Bill Text: IL HB5616 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the Business Corporation Act of 1983. Provides that, in the case of a domestic or foreign corporation, no payment is required for a franchise tax that would have been due and payable on or after January 1, 2025. Provides that all amounts remaining in the Corporate Franchise Tax Refund Fund shall be transferred to the General Revenue Fund no later than December 31, 2025. Makes changes in provisions concerning the statute of limitations. Repeals provisions concerning franchise taxes payable by domestic and foreign corporations on January 1, 2026. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-04-05 - Rule 19(a) / Re-referred to Rules Committee [HB5616 Detail]

Download: Illinois-2023-HB5616-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB5616 Introduced 2/9/2024, by Rep. Jenn Ladisch Douglass SYNOPSIS AS INTRODUCED:
805 ILCS 5/15.35 from Ch. 32, par. 15.35
805 ILCS 5/15.65 from Ch. 32, par. 15.65
805 ILCS 5/15.90 from Ch. 32, par. 15.90
805 ILCS 5/15.97 from Ch. 32, par. 15.97
Amends the Business Corporation Act of 1983. Provides that, in the case of a domestic or foreign corporation, no payment is required for a franchise tax that would have been due and payable on or after January 1, 2025. Provides that all amounts remaining in the Corporate Franchise Tax Refund Fund shall be transferred to the General Revenue Fund no later than December 31, 2025. Makes changes in provisions concerning the statute of limitations. Repeals provisions concerning franchise taxes payable by domestic and foreign corporations on January 1, 2026. Effective immediately.
LRB103 38799 SPS 68936 b
A BILL FOR
HB5616 LRB103 38799 SPS 68936 b
AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Business Corporation Act of 1983 is amended
by changing Sections 15.35, 15.65, 15.90, and 15.97 as
follows:
(805 ILCS 5/15.35) (from Ch. 32, par. 15.35)
(Text of Section from P.A. 102-16 and 103-8)
Sec. 15.35. Franchise taxes payable by domestic
corporations. For the privilege of exercising its franchises
in this State, each domestic corporation shall pay to the
Secretary of State the following franchise taxes, computed on
the basis, at the rates and for the periods prescribed in this
Act:
(a) An initial franchise tax at the time of filing its
first report of issuance of shares.
(b) An additional franchise tax at the time of filing
(1) a report of the issuance of additional shares, or (2) a
report of an increase in paid-in capital without the
issuance of shares, or (3) an amendment to the articles of
incorporation or a report of cumulative changes in paid-in
capital, whenever any amendment or such report discloses
an increase in its paid-in capital over the amount thereof

HB5616 - 2 - LRB103 38799 SPS 68936 b
last reported in any document, other than an annual
report, interim annual report or final transition annual
report required by this Act to be filed in the office of
the Secretary of State.
(c) An additional franchise tax at the time of filing
a report of paid-in capital following a statutory merger
or consolidation, which discloses that the paid-in capital
of the surviving or new corporation immediately after the
merger or consolidation is greater than the sum of the
paid-in capital of all of the merged or consolidated
corporations as last reported by them in any documents,
other than annual reports, required by this Act to be
filed in the office of the Secretary of State; and in
addition, the surviving or new corporation shall be liable
for a further additional franchise tax on the paid-in
capital of each of the merged or consolidated corporations
as last reported by them in any document, other than an
annual report, required by this Act to be filed with the
Secretary of State from their taxable year end to the next
succeeding anniversary month or, in the case of a
corporation which has established an extended filing
month, the extended filing month of the surviving or new
corporation; however if the taxable year ends within the
2-month period immediately preceding the anniversary month
or, in the case of a corporation which has established an
extended filing month, the extended filing month of the

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surviving or new corporation the tax will be computed to
the anniversary month or, in the case of a corporation
which has established an extended filing month, the
extended filing month of the surviving or new corporation
in the next succeeding calendar year.
(d) An annual franchise tax payable each year with the
annual report which the corporation is required by this
Act to file.
On or after January 1, 2020 and prior to January 1, 2021,
the first $30 in liability is exempt from the tax imposed under
this Section. On or after January 1, 2021, and prior to January
1, 2024, the first $1,000 in liability is exempt from the tax
imposed under this Section. On or after January 1, 2024 and
prior to January 1, 2025, the first $5,000 in liability is
exempt from the tax imposed under this Section. The provisions
of this Section shall not require the payment of any franchise
tax that would otherwise have been due and payable on or after
January 1, 2025. There shall be no refunds or proration of
franchise tax for any taxes due and payable on or after January
1, 2025 on the basis that a portion of the corporation's
taxable year extends beyond January 1, 2025.
This Section is repealed on January 1, 2026.
(Source: P.A. 102-16, eff. 6-17-21; 103-8, eff. 6-7-23.)
(Text of Section from P.A. 102-282, 102-558, and 103-8)
Sec. 15.35. Franchise taxes payable by domestic

HB5616 - 4 - LRB103 38799 SPS 68936 b
corporations. For the privilege of exercising its franchises
in this State, each domestic corporation shall pay to the
Secretary of State the following franchise taxes, computed on
the basis, at the rates and for the periods prescribed in this
Act:
(a) An initial franchise tax at the time of filing its
first report of issuance of shares.
(b) An additional franchise tax at the time of filing
(1) a report of the issuance of additional shares, or (2) a
report of an increase in paid-in capital without the
issuance of shares, or (3) an amendment to the articles of
incorporation or a report of cumulative changes in paid-in
capital, whenever any amendment or such report discloses
an increase in its paid-in capital over the amount thereof
last reported in any document, other than an annual
report, interim annual report or final transition annual
report required by this Act to be filed in the office of
the Secretary of State.
(c) An additional franchise tax at the time of filing
a report of paid-in capital following a statutory merger
or consolidation, which discloses that the paid-in capital
of the surviving or new corporation immediately after the
merger or consolidation is greater than the sum of the
paid-in capital of all of the merged or consolidated
corporations as last reported by them in any documents,
other than annual reports, required by this Act to be

HB5616 - 5 - LRB103 38799 SPS 68936 b
filed in the office of the Secretary of State; and in
addition, the surviving or new corporation shall be liable
for a further additional franchise tax on the paid-in
capital of each of the merged or consolidated corporations
as last reported by them in any document, other than an
annual report, required by this Act to be filed with the
Secretary of State from their taxable year end to the next
succeeding anniversary month or, in the case of a
corporation which has established an extended filing
month, the extended filing month of the surviving or new
corporation; however if the taxable year ends within the
2-month period immediately preceding the anniversary month
or, in the case of a corporation which has established an
extended filing month, the extended filing month of the
surviving or new corporation the tax will be computed to
the anniversary month or, in the case of a corporation
which has established an extended filing month, the
extended filing month of the surviving or new corporation
in the next succeeding calendar year.
(d) An annual franchise tax payable each year with the
annual report which the corporation is required by this
Act to file.
On or after January 1, 2020 and prior to January 1, 2021,
the first $30 in liability is exempt from the tax imposed under
this Section. On or after January 1, 2021 and prior to January
1, 2024, the first $1,000 in liability is exempt from the tax

HB5616 - 6 - LRB103 38799 SPS 68936 b
imposed under this Section. On or after January 1, 2024 and
prior to January 1, 2025, the first $5,000 in liability is
exempt from the tax imposed under this Section. The provisions
of this Section shall not require the payment of any franchise
tax that would otherwise have been due and payable on or after
January 1, 2025. There shall be no refunds or proration of
franchise tax for any taxes due and payable on or after January
1, 2025 on the basis that a portion of the corporation's
taxable year extends beyond January 1, 2025.
This Section is repealed on January 1, 2026.
(Source: P.A. 102-282, eff. 1-1-22; 102-558, eff. 8-20-21;
103-8, eff. 6-7-23.)
(805 ILCS 5/15.65) (from Ch. 32, par. 15.65)
Sec. 15.65. Franchise taxes payable by foreign
corporations. For the privilege of exercising its authority to
transact such business in this State as set out in its
application therefor or any amendment thereto, each foreign
corporation shall pay to the Secretary of State the following
franchise taxes, computed on the basis, at the rates and for
the periods prescribed in this Act:
(a) An initial franchise tax at the time of filing its
application for authority to transact business in this
State.
(b) An additional franchise tax at the time of filing
(1) a report of the issuance of additional shares, or (2) a

HB5616 - 7 - LRB103 38799 SPS 68936 b
report of an increase in paid-in capital without the
issuance of shares, or (3) a report of cumulative changes
in paid-in capital or a report of an exchange or
reclassification of shares, whenever any such report
discloses an increase in its paid-in capital over the
amount thereof last reported in any document, other than
an annual report, interim annual report or final
transition annual report, required by this Act to be filed
in the office of the Secretary of State.
(c) Whenever the corporation shall be a party to a
statutory merger and shall be the surviving corporation,
an additional franchise tax at the time of filing its
report following merger, if such report discloses that the
amount represented in this State of its paid-in capital
immediately after the merger is greater than the aggregate
of the amounts represented in this State of the paid-in
capital of such of the merged corporations as were
authorized to transact business in this State at the time
of the merger, as last reported by them in any documents,
other than annual reports, required by this Act to be
filed in the office of the Secretary of State; and in
addition, the surviving corporation shall be liable for a
further additional franchise tax on the paid-in capital of
each of the merged corporations as last reported by them
in any document, other than an annual report, required by
this Act to be filed with the Secretary of State, from

HB5616 - 8 - LRB103 38799 SPS 68936 b
their taxable year end to the next succeeding anniversary
month or, in the case of a corporation which has
established an extended filing month, the extended filing
month of the surviving corporation; however if the taxable
year ends within the 2-month period immediately preceding
the anniversary month or the extended filing month of the
surviving corporation, the tax will be computed to the
anniversary or, extended filing month of the surviving
corporation in the next succeeding calendar year.
(d) An annual franchise tax payable each year with any
annual report which the corporation is required by this
Act to file.
On or after January 1, 2020 and prior to January 1, 2021,
the first $30 in liability is exempt from the tax imposed under
this Section. On or after January 1, 2021 and prior to January
1, 2025, the first $1,000 in liability is exempt from the tax
imposed under this Section. The provisions of this Section
shall not require the payment of any franchise tax that would
otherwise have been due and payable on or after January 1,
2025. There shall be no refunds or proration of franchise tax
for any taxes due and payable on or after January 1, 2025 on
the basis that a portion of the corporation's taxable year
extends beyond January 1, 2025.
This Section is repealed on January 1, 2026.
(Source: P.A. 101-9, eff. 6-5-19; 102-16, eff. 6-17-21;
102-558, eff. 8-20-21; 102-813, eff. 5-13-22.)

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(805 ILCS 5/15.90) (from Ch. 32, par. 15.90)
Sec. 15.90. Statute of limitations.
(a) Except as otherwise provided in this Section and
notwithstanding anything to the contrary contained in any
other Section of this Act, prior to January 1, 2025, no
domestic corporation or foreign corporation shall be obligated
to pay any annual franchise tax, fee, or penalty or interest
thereon imposed under this Act, nor shall any administrative
or judicial sanction (including dissolution) be imposed or
enforced nor access to the courts of this State be denied based
upon nonpayment thereof more than 7 years after the date of
filing the annual report with respect to the period during
which the obligation for the tax, fee, penalty or interest
arose, unless (1) within that 7 year period the Secretary of
State sends a written notice to the corporation to the effect
that (A) administrative or judicial action to dissolve the
corporation or revoke its authority for nonpayment of a tax,
fee, penalty or interest has been commenced; or (B) the
corporation has submitted a report but has failed to pay a tax,
fee, penalty or interest required to be paid therewith; or (C)
a report with respect to an event or action giving rise to an
obligation to pay a tax, fee, penalty or interest is required
but has not been filed, or has been filed and is in error or
incomplete; or (2) the annual report by the corporation was
filed with fraudulent intent to evade taxes payable under this

HB5616 - 10 - LRB103 38799 SPS 68936 b
Act. A corporation nonetheless shall be required to pay all
taxes that would have been payable during the most recent 7
year period due to a previously unreported increase in paid-in
capital that occurred prior to that 7 year period and interest
and penalties thereon for that period, except that, from
February 1, 2008 through March 15, 2008, with respect to any
corporation that participates in the Franchise Tax and License
Fee Amnesty Act of 2007, the corporation shall be only
required to pay all taxes that would have been payable during
the most recent 4 year period due to a previously unreported
increase in paid-in capital that occurred prior to that 7 year
period. Beginning January 1, 2025, no domestic corporation or
foreign corporation shall be obligated to pay any annual
franchise tax, fee, or penalty or interest thereon imposed
under this Act, nor shall any administrative or judicial
sanction (including dissolution) be imposed or enforced nor
access to the courts of this State be denied based upon
nonpayment thereof more than 7 years after the date of filing
the annual report with respect to the period during which the
obligation for the tax, fee, penalty or interest arose.
(b) If within 2 years following a change in control of a
corporation the corporation voluntarily pays in good faith all
known obligations of the corporation imposed by this Article
15 with respect to reports that were required to have been
filed since the beginning of the 7 year period ending on the
effective date of the change in control, no action shall be

HB5616 - 11 - LRB103 38799 SPS 68936 b
taken to enforce or collect obligations of that corporation
imposed by this Article 15 with respect to reports that were
required to have been filed prior to that 7 year period
regardless of whether the limitation period set forth in
subsection (a) is otherwise applicable. For purposes of this
subsection (b), a change in control means a transaction, or a
series of transactions consummated within a period of 180
consecutive days, as a result of which a person which owned
less than 10% of the shares having the power to elect directors
of the corporation acquires shares such that the person
becomes the holder of 80% or more of the shares having such
power. For purposes of this subsection (b) a person means any
natural person, corporation, partnership, trust or other
entity together with all other persons controlled by,
controlling or under common control with such person.
(c) Except as otherwise provided in this Section and
notwithstanding anything to the contrary contained in any
other Section of this Act, no foreign corporation that has not
previously obtained authority under this Act shall, upon
voluntary application for authority filed with the Secretary
of State prior to January 1, 2001, be obligated to pay any tax,
fee, penalty, or interest imposed under this Act, nor shall
any administrative or judicial sanction be imposed or enforced
based upon nonpayment thereof with respect to a period during
which the obligation arose that is prior to January 1, 1993
unless (1) prior to receipt of the application for authority

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the Secretary of State had sent written notice to the
corporation regarding its failure to obtain an application for
authority, (2) the corporation had submitted an application
for authority previously but had failed to pay any tax, fee,
penalty or interest to be paid therewith, or (3) the
application for authority was submitted by the corporation
with fraudulent intent to evade taxes payable under this Act.
A corporation nonetheless shall be required to pay all taxes
and fees due under this Act that would have been payable since
January 1, 1993 as a result of commencing the transaction of
its business in this State and interest thereon for that
period.
(Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08;
96-66, eff. 1-1-10.)
(805 ILCS 5/15.97) (from Ch. 32, par. 15.97)
Sec. 15.97. Corporate Franchise Tax Refund Fund.
(a) Beginning July 1, 1993, a percentage of the amounts
collected under Sections 15.35, 15.45, 15.65, and 15.75 of
this Act shall be deposited into the Corporate Franchise Tax
Refund Fund, a special Fund hereby created in the State
treasury. From July 1, 1993, until December 31, 1994, there
shall be deposited into the Fund 3% of the amounts received
under those Sections. Beginning January 1, 1995, and for each
fiscal year beginning thereafter, 2% of the amounts collected
under those Sections during the preceding fiscal year shall be

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deposited into the Fund.
(b) Beginning July 1, 1993, moneys in the Fund shall be
expended exclusively for the purpose of paying refunds payable
because of overpayment of franchise taxes, penalties, or
interest under Sections 13.70, 15.35, 15.45, 15.65, 15.75, and
16.05 of this Act and making transfers authorized under this
Section. Refunds in accordance with the provisions of
subsections (f) and (g) of Section 1.15 and Section 1.17 of
this Act may be made from the Fund only to the extent that
amounts collected under Sections 15.35, 15.45, 15.65, and
15.75 of this Act have been deposited in the Fund and remain
available. On or before August 31 of each year, the balance in
the Fund in excess of $100,000 shall be transferred to the
General Revenue Fund. Notwithstanding the provisions of this
subsection, for the period commencing on or after July 1,
2022, amounts in the fund shall not be transferred to the
General Revenue Fund and shall be used to pay refunds in
accordance with the provisions of this Act. Within a
reasonable time after December 31, 2024, but no later than
December 31, 2025, the Secretary of State shall direct and the
Comptroller shall order transferred to the General Revenue
Fund all amounts remaining in the fund.
(c) This Act shall constitute an irrevocable and
continuing appropriation from the Corporate Franchise Tax
Refund Fund for the purpose of paying refunds upon the order of
the Secretary of State in accordance with the provisions of

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this Section.
(d) This Section is repealed on January 1, 2026.
(Source: P.A. 102-282, eff. 1-1-22; 103-8, eff. 6-7-23.)