other, explain:
▪ If your state’s general-purpose apportionment formula is not a single-factor sales formula:
▪ Are companies in certain industries allowed to use a single-factor sales formula?
Yes No
▪ If YES, which industries:
▪ Are there any other circumstances in which a taxpayer may use a single-factor sales formula?
Yes No
▪ If YES, explain:
▪ If a corporation establishes nexus during the tax year, are the taxpayer’s in-state sales made
prior to establishing nexus included in the numerator of the sales factor?
Yes No
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[3.] Alternative Method Relief. If your state’s standard apportionment formula does not fairly represent the extent of the
taxpayer’s business activity in the state, is there a procedure by which the TAXPAYER may request the use of an
alternative apportionment method? Yes No
▪ If YES, what are the requirements for obtaining an alternative apportionment (check all that apply)?
Prove that standard formula does not fairly represent the taxpayer’s in-state activity
Prove that alternative method fairly represents the taxpayer’s in-state activity
Other, explain:
▪ If YES, what types of alternative apportionment methods are permissible (check all that apply)?
Separate accounting
Exclusion of one or more of the factors
Inclusion of one or more additional factors that fairly represent the taxpayer’s in-state activity
Other, explain:
▪ If YES, is the taxpayer required to obtain approval for the use of the alternative method
in advance of its use?
Yes No
[4.] State Use of Alternative Methods. If your state’s standard apportionment formula does not fairly represent the extent
of the taxpayer's business activity in the state, can the STATE TAX AUTHORITIES require the use of an alternative
apportionment method? Yes No
▪ If YES, what are the requirements for mandating an alternative apportionment (check all that apply)?
Prove that standard formula does not fairly represent the taxpayer’s in-state activity
Prove that alternative method fairly represents the taxpayer’s in-state activity
Other, explain:
▪ If YES, what types of alternative apportionment methods are permissible (check all that apply)?
Separate accounting
Exclusion of one or more of the factors
Inclusion of one or more additional factors that fairly represent the taxpayer’s in-state activity
Other, explain:
[5.] Zero Numerator or Denominator
▪ If the numerator of an apportionment factor is zero, is the factor eliminated from the computation?
▪ If the denominator of an apportionment factor is zero, is the factor eliminated from the computation?
If the denominator is zero, then no business income to apportion to IL.
Yes No
Yes No
[6.] There is no question 6
[7.] There is no question 7
[8.] Ownership Interest in PTE. Assume “A” (an out-of-state corporation) is subject to your state’s income-based tax
solely as a result of its ownership interest in “X” (a pass-through entity), which is doing business in your state. How does
“A” treat its distributive share of X’s income, assuming “A” owns:
▪ Limited interest in an operating partnership?
Separate accounting Treat as allocable income Combine with X’s income
Other, explain:
▪ Limited interest in an investment partnership?
Separate accounting Treat as allocable income Combine with X’s income
Other, explain:
▪ General partnership interest?
Separate accounting Treat as allocable income
Other, explain:
Combine with X’s income
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▪ Limited liability company interest?
Separate accounting Treat as allocable income
Other, explain:
Combine with X’s income
If separate accounting is not allowed and X’s income is not treated as allocable income, how does “A” compute its
apportionment percentage, assuming it owns:
▪ Limited interest in an operating partnership?
Based only on A’s apportionment factors
Based on A’s factors and its share of X’s factors
Based on A’s factors, plus the inclusion in the sales factor of the K-1 income from X
Other, explain:
▪ Limited interest in an investment partnership?
Based only on A’s apportionment factors
Based on A’s factors and its share of X’s factors
Based on A’s factors, plus the inclusion in the sales factor of the K-1 income from X
Other, explain:
▪ General partnership interest?
Based only on A’s apportionment factors
Based on A’s factors and its share of X’s factors
Based on A’s factors, plus the inclusion in the sales factor of the K-1 income from X
Other, explain:
▪ Limited liability company interest?
Based only on A’s apportionment factors
Based on A’s factors and its share of X’s factors
Based on A’s factors, plus the inclusion in the sales factor of the K-1 income from X
Other, explain:
Property Factor. If your state does not include a property factor in either its general apportionment formula or its
specialized industry formulas, check this box and skip to Payroll Factor? State does not use a property factor
[9.] Property Factor: Valuation
▪ What method is used to value real and tangible personal property?
Cost Net book value Federal adjusted basis State adjusted basis
▪ What method is used to value depletable assets?
Cost Net book value Federal adjusted basis State adjusted basis
Other, explain:
Other, explain:
[10.] Property Factor: Average Value
▪ What averaging method is used to determine the annual value of property?
Beginning and end of year Monthly Quarterly Other, explain:
[11.] Property Factor: Exclusions
▪ Which types of property are specifically excluded (check all that apply)?
Intangible assets
Property used to produce nonbusiness income
Custom software Canned software Other, explain:
Construction in progress
[12.] Property Factor: Leased Assets
▪ If rented or leased assets are included in the property factor, how is the amount of the inclusion determined?
N/A, rental assets are excluded 8 times annual rental Other, explain:
▪ If rental property is subleased, what is the property factor inclusion based on, assuming the sub-rents are:
▪ Business income?
Gross rents Net rents (gross less sub-rents) Other, explain:
▪ Nonbusiness income? Gross rents Net rents (gross less sub-rents) Other, explain:
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[13.] Property Factor: Inventory
▪ What valuation method is used for inventory? Same as Book Same as Tax
▪ Can the LIFO method be used in determining the value of inventory? Yes No
▪ Must the IRC §263A uniform capitalization method be used in determining the value of inventory? Yes No
[14.] Property Factor: Other Assets
▪ Which taxpayer includes construction-in-progress in the property factor?
Construction contractor Owner of constructed property Neither – Excluded from property factor
▪ Is property that was previously used by the taxpayer, but is now idle, included in the property factor?
Yes, if retained for later use (Remains in property factor for ___ years)
Yes, if held for disposition (Remains in property factor for ___ years)
Other, explain:
▪ Which types of property are included in the property factor (check all that apply)?
Leasehold improvements Mobile property Property in transit between taxpayer and customer
Property in transit between two of taxpayer’s facilities
▪ If leasehold improvements are included in the property factor, how are they valued?
Average cost Capitalization of amortization expense Other, explain:
▪ How is the value of the following types of mobile property attributed to the numerator of the property factor
(e.g., time, mileage, departures, ton miles, port days, where titled, etc.)?
▪ Airplanes:
▪ Autos and trucks:
▪ Ships:
▪ Autos used by sales reps:
Payroll Factor. If your state does not include a payroll factor in either its general apportionment formula or its specialized
industry formulas, check this box and skip to Sales Factor? State does not use a payroll factor
[15.] Payroll Factor. For purposes of computing your state’s payroll factor:
▪ Does your state apply a throwback rule to payroll?
▪ If an employee, who is a resident of your state, performs services in another state, is the employee’s salary
prorated between the states in determining the payroll factor numerator?
▪ Does your state recognize a “common paymaster” procedure for purposes of computing the payroll factor?
▪ If YES, explain:
▪ The compensation of a leased employee is included in the payroll factor of which entity?
Common law employer Entity at which the employee provides services
Entity which provides a paycheck to employee Other, explain:
▪ Must a specific form be used to compute the payroll factor? YES (Form:
) No
▪ Are amounts from federal Form 940 acceptable for computing the payroll factor?
YES
NO
▪ Are amounts from state unemployment tax returns acceptable for computing the payroll factor?
[16.] Payroll Factor: Inclusions. Which amounts are included in the payroll factor (check all that apply)?
Officers’ salaries Sick pay Contributions to IRC §401(k) plan Payments to independent contractors
Income from fringe benefits, imputed under IRC §79 Fees paid to affiliated corporation for personal services
[17.] Sales Factor: Meaning of Sales. For purposes of computing the sales factor, what is your state’s statutory definition
of sales?
All gross receipts of the taxpayer not allocated as nonbusiness income
Other, explain:
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[18.] Sales Factor: Inclusions. Which types of business receipts are included in the sales factor (check all that apply)?
Sales of tangible personal property
▪ Does “sales” mean gross sales less returns and allowances?
Yes No
▪ Does “sales” include federal and state excise taxes (e.g., sales taxes) that are
passed on to the buyer or included as part of the selling price of the product?
Yes No
Sales of real property
Sales of fixed assets (e.g., machinery and equipment)
▪ What amount is included? Gross receipts Net gain Other, explain:
▪ Are substantial amounts from incidental or occasional sales of fixed assets
(e.g., sale of a factory) excluded from the sales factor?
Yes No
▪ Are insubstantial amounts from incidental or occasional sales
(e.g., sale of automobile) excluded from the sales factor?
Yes No
Rents from leasing tangible personal property
Rents from leasing real property
Royalties from licensing the use of real property
Sales of services (e.g., fees or commissions)
▪ In the case of a cost-plus fixed fee contract (e.g., operation of a government-owned
plant for a fee), does “sales” include the entire reimbursed cost plus the fee?
Yes No
Franchise fees
Income from intangible property
▪ Is income from intangible property which cannot readily be attributed to any
particular income producing activity of the taxpayer excluded from the sales factor?
Yes No
Royalties from intangible property (e.g., patents or trademarks) must meet 50% test
Sales of intangible property (e.g., patents or trademarks)
▪ What amount is included? Gross receipts Net gain Other, explain:
Sales of short-term investments in marketable securities and other liquid assets held
in connection with the cash management activities of a corporate treasury department
▪ What amount is included? Gross receipts Net gain Other, explain:
Dividends from U.S. corporations
▪ What amount is included? Gross receipts Net amount after dividends received deduction
Dividends from foreign (non-U.S.) corporations
▪ What amount is included? Gross receipts Net amount after dividends received deduction
IRC Section 951 Subpart F income
IRC Section 78 gross-up income
IRC §951A global intangible low-taxed income (GILTI)
IRC §965 one-time Subpart F inclusion for deferred foreign income (last tax year that begins before 2018)
Interest related to product sales (e.g., trade receivables)
Interest derived from short-term-investments (other than federal, state or local debt obligations)
Interest derived from federal debt obligations
Interest derived from state or local debt obligations (your own state)
Interest derived from state or local debt obligations (other states)
Reimbursements from related corporations for shared costs
Reimbursements from customers for expenses paid on their behalf
[19.] Sales of Electricity. Is the sale of electricity considered the sale of:
Service Intangible property Tangible personal property Other, explain:
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[20.] Post-Filing Adjustments. If another state successfully asserts nexus, does your state permit amended returns
reflecting an adjustment to the sales factor? Yes No
[21a.] Sourcing Sales of Tangible Personal Property
▪ Ignoring the application of your state’s throwback rule (if any), how are sales of tangible personal property attributed to
the numerator of the sales factor (check all that apply)?
State in which the goods are delivered or shipped to a purchaser (destination state)
If the purchaser is the U.S. government, State from which the goods were shipped (state of origin)
State in which the shipment terminates, even though the purchaser subsequently transfers the goods to another state
State in which a sales office negotiated the sale
State in which the sales activity occurred
▪ If an out-of-state customer picks up goods at the taxpayer’s in-state manufacturing facility (a “dock sale”), in which state’s
sales factor numerator is the sale included? State in which goods are picked up Destination state
[21b.] Sourcing Rental Income
▪ How are rents from leasing tangible personal property attributed to the numerator of the sales factor?
Entire amount is attributed to state in which the greater proportion of the time or use of the property takes place (allor-nothing)
Pro-rated among states, based on percentage of the time or use of property in each state
Other, explain:
▪ How are rents from leasing real property attributed to the numerator of the sales factor?
Based solely on the location of the real property
Other, explain:
[21c.] Sourcing Sales of Services. Does your state attribute sales of services to the numerator of the sales factor based on
where the income-producing activity is performed? Yes No
▪ If YES, how is the amount attributed to your state determined when the income-producing activity
is performed in more than one state?
Traditional UDITPA greater costs of performance standard (all-or-nothing approach)
Percentage of total costs of performance incurred in your state
Ratio of time spent performing the service in your state to the total time spent performing the service
Other, explain:
▪ If your state sources sales of services based on costs of performance, which amounts are included in the
taxpayer’s costs of performance (check all that apply)?
Direct costs based on GAAP
Direct costs based on industry standards
Costs associated with obtaining and retaining clients, including contract negotiations
Charges from unrelated subcontractors performing some or all of the services
Charges from related entities performing some or all of the services
Other, explain:
▪ Does your state use a market-based sourcing rule for attributing sales of services to the numerator of the sales factor?
Yes No
▪ If YES, please answer the following questions.
▪ How is the location of the market for the service determined?
Where benefit of service is received
Where service is received
Where customer is located
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Where service is delivered
Other, explain:
▪ Does your state provide (check all that apply)?
Different attribution rules, depending on whether customer is an individual or business entity
Throw-back rule if taxpayer is not taxable in state in which service is received
Throw-out rule if state in which service is received cannot be determined
Ability to prorate a sale among two or more states
Fallback rules if market state cannot be determined under general rule
▪ If applicable, which fallback rules does your state provide (check all that apply)?
Customer’s billing address
Location from which customer ordered the service
Reasonable approximation
Other, explain:
▪ What factors are considered in determining the market state (check all that apply)?
Service relates to real property that is located in state
Service relates to tangible personal property that is located in state at time service is received
Service relates to intangible property that is used in state at time service is received
Service is provided to purchaser who is an individual physically present in state at time service is received
Service is provided to person engaged in trade or business in state and service relates to that person's business in
state
Service is received in state and is a personal service that is performed on a direct, one-to-one basis
Service is professional in nature, and is provided to a purchaser who is an individual domiciled in state, or to a
purchaser with business operations in state
▪ If the customer is an individual, does your state make the presumption that the market for the sale is in your state if
the customer’s billing address is in the state? Yes No
▪ Does your state attribute sales of services to the numerator of the sales factor based on a criteria other than where the
income-producing activity is performed or where the benefit of the service is received by the purchaser? Yes No
▪ If YES, explain:
[21d.] Sourcing Intangible Income. How are the following types of gross receipts attributed to the numerator of the sales
factor (check all that apply)?
▪ Royalty income
Costs of performance rule
Where intangible property is used (market-based rule)
Based solely on taxpayer’s commercial domicile
Based solely on location of payer
Other, explain:
Special rule for computer software, explain:
N/A, royalty income is not included in the sales factor
▪ Interest income
Costs of performance rule (non-dealer)
Based solely on taxpayer’s commercial domicile
Based solely on location of payer (dealer in intangibles)
Other, explain:
N/A, interest income is not included in the sales factor
▪ Dividend income
Costs of performance rule
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Based solely on taxpayer’s commercial domicile
Based solely on location of payer
Other, explain:
N/A, dividend income is not included in the sales factor
▪ Capital gain income from dispositions of intangible property
Costs of performance rule (non-dealer)
Based solely on taxpayer’s commercial domicile
Other, explain: based on location of payer if dealer in intangibles
N/A, capital gain income is not included in the sales factor
[22.] There is no question 22
[23.] Throwback Rule. Does your state apply a throwback rule to sales of tangible personal property?
Yes No
▪ If YES, sale is thrown back to: State from which goods were shipped State where order was processed
▪ Does your state apply a double-throwback rule to “drop shipment” sales? Yes No
▪ To avoid the throwback of domestic sales, what must the taxpayer demonstrate (check all that apply)?
Proof of a taxable presence
Filing of a tax return
Proof of a tax payment
N/A, no throwback rule
Other, explain:
[24.] Throwback for Foreign Sales
Does your state apply a throwback rule to sales to purchasers in a foreign country? Yes No
▪ If YES, how is nexus with the foreign country determined for purposes of applying the throwback rule?
State nexus standards, ignoring P.L. 86-272
Foreign country’s nexus standards
State nexus standards, considering P.L. 86-272 Other, explain:
▪ To avoid the throwback of foreign sales, what must the taxpayer demonstrate (check all that apply)?
Proof of a taxable presence
Filing of a tax return
Proof of a tax payment
N/A, no throwback rule
Other, explain: not exempt by treaty
[25.] Throw-out Rule. If your state does not have a throwback rule, does it have a “throw-out” rule, whereby sales to
purchasers in states in which the corporation is not taxable are excluded from both the numerator and the denominator of the
sales factor? Yes No N/A, state has throwback rule
[26.] Contested Sales. If another state properly includes (under its statutes) a sale in the numerator of its sales factor, would
your state contest its right to tax that sale and throw the sale back to your state? Yes No N/A, no throwback rule
[27.] U.S. Government Sales. Does your state apply a throwback rule to sales to the U.S. government?
Yes
No
[28.] Joyce versus Finnegan. If your state has a throwback rule and requires combined reporting, which rule is used?
Joyce Finnigan N/A, state does not have throwback rule or combined reporting
[29.] Jurisdictional Standards
What jurisdictional standards does your state consider adequate in order for a taxpayer to establish that it is taxable in
another state and therefore does not need to throwback sales from that state (check all that apply)?
Taxpayer meets other state’s filing requirement and files
Taxpayer has nexus in other state based on your state’s nexus standards
Taxpayer engages in unprotected activity in other state (i.e., activity which exceeds protections of Public Law 86-272)
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▪ If taxpayer’s employees engage in unprotected activity in other states, what level of activity is considered
de minimis and therefore does not create nexus in other state?
Less than 5 days
Less than 14 days
Less than 30 days
Other standard. Explain:
▪ Do the same standards apply with respect to in-bound nexus with your state? Yes No
[30.] Specialized Industry Formulas
▪ Does your state require an AIRLINE to use a special apportionment formula?
Yes No
▪ If YES, what is the formula? Revenue miles per 35 ILCS 5/304(d)(4)
▪ If YES, how are any specialized factors computed?
▪ If YES, what is the definition of a company in this industry?
▪ Does your state require a CONSTRUCTION CONTRACTOR to use a special apportionment formula? Yes No
▪ If YES, what is the formula?
▪ If YES, how are any specialized factors computed?
▪ If YES, what is the definition of a company in this industry?
▪ Does your state require a FINANCIAL INSTITUTION to use a special apportionment formula?
Yes No
▪ If YES, what is the formula? Business income multiplied by fraction per 35 ILCS 5/304(c)(1)
▪ If YES, how are any specialized factors computed?
▪ If YES, what is the definition of a company in this industry?
▪ Does your state require a PIPELINE COMPANY to use a special apportionment formula?
Yes No
▪ If YES, what is the formula? Receipts from miles traveled in Illinois per 35 ILCS 5/304(d)(3)
▪ If YES, how are any specialized factors computed?
▪ If YES, what is the definition of a company in this industry?
▪ Does your state require a PROFESSIONAL SPORTS TEAM to use a special apportionment formula? Yes No
▪ If YES, what is the formula?
▪ If YES, how are any specialized factors computed?
▪ If YES, what is the definition of a company in this industry?
▪ Does your state require a PUBLISHER to use a special apportionment formula?
Yes No
▪ If YES, what is the formula?
▪ If YES, how are any specialized factors computed?
▪ If YES, what is the definition of a company in this industry?
▪ Does your state require a RAILROAD to use a special apportionment formula?
Yes No
▪ If YES, what is the formula? Receipts from miles traveled in Illinois per 35 ILCS 5/304(d)(3)
▪ If YES, how are any specialized factors computed?
▪ If YES, what is the definition of a company in this industry?
▪ Does your state require a SHIP TRANSPORTATION COMPANY to use a special apportionment formula? Yes No
▪ If YES, what is the formula? Receipts from miles traveled in Illinois per 35 ILCS 5/304(d)(3)
▪ If YES, how are any specialized factors computed?
▪ If YES, what is the definition of a company in this industry?
▪ Does your state require a TELECOMMUNICATIONS COMPANY to use a special apportionment formula? Yes No
▪ If YES, what is the formula? Service address per 35 ILCS 5/304(a)(3)(B-5)
▪ If YES, how are any specialized factors computed?
▪ If YES, what is the definition of a company in this industry?
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▪ Does your state require a TRUCKING COMPANY to use a special apportionment formula?
Yes No
▪ If YES, what is the formula? Receipts from miles traveled in Illinois per 35 ILCS 5/304(d)(3)
▪ If YES, how are any specialized factors computed?
▪ If YES, what is the definition of a company in this industry?
▪ Does your state require a TV AND RADIO BROADCASTER to use a special apportionment formula? Yes No
▪ If YES, what is the formula? Programming revenue by audience share, advertising revenue by commerical
domicile of advertiser per 35 ILCS 5/304(a)(3)(B-7)
▪ If YES, how are any specialized factors computed?
▪ If YES, what is the definition of a company in this industry?
▪ Are there any other industries for which the use of a special apportionment formula is required?
Yes No
▪ If YES, what industries?
▪ If YES, what formula(s) are required?
[31.] Combined Reporting
▪ In regard to your state’s tax reporting requirements, which filing options are available to a group of corporations engaged
in a unitary business (check all that apply)?
Combined unitary reporting is mandatory
Combined unitary reporting is not allowed under any circumstances
State may require combined unitary reporting if certain conditions are met
State may grant permission to file a combined unitary report if certain conditions are met
Taxpayer may elect combined unitary reporting if certain conditions are met
Other, explain:
[32.] Combined Reporting Group. If combined unitary reporting is required or permitted:
▪ How does your state define a “unitary business”? A group of persons related through common ownership whose
business activities are integrate with, dependent upon, and contribute to each other. 35 ILCS 5/1501(a)(27)
▪ What factors are considered in determining whether companies are engaged in a unitary business (check all that apply)?
Functional integration
Economies of scale
Centralized executive force
Centralized administrative services
Same type or line of business
Steps in a vertical enterprise or process
Operations are dependent upon or contribute to one another
Other, explain:
▪ Are taxpayers required to complete a questionnaire to determine whether a unitary relationship exists? Yes No
▪ What is the stock ownership percentage for inclusion in the combined reporting group?
50% or more More than 50% 80% or more Other, explain:
▪ If unitary, are the following types of companies included in the combined reporting group (check all that apply)?
Transportation companies Insurance companies Financial services companies
▪ What is your state’s policy regarding worldwide versus water’s-edge combined reporting?
Water’s-edge is mandatory
Worldwide is required, unless taxpayer makes a water’s-edge election
Worldwide is mandatory
Water’s-edge is required, unless taxpayer makes a worldwide election
Other, explain:
▪ If water’s-edge combined reporting is used, which corporations are excluded from the combined reporting group?
Corporations organized in a foreign country
80/20 companies, defined as: Business activity outside the United States is 80% or more of total business
activity. 35 ILCS 5/1501(a)(27)
Other, explain:
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▪ Is a unitary “check-the-box” foreign branch (i.e., a 100%-owned foreign country corporation that is treated as a
disregarded entity for U.S. tax purposes) included in the combined reporting group?
Yes No
▪ If a member of the combined reporting group is a partner in a partnership that is unitary with the partner, is the
distributive share of the partnership’s income included in the combined report?
Yes No
[33.] There is no question 33
[34.] Combined Income. If combined unitary reporting is required or permitted:
▪ When apportioning the income of a combined reporting group, the income of the group members is combined:
Before applying the state’s apportionment percentage After each member individually apportions its income
▪ What adjustments are made for income derived from transactions between members of the combined reporting group?
No adjustments are made for intercompany transactions
Same as those required by Treas. Reg. §1.1502-13 for federal consolidated return purposes
Same as Treas. Reg. §1.1502-13, with exceptions. Explain:
Other, explain:
▪ Are gross receipts arising from transactions between members of the combined reporting group
eliminated for purposes of computing the sales factor?
Yes No
▪ Are dividends paid by one group member to another group member eliminated from the income of the recipient?
Yes No Only if paid from E&P of unitary business included in combined report
▪ Can a tax credit earned by one group member be used to reduce the tax liability of another group member? Yes No
▪ Is each group member with nexus in your state separately responsible for the tax on its income apportioned to the state?
Yes No
▪ If a combined reporting group has a taxable loss, is the resulting NOL carried forward at the group-level
or the member-level? NOL carryforward of group NOL carryforward attributed to specific members
▪ If NOL carryforwards are attributed to specific members, can an NOL carryforward attributable
to one group member offset the income of other group members?
Yes No
▪ When a combined reporting group acquires a new member that has NOL carryforwards
in your state, can those carryforwards offset the income of other group members?
Yes No
▪ If YES, are there SRLY-type restrictions on the use of the new member’s NOL carryforwards?
Yes No
▪ If YES, explain:
[34a.] Elective Combination or Consolidation. The purpose of these new questions is to determine whether there are any
circumstances under which a corporation doing business in your state has the option to elect to file either a combined
unitary report or a consolidated return with other related corporations.
▪ Does your state permit a corporation doing business in the state to elect to file a combined unitary
report with other related corporations?
Yes No
NOTE: Section 502(e) of the IITA provides for an election only for taxable years ending on or after December 31,
1985 and before December 31, 1993. For taxable years ending on or after December 31, 1993, taxpayers that are
corporations (other than Subchapter S corporations) and that are members of the same unitary business group shall
be treated as one taxpayer and are required to file combined returns
▪ If YES, what are the eligibility requirements for making the election?
▪ If YES, what corporations are included in an elective combined unitary report?
▪ If YES, is the election binding on subsequent tax years?
▪ If YES, how many years is the election binding?
▪ Does your state permit a corporation doing business in the state to elect to file a consolidated return
with other related corporations?
▪ If YES, what are the eligibility requirements for making the election?
▪ If YES, what corporations are included in an elective consolidated return?
▪ If YES, is the election binding on subsequent tax years?
▪ If YES, how many years is the election binding?
Yes
No
Yes
No
Yes
No
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[34b.] Tax Haven Operations
▪ Does your state require that a water’s-edge combined unitary report include the income of a member
of the unitary group that is incorporated or doing business in a tax haven country?
Yes No
▪ If YES, are the apportionment factors of the tax haven member also included in the
water’s-edge combined unitary report?
Yes No
▪ If YES, how does your state define a “tax haven” country?
▪ If YES, is it possible to exclude the tax haven member from the combined unitary report
if certain requirements are met?
Yes No
▪ If YES, what are the requirements for excluding the tax haven member from the combined unitary report?
[35.] Consolidated Returns. In regard to your state’s tax reporting requirements:
▪ What filing options are available to a group of commonly controlled corporations (check all that apply)?
Consolidated return is mandatory
Consolidated return is not allowed under any circumstances
State may require consolidated return if certain conditions are met
State may grant permission to file consolidated return if certain conditions are met
Taxpayer may elect to file a consolidated return if certain conditions are met
Other, explain:
[36.] Consolidated Group. If consolidated returns are required or permitted:
▪ What is the stock ownership percentage for inclusion in the consolidated return?
50% or more More than 50% 80% or more Other, explain:
▪ In addition to stock ownership, what other requirements must an affiliate satisfy to be included in a consolidated return
(check all that apply)?
Must be included in federal consolidated return
Must have nexus in state
Must derive all of its income from sources within state Other, explain:
▪ Must the affiliated group file a federal consolidated return to be eligible to file a state consolidated return? Yes No
▪ If YES, must the state consolidated return include all the affiliates included in the federal return?
Yes No
▪ Are the following types of companies includible in a state consolidated return (check all that apply)?
Transportation companies Insurance companies Financial services companies
▪ Can a foreign (non-U.S.) corporation be included in a state consolidated return?
Yes No
▪ Can a “check-the-box” foreign branch (i.e., a 100%-owned foreign country corporation that is
treated as a disregarded entity for U.S. tax purposes) be included in a state consolidated return?
Yes No
▪ Must the year-end used for the state consolidated return be the same as that used for the federal consolidated return?
Yes No
▪ Must an affiliated group continue to file a consolidated state return, once it has elected to do so?
Yes No Other, explain:
[36a.] Consolidated Income
▪ When apportioning the income of a consolidated group, the income of the group members is consolidated:
Before applying the state’s apportionment percentage After each member individually apportions its income
▪ What adjustments are made for income derived from transactions between members of the consolidated group?
No adjustments are made for intercompany transactions
Same as those required by Treas. Reg. §1.1502-13 for federal consolidated return purposes
Same as Treas. Reg. §1.1502-13, with exceptions. Explain:
Other, explain:
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▪ Are gross receipts arising from transactions between members of the consolidated group eliminated
for purposes of computing the sales factor?
Yes No
▪ Are dividends paid by one group member to another group member eliminated from the income of the recipient?
Yes No
▪ Can a tax credit earned by one group member be used to reduce the tax liability of another group member?
Yes No
▪ Is each group member with nexus in your state separately responsible for the tax on its income apportioned
to the state? Yes No
▪ If a consolidated group has a taxable loss, is the resulting NOL carried forward at the group-level or the member-level?
NOL carryforward of group NOL carryforward attributed to specific members
▪ If NOL carryforwards are attributed to specific members, can an NOL carryforward attributable
to one group member offset the income of other group members?
Yes No
▪ When a consolidated group acquires a new member that has NOL carryforwards in your state,
can those carryforwards offset the income of other group members?
Yes No
▪ If YES, are there SRLY-type restrictions on the use of the new member’s NOL carryforwards?
Yes No
▪ If YES, explain:
[37.] Business/Nonbusiness Income.
▪ How does your state define business income? All income that may be treated as apportionable business income under
the US Constitution. 35 ILCS 5/1501(a)(1)
▪ How does your state define nonbusiness income? All income other than business income or compensation. 35 ILCS
5/1501(a)(13)
▪ Which of the following factors are taken into account in determining whether an item of income is treated
as business income (check all that apply)?
Transactional test Functional test Whether income is apportionable under the U.S. Constitution
Other, explain:
▪ What terminology does your state use to refer to an item of income that is apportioned?
Business income
Apportionable income
Other, explain:
▪ What terminology does your state use to refer to an item of income that is allocated?
Nonbusiness income
Non-apportionable income
Other, explain:
[38.] There is no question 38
[39.] Allocating Nonbusiness Income
Indicate how your state allocates items of nonbusiness income, using the following codes. For example, enter “C” if the
item is allocated based on the corporation’s commercial domicile.
L–Physical location of income-producing property
C–Commercial domicile of taxpayer
U–Where income-producing property is used
S–Situs of income-producing property
O–Other, explain:
Item of Nonbusiness Income
Allocation Method
▪ Gain or loss from sale of real property
S
▪ Gain or loss from sale of tangible personal property
S
▪ Gain or loss from sale of stocks, bonds, and other securities
C
▪ Gain or loss from sale of intangible property
C
▪ Rents and royalties from leasing or licensing real property
L
▪ Rents from leasing tangible personal property
U
▪ Royalties from licensing intangible property
U
▪ Dividends
C
▪ Interest
C
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[40.] Intercorporate Transactions. Briefly describe the circumstances under which your state uses the following methods
in dealing with related party transactions (e.g., a licensing arrangement between an in-state operating company and a related
out-of-state intangible property holding company).
▪ Forced combination of the related entities:
▪ Reallocation of income among the related entities (e.g., IRC Section 482-type provision):
▪ Denial of deductions for intercorporate payments:
▪ Assert that the out-of-state entity has income tax nexus (e.g., economic or attributional nexus):
▪ Disregard the existence of the related party transactions (e.g., economic substance/business purpose doctrines):
▪ Require alternative apportionment method (e.g., UDITPA Section 18-type equitable relief provision):
▪ Other, explain:
[41.] Related Party Interest Expense
▪ Does your state require an addition modification for interest expenses paid to a related member? Yes No
▪ If YES, how does your state define a “related member” (check all that apply)?
Component member of a controlled group under IRC §1563
Shareholder that owns 50% or more of the taxpayer
Corporation that is 50% or more owned by the taxpayer
Other, explain:
▪ If YES, under what circumstances is an addback not required (check all that apply)?
Recipient’s income is taxed by a foreign country
Specific requirements:
Recipient’s income is taxed by a U.S. state
Specific requirements:
Recipient pays the amount to an unrelated person in same tax year
Specific requirements:
Adjustment is unreasonable
Agree to alternative adjustment
Other, explain:
▪ If YES, is an addback required only if the interest expense is related to intangible property? Yes No
▪ If YES, explain:
▪ If a portion of a taxpayer’s interest expense deduction is disallowed for federal tax purposes due to the IRC §163(j)
limitation, how does your state determine the portion of the federal interest expense deduction that is related-party
interest as opposed to third-party interest?
Pro-rata based on the percentage of the taxpayer’s total interest expense (before applying the §163(j)
limitation) that is related-party interest expense versus third-party interest expense
Other, explain:
[42.] Related Party Intangibles Expense
▪ Does your state require an addition modification for intangible expenses paid to a related member? Yes No
▪ If YES, how does your state define “intangible expenses”?
▪ If YES, how does your state define a “related member” (check all that apply)?
Component member of a controlled group under IRC §1563
Shareholder that owns 50% or more of the taxpayer
Corporation that is 50% or more owned by the taxpayer
Other, explain:
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▪ If YES, under what circumstances is an addback not required (check all that apply)?
Recipient’s income is taxed by a foreign country
Specific requirements:
Recipient’s income is taxed by a U.S. state
Specific requirements:
Recipient pays the amount to an unrelated person in same tax year
Specific requirements:
Adjustment is unreasonable
Agree to alternative adjustment
Other, explain:
[43.] Other Related Party Expenses
▪ Does your state require an addition modification for related party expenses other than interest expenses or intangible
expenses?
Yes No
▪ If YES, explain: insurance premiums, REIT dividends
D. ADMINISTRATIVE ISSUES
[1.] Due Dates for Filing Returns
What is the due date of the annual income tax return for a calendar year C corporation?
March 15 April 15 Other, explain:
▪ What is the due date of the annual income tax return for a calendar year S corporation?
Same as C corporation Other, explain:
▪ If the due date falls on a weekend or a holiday, is the due date extended to the next succeeding day
which is not a weekend day or a holiday?
Yes No
▪ Are any corporations required to file their income tax returns electronically?
Yes No
▪ If YES, what types of corporations?
Beginning with returns required to be filed for taxable years ending on or after December 31, 2011, any
taxpayer required to file its federal income tax return by electronic means is required to file its equivalent
Illinois income tax return for the same taxable year by electronic means. Regulations do not require electronic
filing of amended returns, or of returns of individuals or estates, or to any return the Department has
announced cannot be filed by electronic means.
▪ Does your state participate in the Federal-State 1120 electronic filing program?
Yes No
[2.] Filing Extensions. Under what circumstances does your state allow an extension to file a return?
Automatic with federal extension
Only with showing of a valid business reason
Automatic state extension
Other, explain:
▪ If no tax is due and a federal extension is not filed, must a state extension form be filed?
Yes
No
COVID-19 Emergency. In response to the COVID-19 emergency, the IRS extended the due date for filing corporate
income tax returns otherwise due on April 15, 2020, to July 15, 2020 (IRS Notice 2020-18, Mar. 23, 2020).
▪ Did your state extend the due date for corporate income tax returns in response to COVID-19?
Yes No
▪ If YES, does your state extension conform to the federal extension?
Yes No
▪ If NO, explain your state-specific extension:
▪ If YES, has your state department of revenue issued guidance regarding the extension?
Yes No
▪ If YES, please provide citation(s): Informational Bulletin FY 2020-24
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[3.] Maximum Extension
▪ What is the maximum extension period? 6 months Other, explain: The Department will grant an automatic
extension of 6 months to taxpayers whose returns are due on the fifteenth day of the fourth month after the end of
the taxable year and 7 months for all other taxpayers to file any Illinois income tax return except returns due under
Article 7 of the IITA.
▪ Must the federal extension form be filed with the state extension form?
Yes No
[4.] Extension Form
▪ What state form is used to file for a state extension? Form:
▪ Can the taxpayer obtain a state extension without a federal extension?
▪ If a state extension is not required because it is automatic with a federal extension, must a
state extension be filed if additional tax is due?
▪ Must a payment of tax accompany the extension?
▪ If YES, what percentage of the tax due must be paid with the extension? 100%
Yes No
Yes
Yes
No
No
[5.] U.S. Mail
▪ If mailed using the U.S. postal service, what date determines whether a return is timely filed (check one)?
Date received by state agency Postmark date (Is Certificate of Mailing accepted as proof? Yes No)
▪ If mailed using the U.S. postal service, what date determines whether estimated tax is timely paid (check one)?
Date received by state agency Postmark date (Is Certificate of Mailing accepted as proof? Yes No)
▪ If mailed using an express mail carrier, what date determines whether a return is timely filed (check one)?
Date received by state agency Date given to carrier
▪ If mailed using an express mail carrier, what date determines whether estimated tax is timely paid (check one)?
Date received by state agency Date given to carrier
[6.] Payment of Tax. For purposes of your state’s corporate income tax:
▪ Are estimated tax payments required?
▪ Is there a de minimis amount of tax below which estimates are not required?
▪ If Yes, amount? $400
▪ Must the estimated payments include any applicable (alternative) minimum tax?
Yes
Yes
No
No
Yes
No
▪ Are some corporations required to make tax payments via electronic funds transfer?
Yes No
▪ If YES, what types of corporations? When annual tax liability exceeds $20,000
▪ Describe the estimated payment requirements for a calendar year corporation by completing the following table:
Date Due
Amount Due (%)
Date Due
Amount Due (%)
First payment
April 15
25%
Third payment
September 15
25%
Second payment
June 15
25%
Fourth payment
December 15
25%
▪ What interest rate is charged on the underpayment of estimated taxes? Underpayment rate per IRC § 6621
▪ What penalty is imposed on the underpayment of estimated taxes? 2% up to 30 days late, 10% after 30 days
COVID-19 Emergency. In response to the COVID-19 emergency, the IRS extended the due date for corporate income tax
payments otherwise due on April 15, 2020, to July 15, 2020 (IRS Notice 2020-18, Mar. 23, 2020).
▪ Did your state extend the due date for corporate income tax payments in response to COVID-19?
Yes No
▪ If YES, does your state extension conform to the federal extension?
Yes No
▪ If NO, explain your state-specific extension:
▪ If YES, has your state department of revenue issued guidance regarding the extension?
Yes No
▪ If YES, please provide citation(s): Informational Bulletin FY 2020-24
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[7.] Credit Cards. Does your state allow taxpayers to pay tax using a credit card? Yes No
▪ If YES, which cards are eligible (check all that apply)?
VISA MasterCard American Express Discover Other, explain:
▪ If YES, which taxes are eligible for payment via credit card (check all that apply)?
Corporate Income/Franchise Sales/Use Payroll Individual income Other, explain:
▪ If YES, are current and delinquent taxes eligible for payment via credit card?
Current tax only Delinquent tax only
Both current and delinquent tax
[8.] Underpayment Penalty Exceptions
▪ Does your state provide exceptions to the underpayment penalties for corporate estimated taxes? Yes No
▪ If YES, what are your state’s exceptions? SAF
Other, check all that apply:
No penalty if estimated taxes paid equal the tax liability shown on preceding year’s 12-month return
No penalty if estimated taxes paid equal a specified percentage of current year tax liability (Percentage: 90%)
▪ For this purpose, can taxpayer use? Annualized income Adjusted seasonal income
Other, explain:
▪ Do special rules apply to “large” corporations? Yes No
▪ If YES, what special rules apply? SAF Other, explain:
[9.] Interest and Penalties
▪ What is the penalty for:
▪ Late filing of a corporate income tax return?
▪ Late payment of corporate income tax?
days
SAF
SAF
▪ Describe how interest is computed on:
▪ Applicable interest rate
▪ Begins as of due date of return (Yes/No)?
▪ Begins __ days after claim for refund (Yes/No)?
▪ How many days?
▪ Other, explain:
Other, explain: 2% up to maximum of $250
Other, explain: 2% up to 30 days late, 10% after 30
Underpayments
Calculated under IRC § 6621
Yes
Refunds
Calculated under IRC § 6621
Yes
No interest if refund paid
within 90 days of due date of
return
▪ How are these interest rates determined? SAF Other, explain:
▪ Is interest compounded? Yes No ▪ If so, how often? Daily Quarterly Other, explain:
▪ If your state receives a partial or delinquent payment from a taxpayer, how is the payment applied (check all that apply)?
Tax first, then penalty, then interest
As indicated by the taxpayer
Penalty first, then interest, then tax
Subject to negotiation between the parties
Other, explain:
[10.] Change in Accounting Method. For purposes of your state’s corporate income tax:
▪ How does a taxpayer obtain permission to change an accounting method?
Automatic with federal permission State permission is required N/A, permission is not required
▪ If state permission is required, what is Form number?
▪ Can the effects of an accounting method change be spread over future years?
SAF
Other, explain:
▪ If an accounting method is changed for federal purposes, must it also be changed for state purposes? Yes No
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[11.] Conformity to Federal Tax Years. For purposes of your state’s corporate income tax:
▪ Must the tax year for state purposes be the same as the federal tax year? Yes No
▪ How does a taxpayer obtain permission to change a corporation's tax year?
Automatic with federal permission State permission is required N/A, permission is not required
▪ If state permission is required, what is Form number?
▪ Must a partnership or S corporation make a state required payment of estimated taxes (similar to IRC §7519) if it does not
use a required tax year? Yes No
▪ Does your state deny its graduated rates to personal service corporations and tax them at the maximum corporate rate, as
under federal law? Yes No N/A – State has flat-rate corporate income tax
[12.] Conformity to Federal Methods. For purposes of computing corporate taxable income, does your state conform to
the following federal accounting methods (check all that apply)?
Installment method
Amortization of R&D costs (IRC §174)
Completed contract method
Amortization of start-up costs (IRC §195)
Percentage of completion method
Amortization of organizational costs (IRC §248)
LIFO inventory method
Uniform capitalization rules (IRC §263A)
Simplified dollar-value LIFO (IRC §474)
Bad debts - Reserve method for small banks (IRC §585)
▪ If NO to any item, what method is available?
▪ Does your state conform to the federal $25 million gross receipts test found in IRC §448(c) for purposes of determining
whether a C corporation can use or is not required to use the following methods of accounting? (check all that apply)
Can use the cash method of accounting
Not required to maintain inventories
Not required to apply the IRC §263A UNICAP rules
Not required to use the percentage of completion method for a small construction contract
[13.] Audits. Does your state:
▪ Use statistical sampling in arriving at an audit assessment for corporate income taxes?
Yes
No
▪ Audit both income taxes and sales and use taxes during the same audit?
▪ Assess the taxpayer for costs incurred in conducting an out-of-state audit?
Yes
Yes
No
No
[14.] Reporting Federal Adjustments
▪ Is a corporation required to report a federal audit adjustment to your state?
Yes No
▪ Is YES, please provide statute, regulation or other administrative pronouncement that
requires federal adjustments to be reported to your state? 35 ILCS 5/506(b); 86 Ill. Adm. Code §100.5030,
§100.9320(d)
▪ What event(s) trigger a reporting obligation with respect to a federal audit (check all that apply)?
When the IRS initiates an audit
When there is a final determination (Definition of “final determination”: 35 ILCS 5/506(b): “amount of tax…altered
by amendment of the return or by any other recomputation or redetermination that is agreed to or finally
determined…..” )
Taxpayer’s execution of federal Form 870
Other, explain:
▪ Is there a minimum threshold in terms of the effect of the change on the corporation’s tax liability
before the filing of an amended return is required?
Yes No
▪ Is YES, what is the minimum threshold amount?
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▪ How should a corporation report a finalized federal audit adjustment to your state (check all that apply)?
Amended return and copy of revenue agent report (RAR)
Copy of RAR only
Other, explain:
▪ Is a “paper” filing permitted or is there an electronic filing requirement?
▪ What is the deadline for reporting a federal revenue agent’s final adjustment?
90 days Other, explain: 120 days
▪ If a corporation reports a federal adjustment to your state in a timely manner, does the reporting
extend the due date for filing an amended state tax return?
▪ Is YES, what is the length of the extension? 2 years from due date of amended return
▪ If a federal adjustment extends the statute of limitations, are the issues open for adjustment limited
to those items that are altered as a direct result of the federal adjustment?
▪ Does your state allow taxpayers to offset state tax liability changes resulting from federal audit
adjustments against adjustments to other state items unrelated to the federal audit?
▪ If a federal RAR adjustment requires amended state returns for years otherwise closed by statute:
▪ Is the amended return limited to the federal adjustments?
▪ Can a state tax refund be received?
▪ To prevent the imposition of interest, does your state allow taxpayers to make advanced payments before
there is a final federal determination that triggers the filing responsibility for an amended state return?
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
▪ What is the deadline for filing a response to a determination letter from your state?
90 days Other, explain: 60 days
▪ What is the deadline for filing a valid claim for refund?
3 years from date return was filed Other, explain:
[15.] Statute of Limitations
▪ What is your state’s statute of limitations for assessing taxes?
3 years from due date or filing date, whichever is later
Other, explain:
▪ What is your state’s statute of limitations if gross income is understated by a stated percentage?
6 years if 25%
Other, explain:
▪ What is your state’s statute of limitations if the taxpayer fails to file a return?
No limit
Other, explain:
▪ What is your state’s statute of limitations in cases of fraud?
▪ Can a jeopardy assessment be made for income taxes?
No limit
Other, explain:
Yes No
[16.] Notification to Represent Client
▪ Must your state be notified that a person will be acting on behalf of a corporation in an audit situation? Yes No
▪ What about a non-audit situation? Yes No
▪ If notification is required, what is the form name and number?
Power of Attorney (Form: IL-2848
)
Other, explain:
[17.] Required Federal Attachments
▪ Is a corporation required to attach federal Form 1120, pages 1 to 5, to its state income tax return?
▪ In addition to Form 1120, pages 1 to 5, what additional federal forms and schedules are required
to be attached to the state income tax return (check all that apply)?
Any and all federal forms and schedules that the IRS requires to be attached to Form 1120
Schedule M-3
Form 851
Other, explain: Schedules L, M-1, M-2, M-3
Yes No
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▪ How does your state treat a federal consolidated return if the composition of the consolidated or combined group differs
for state purposes?
Attach the federal consolidated return filed with the IRS
Attach a pro-forma federal return, including federal data for only those members included in the state consolidated
or combined group
Other, explain: Attach Schedule UB
N/A – State does not permit consolidated returns or combined reporting
[18.] Short Year Due to Acquisition. Assume that E (an existing calendar year consolidated group) acquires 100% of T (a
non-calendar year corporation), forming N (a new consolidated group). In each independent fact pattern, indicate how your
state treats the short tax years arising from the acquisition?
Case 1: N files using a calendar year, and T is not part of a unitary group with E or N
▪ Must two short period tax returns be filed for T? Yes No
▪ If YES, what is due date for first short period return? SAF SAF + 1 month Other, explain:
Case 2: N files using a calendar year, and T is part of a unitary group with E or N
▪ Must two short period tax returns be filed for T? Yes No
▪ If YES, what is due date for first short period return? SAF SAF + 1 month Other, explain:
Case 3: N adopts a different tax year than E
▪ Must two short period tax returns be filed for T? Yes No
▪ If YES, what is due date for first short period return? SAF SAF + 1 month Other, explain:
[19.] Amended Returns
▪ In your state, what “form” does a C corporation use to amend a tax return (check all that apply)?
Freestanding amended return form (Form: IL-1120-X)
Same as original return, but check “Amended” box
Same as original return, but write “Amended” on top
Other, explain:
▪ In your state, what “form” does an S corporation use to amend a tax return (check all that apply)?
Special amended return form (Form: IL-1120-ST)
Same as original return, but check “Amended” box
Same as original return, but write “Amended” on top
Other, explain:
[20.] Private Contractors
▪ Does your state hire private contractors (e.g., collection agencies) to assist in tax administration? Yes
▪ If YES, how are these private contractors compensated? Hourly fee Fixed fee
Contingent fee (Range of fee authorized?
) Other, explain:
▪ In what activities do the private contractors engage (check all that apply)?
Nexus reviews
Collection of outstanding delinquent tax receivables
Assessment of tax via audit
Other, explain:
No
[21.] Offers in Compromise
▪ Is your state’s department of revenue/taxation authorized to accept offers in compromise? Yes No
▪ If YES, what are the taxes for which an offer in compromise can be made (check all that apply)?
Income tax Franchise tax Uncollected sales/use tax Collected, but unremitted sales/use tax
Unemployment taxes Income tax withhold from payroll
Other, explain:
▪ If YES, what are the conditions required for an offer in compromise to be made (check all that apply)?
Tax liability has finally been fixed
Taxpayer has been discharged in bankruptcy
Taxpayer has exhausted its protest rights
Taxpayer has shown by proof to be insolvent
Other, explain:
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▪ If YES, is there a special form or application that must be filed to initiate the offer in compromise process?
Yes (Form: BOA-1, BOA-5 )
No
▪ If your state’s department of revenue/taxation is not authorized to accept offers in compromise, is there another way to
obtain an offer in compromise? Yes (Process?
) No
[22.] Voluntary Disclosure Programs
▪ Does your state offer a voluntary disclosure program for corporate taxpayers?
Yes No
▪ If YES, what are the qualification requirements for participating in the program? Have not been contacted by the
Department
▪ If YES, what are the benefits of participating in the program? Limit collection to 4 years, waiver of penalty
▪ If YES, what is the process for participating in the program? Submit Form BOA-2
▪ If YES, does your state take a look-back approach (i.e., taxpayers are required to file for prior years) or
a forward-looking approach? Look-back (How many prior years? 4 ) Forward-looking
▪ If YES, are penalties abated if taxpayer comes forward with prior liabilities?
Yes No Occasionally
▪ If NO, if a non-filer comes forward with prior liabilities, are penalties generally required?
Yes No
[23.] Form 1099 Requirements
▪ Does your state require corporations to file a separate “state” version of Form 1099 for payments
to individuals? Yes No
▪ If YES, what is the due date for filing the state version of Form 1099?
▪ If YES, what form is required? Copy of federal Form 1099 Other, explain:
▪ If YES, what payment amount triggers a filing requirement? SAF Other, explain:
[24.] Multistate Tax Commission
▪ What type of membership does your state have in the MTC? Compact Sovereignty Associate None
▪ Does your state participate in the following MTC joint audit programs? Income tax audits Sales tax audits
▪ Has your state adopted the following MTC model apportionment regulations?
Yes
No
Partly
Yes
No
Partly
▪ General apportionment
▪ Trucking Companies
▪ Construction Contractors
▪ TV and Radio Broadcasting
▪ Railroads
▪ Publishing
▪ Airlines
▪ Telecommunications
▪ Has your state adopted the following MTC model statutes?
▪ Factor Presence Nexus Standard for BAT
▪ Intangible and Interest Expense Add-back
▪ Combined Reporting
▪ Compilation of State Tax Return Data
▪ Disclosure of Reportable Transactions
▪ Tax Avoidance Transaction Voluntary Compliance
▪ Apportionment of Income of Financial Institutions
▪ Mobile Workforce Withholding
▪ Reporting for Nonresident Members of PTE
Yes
No
Partly
▪ Has your state adopted the Statement of Information Concerning Practices of MTC and Signatory States
under Public Law 86-272? Yes No Partly
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[25.] Nonresident Employees
▪ Does your state impose a personal income tax?
Yes No
▪ If YES, does your state have a de minimis rule, based on the number of days worked or the amount of
income earned, which exempts the wages of a nonresident employee who is temporarily working in your
state (assume the employee is not an athlete or entertainer, and that no reciprocity agreement applies)? Yes No
▪ If YES, describe exemption:
▪ If YES, what is the minimum threshold based on? Days worked: _ Income earned: $_
▪ If YES, does the exemption depend on whether the nonresident employee’s state of residence meets certain
requirements (check all that apply)?
Provides a substantially similar exclusion
Does not impose a personal income tax
Other, explain:
▪ If YES, has your state entered into a reciprocity agreement with another state, under which each state
agrees not to tax a resident of the other state on compensation the nonresident receives for working as
an employee in your state (assume the employee is not an athlete or an entertainer)?
Yes No
▪ If YES, which state(s): Iowa, Kentucky, Michigan, or Wisconsin
▪ If the assigned or primary office of a nonresident employee is in your state but the employee is working
in another state for his or her convenience rather than the employer’s necessity, does your state source
the wages to your state based on the location of the primary office (“convenience of employer rule”).
Yes No
COVID-19 Emergency. Mandatory stay-at-home orders forced many businesses to require their employees to work from
home or other remote locations. In response, some states have announced relief provisions regarding the income tax
withholding issues raised by the presence of employees of out-of-state corporations working in a state.
▪ Has your state announced a relief provision which provides that the state will not impose
an income tax withholding requirement on an employer based solely on changes in an employee’s
work location that are temporary in nature and attributable to the COVID-19 emergency?
Yes No
▪ If YES, what are the requirements for qualifying for the relief provision?
▪ If YES, on what date does the relief provision take effect?
▪ If YES, on what date does the relief provision end?
▪ If YES, has your state department of revenue issued guidance regarding these relief provisions?
Yes No
▪ If YES, please provide citation(s):
[26.] Federal Schedule UTP
▪ Does your state require that Schedule UTP be attached to the state corporate income tax return?
Yes No
[27.] Partnership Audit Rules. The federal Bipartisan Budget Act of 2015 included a new centralized audit regime for
partnerships. Under the new regime (IRC §§ 6221 to 6241), also referred to as the BBA or PBBA, all IRS audits,
adjustments and collections are generally made at the partnership level rather than the partner level.
▪ Does your state generally conform to the federal partnership audit regime found in IRC §§6621 6221 to 6241?
Yes No
▪ If NO, explain nature of nonconformity: Upon finalization of any federal changes, partnerships must file IL-1065X to report changes made for each tax year under audit.
[28.] Common Mistakes
▪ What are the most common mistakes that corporations make in filing income tax returns and paying income taxes?
For ease of presentation in a chart, please organize your response as a bullet point list, as follows:
- Duplicate or missing FEIN on Schedule UB
- Including receipts from an occasional sale in the sales factor
- Bonus depreciation addition and subtraction modifications
and so on
IT-21-0008
Page 42
I hope this information is helpful. If you require additional information, please visit our website at
www.tax.illinois.gov or contact the Department’s Taxpayer Assistance Division at (800) 732-8866
or (217) 782-3336.
Sincerely,
Jennifer Uhles
Associate Counsel (Income Tax)
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