Legal References

Definitions

The Illinois Income Tax is imposed on every taxpayer on its unrelated business taxable income as determined under Section 512 of the Internal Revenue Code, without any deduction for the tax imposed or the standard exemption.

Replacement Tax, also known as Personal Property Replacement Tax, is a tax on the net income of corporations, subchapter S corporations, partnerships, and trusts. This tax replaces money lost by local governments when their power to impose personal property taxes was taken away. Replacement tax is collected from corporations, subchapter S corporations, partnerships, and trusts by the State of Illinois and paid to local governments.

Tax rate

Exempt organizations may be formed as either a corporation or a trust. Therefore, exempt organizations pay both income tax and replacement tax, but the rates differ.

Use the Tax Rate Database to determine the income and replacement tax rates for the exempt corporation or trust.

Tax base

The starting point for the Illinois Exempt Organization Income and Replacement Tax Return is the unrelated business taxable income or loss after deducting income exempt from tax by reason of the United States or Illinois Constitutions, or by reason of law, statute or treaties of the United States, and adding back any Illinois income tax deducted on the federal return.

Filing requirements

You must file Form IL-990-T, Exempt Organization Income and Replacement Tax Return, if you are an organization exempt from federal income tax by reason of Section 501(a) of the Internal Revenue Code (IRC) and earn or receive unrelated business taxable income as determined under IRC, Section 512, and

  • have net income as defined under the Illinois Income Tax Act (IITA); or
  • are a resident or qualified to do business in the state of Illinois and are required to file U.S. Form 990-T (regardless of net income or loss).

Due dates

  • Original return

In general
  • Form IL-990-T is due on or before the 15th day of the 5th month following the close of the tax year.
If you are an employee trust as described in IRC Section 401(a)
  • Form IL-990-T is due on or before the 15th day of the 4th month following the close of the tax year
  • Automatic filing extension

You are not required to file a form in order to obtain this automatic extension. However, if you expect tax to be due, you must  pay any tentative tax due by the original due date of the return to avoid interest and penalty on tax not paid. An extension of time to file your Form IL-990-T does not extend the amount of time you have to pay your Illinois tax liability. See Make a Payment for payment options.

If you are classified federally as a
  • corporation or a 501(c) trust, we grant you an automatic seven-month extension of time to file your tax return.
  • 401(a) trust, we grant you an automatic six-month extension of time to file your tax return
  • Amended return

For amended returns claiming a credit or refund filed on or after June 25, 2021, IDOR has an automatic six month extension of time to issue an assessment of additional tax due if the amended return is filed within six months of the original expiration of the statute of limitations.

State Change
  • If your change creates or increases the Illinois net loss for the year, you must file Form IL- 990-T-X showing the increase in order to carry the increased loss amount to another year.
  • If your change increases the tax due to Illinois, you should file Form IL-990-T-X and pay the tax, penalty, and interest promptly.
  • If your change decreases the tax due to Illinois and you are entitled to a refund or credit carryforward, you must file Form IL-990-T-X within
    • three years after the due date of the return (including extensions),
    • three years after the date your original return was filed, or
    • one year after the date your Illinois tax was paid, whichever is latest.
Federal Change
  • If your federal change decreases the tax due to Illinois and you are entitled to a refund or credit carryforward, you must file Form IL-990-T-X within two years plus 120 days of federal finalization.
  • If your federal change increases the tax due to Illinois, you must file Form IL-990-T-X and pay any additional tax within 120 days of IRS partial agreement or finalization. To avoid late payment penalties, you must attach proof of the federal finalization date, showing the change was reported to Illinois within 120 days of IRS acceptance, or you may be assessed a late-payment penalty.

Note: You should not file Form IL-990-T-X until you receive a federal finalization notification from the IRS stating that they have accepted your change, either by paying a refund, or by final assessment, agreement, or judgment. Acknowledgement that the IRS received your amended return is not acceptable proof of federal finalization.

What if I need to correct or change my return?

If you need to correct or change your return after it has been filed, you must file Form IL-990-T-X, Amended Exempt Organization Income and Replacement Tax Return. Returns filed before the extended due date of the return are treated as your original return for all purposes. You should file Form IL-990-T-X only after you have filed a processable Illinois Income Tax return. You must file a separate Form IL-990-T-X for each tax year you wish to change. For more information see                      Form IL-990-T-X Instructions

Do not file another Form IL-990-T with "amended" figures to change your originally filed Form IL-990-T.