IL-1120-ST Instructions

              IL-1120-ST Instructions (R-12/05) Page 1 of 8
Illinois Department of Revenue
IL-1120-ST Instructions 2005
What’s new for 2005?
• Effective immediately, “business income” is defined to mean
all income that may be apportioned without violating the
Constitution of the United States. This new definition overrules
recent court cases that had ruled that gain from disposition of
an entire business or from property that previously had been
used in a business is not business income. Also, if you re-ported
income from an asset or activity as business income in
a prior year, and report any income from that asset or activity
as nonbusiness income on this return, you must add back all
expenses deducted in connection with that income in this year
and in your two most recent tax years. See Specific Instructions
for Part I, Line 2c, and Part III, Lines 2a and 7.
• Effective for tax years ending on or after December 31, 2004,
you may not deduct some interest or “intangible expenses”
such as royalties and losses on sales of intangible assets from
transactions with a taxpayer who would be a member of your
unitary business group, but cannot be included because 80
percent or more of its business is conducted outside the United
States. Also, the 80/20 company that receives the amounts will
not be taxed on them. See Specific Instructions for Part I, Lines
2c and 5e and Schedule 80/20, Related-Party Expenses for
more information.
• The IL-477, Replacement Tax Investment Credit, scheduled to
expire on December 31, 2003, has been extended until Decem-ber
31, 2008. You may continue to claim a credit for qualified
property placed in service after December 31, 2003.
• Effective for tax years ending on or after December 31, 2003,
and before December 31, 2004, the Research and Develop-ment
Credit was not an allowable credit. For tax years ending
on or after December 31, 2004, the Research and Develop-ment
Credit has been restored.
General Information
Who must file Form IL-1120-ST?
You must file Form IL-1120-ST if you are a small business
corporation, as defined in Internal Revenue Code (IRC), Section
1361(a), that
• has net income or loss as defined under the Illinois Income Tax
Act (IITA); or
• is qualified to do business in the state of Illinois and is required
to file U.S. Form 1120S (regardless of net income or loss).
If you own a Qualified Subchapter S Subsidiary (QSSS) defined
in IRC, Section 1361(b)(3), as well as any other entity that is
disregarded as an entity separate from you for purposes of the
IRC, it is likewise disregarded as a separate entity for purposes of
the IITA. You must include all items of income, deduction, loss,
credit, etc., from such entities on your return as if they were
earned or incurred by you directly.
If you are an S corporation that is a member of a unitary business
group, you should see Illinois Schedule UB, Combined
Apportionment for Unitary Business Group, and the instructions
for information about filing requirements. S corporations may be
required to apportion their business income as members of a
unitary group, but may not file a combined return.
It is your duty as a taxpayer to obtain forms. Failure to obtain them
is not an excuse for failure to file returns as required by law.
How do I register my business?
If you are required to file Form IL-1120, you should register by
calling our Central Registration Division at 217 785-3707. You may
be able to register electronically. Visit our Web site at
www.tax.illinois.gov for more information.
Registering with the Illinois Department of Revenue (IDOR), prior
to filing your return ensures that your tax returns are accurately
processed.
Your identification numbers as an Illinois business taxpayer are
your federal employer identification number (FEIN) and your
Illinois business tax (IBT) number.
When should I file?
Your Illinois filing period is the same as your federal filing period.
In general, Form IL-1120-ST is due on or before the 15th day of
the 3rd month following the close of the tax year.
Automatic seven-month extension — We grant you an auto-matic
seven-month extension of time to file your small business
corporate tax return. You are not required to file Form IL-505-B,
Automatic Extension Payment, in order to obtain this automatic
extension. However, if you expect tax to be due, you must use
Form IL-505-B to pay any tentative tax due in order to avoid
interest and penalty on tax not paid by the original due date of the
return. An extension of time to file your Form IL-1120-ST is not an
extension of time for payment of Illinois tax.
Additional extensions beyond the automatic extension
period — We will grant an extension of more than seven months
only if an extension of more than six months is granted by the
Internal Revenue Service (IRS). You must attach a copy of the
approved federal extension to your Form IL-1120-ST.
Where should I file?
Mail your Form IL-1120-ST to
ILLINOIS DEPARTMENT OF REVENUE
PO BOX 19032
SPRINGFIELD IL 62794-9032
When should I pay?
Payment of tax — You must pay your Illinois replacement tax in
full on or before the original due date of the return. This payment
date applies even though an automatic extension for filing your
return has been granted.
Estimated tax payments — Small business corporations are not
required to make estimated tax payments.
Who should sign the return?
Your Form IL-1120-ST must be signed by the president, vice
president, treasurer, or any other officer duly authorized to sign the
return. In the case of a bankruptcy, a receiver, trustee, or as-signee
must sign any return required to be filed on behalf of the
corporation. The signature verifies by written declaration (and
under penalties of perjury) that the signing individual has person-ally
examined the return and the return is true, correct, and
complete. The fact that an individual’s name is signed to a return
is prima facie evidence that the individual is authorized to sign the
return on behalf of the corporation.
Any person paid to prepare the return (other than a regular, full-time
employee of the taxpayer, such as a clerk, secretary, or
bookkeeper) must provide a handwritten signature, date the
return, and write the preparer’s taxpayer identification number. If
the preparer is an employee or partner of a firm or corporation,
the preparer must also provide the firm’s name, address, and