# 86 Ill. Adm. Code 100.9310: Section 100.9310 Application of Tax Payments Within Unitary Business Groups (IITA Section 603)

> Illinois · Regulations · In force

URL: https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P_S100_9310

## Section

- **Citation:** 86 Ill. Adm. Code 100.9310
- **Heading:** Section 100.9310 Application of Tax Payments Within Unitary Business Groups (IITA Section 603)
- **Jurisdiction:** Illinois
- **Kind:** Regulations
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Illinois Administrative Code / Title 86  /  / Part   / Section 100.9310 Application of Tax Payments Within Unitary Business Groups (IITA Section 603)

## Text

Section 100
TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 100 INCOME TAX
SECTION 100.9310 APPLICATION OF TAX PAYMENTS WITHIN UNITARY BUSINESS GROUPS (IITA SECTION 603)
Section 100.9310 Application
of Tax Payments Within Unitary Business Groups (IITA Section 603)
a)         In
general
1)         This Section relates to the exercise of the election provided in
IITA Section 603 with respect to overpayments and liabilities that arise as the
result of:
A)        the
filing of an original return;
B)        an
assessment due to a mathematical error;
C)        the filing of an amended return showing an increase in tax
liability;
D)        the filing of an amended return showing a decrease in tax liability
which is approved by the Department;
E)        the submission by a taxpayer of a signed Form IL-870 waiver of restrictions
on assessment and collection under Section 907 of the Act; and
F)         the execution of a Form IL-870-AD pursuant to Section 100.9000(c)(5)
of this Part.
IITA Section
603 was repealed by Public Act 88-195, which also amended IITA Section 502(e)
to require combined returns for taxable years ending on or after December 31,
1993. No election under that Section may be made with respect to taxable years
ending on or after December 31, 1993.
2)         If the overpayment arises from subsection (a)(1) (A) or (D)
above, it may only be credited against the liability for the same taxable year of
one or more other taxpayers that are members of the same unitary group for that
taxable year. If the overpayment arises from subsection (a)(1)(E) or (F) above,
it may be credited against the liability of one or more other members of the same
unitary group for any taxable year within the audit period of the electing company
may only be credited against the liability for the same taxable year of
one or more other taxpayers that are members of the same unitary group for that
taxable year. If the overpayment arises from subsection (a)(1)(E) or (F) above,
it may be credited against the liability of one or more other members of the same
unitary group for any taxable year within the audit period of the electing company.
The audit period of the electing company is any taxable year for which the
original return or an amended return of the electing company has been examined under
IITA Section 904(a) or 909(e) and the electing company has been notified that the
correct tax is less than, equal to, or more than the amount of tax already
assessed.
b)         Elements of the election. The election may only be made by a
taxpayer that has an overpayment and has filed its tax return. The election is
only available for taxable years ending before December 31, 1985. The election,
including the alternative election, is binding and cannot later be amended, revised,
or cancelled by the taxpayer. The election must be specific on the following
matters:
1)         the identities of other members of the unitary business group to
which the overpayment is assigned,
2)         the
amount of the overpayment assigned to each such member, and
3)         the
date the overpayment was made.
c)         Meaning of overpayment. A company's overpayment for a taxable
year is the amount by which its payment and credits for that year exceed its assessed
liability for the same year under IITA Section 903, except for any penalties imposed
under IITA Section 804 as a result of making this election
e overpayment assigned to each such member, and
3)         the
date the overpayment was made.
c)         Meaning of overpayment. A company's overpayment for a taxable
year is the amount by which its payment and credits for that year exceed its assessed
liability for the same year under IITA Section 903, except for any penalties imposed
under IITA Section 804 as a result of making this election.
1)         In ascertaining whether a taxpayer has an overpayment for a
particular taxable year and in computing the amount of such overpayment, an
amended return constituting a claim for refund under IITA Section 909(d) shall
not be treated as reducing the taxpayer's assessed liability for the taxable
year unless the taxpayer has received a notice from the Department that the
claim has been approved and that a refund will be issued.
2)         If an overpayment has been refunded or credited forward to the
taxpayer's next taxable year prior to an election being made, that overpayment
is no longer available to be used as an offset against any other member's
liability, and the refund or credit forward will not be reversed or cancelled
by the Department at the request of the taxpayer. An overpayment elected to be
credited forward to the taxpayer's next taxable year will be considered made as
of the first installment due date of the credit carryforward year.
Consequently, a credit carryforward will be binding once the due date for the
first estimated tax installment of the carryforward year has passed without an
election to offset having been made, and such overpayment will not be available
for offset after that date. For purposes of this section the date on which a refund
will be considered to be made will be the "process date," meaning the
date the Department processes an account by computer for the issuance of a
warrant, which is permanently recorded date maintained by the Department.
d)         Procedure
1)         Manner and time for making an election
will not be available
for offset after that date. For purposes of this section the date on which a refund
will be considered to be made will be the "process date," meaning the
date the Department processes an account by computer for the issuance of a
warrant, which is permanently recorded date maintained by the Department.
d)         Procedure
1)         Manner and time for making an election. The election must be
made on forms prescribed by the Department, and it must be filed before the
Department has issued a refund for the overpayment or before the overpayment
has been credited forward to the taxpayer's next taxable year. All the members
of a unitary group who wish to file an election must do so at the same time and
on the same form. The election is only available to unitary business group
members that have overpayments. Nothing in this Section permits a member of the
unitary business group having a balance due on its liability to claim
unilaterally the overpayment made by another member for the same taxable year. Both
the overpaid and underpaid members are bound by the consequences of the election.
The election should be filed with the original or amended returns which are
related to the election if those returns have not been previously filed.
2)         The Department's response to the election. As soon as
practicable (but not later than 3 months) after the election is filed, the
Department shall inform the electing taxpayer and each taxpayer that is to
receive an assignment of payments pursuant to the election that the election
has been approved or disapproved. An election will be disapproved if it violates
any of the substantive or procedural requirements set out in this Section
n. As soon as
practicable (but not later than 3 months) after the election is filed, the
Department shall inform the electing taxpayer and each taxpayer that is to
receive an assignment of payments pursuant to the election that the election
has been approved or disapproved. An election will be disapproved if it violates
any of the substantive or procedural requirements set out in this Section. In addition,
an election may be disapproved if the Department has chosen to exercise its right
under IITA Section 909(a) or Section 39e of the Civil Administrative Code of
Illinois to use the overpayment to defray another Illinois tax liability of the
electing taxpayer, thus causing the overpayment to be less than the electing
taxpayer had anticipated in filing its election.
3)         Alternative elections
A)        If the election is disapproved because it is premised on a
mistake as to the size of the overpayment, the notice of disapproval must
provide the electing company with an explanation of the correct calculation of
the overpayment, if any. If the election is disapproved because it violates one
of the other requirements set out in this Section, the notice of disapproval must
state the nature of the violation. In either event, the electing company shall
have 45 days from the date that the notice of disapproval is issued to file an alternative
election, provided that an election otherwise meeting the requirements of this
Section is possible. A notice of disapproval is considered issued on its
postmark date. The alternative election may include overpaid members of the
unitary group which were not included in the original election. The alternative
election shall be made on the form prescribed by the Department and should take
into account whatever mistakes or violations the Department has cited in its
notice of disapproval
ossible. A notice of disapproval is considered issued on its
postmark date. The alternative election may include overpaid members of the
unitary group which were not included in the original election. The alternative
election shall be made on the form prescribed by the Department and should take
into account whatever mistakes or violations the Department has cited in its
notice of disapproval. If, by reason of the matters dealt with in the Department's
notice of disapproval, the electing company is shown not to have an overpayment
for the taxable year, then an alternative election may not be filed. In
situations in which an alternative election may be filed, if one is not filed within
45 days of the date that the notice of disapproval is issued, then all
companies involved will be treated as though no election had ever been
attempted.
B)        The Department will approve an election, if it is premised on a
mistake in the size of the electing company's overpayment and if precisely the
same election could be made on the basis of the reduced overpayment.
i)          EXAMPLE: Corporation A, Corporation B, and Corporation C are all
members of the same unitary business group for their taxable years ended
November 30, 1984. Each filed its Illinois income tax return on February 15,
1985 on a combined apportionment basis with the other two. Corporation C showed
a balance of tax due on its return of $20,000; Corporation A showed an
overpayment of $20,000; and Corporation B showed an overpayment of $40,000 on
its return. Corporation A filed an election under this Section, assigning its
entire overpayment to Corporation C and specifying that $5,000 should be
considered as having been paid by Corporation C on each of the four dates that
Corporation A had made estimated tax installments. Corporation B indicated on
its return that its entire $40,000 overpayment should be refunded
payment of $40,000 on
its return. Corporation A filed an election under this Section, assigning its
entire overpayment to Corporation C and specifying that $5,000 should be
considered as having been paid by Corporation C on each of the four dates that
Corporation A had made estimated tax installments. Corporation B indicated on
its return that its entire $40,000 overpayment should be refunded. In
processing Corporation A's return, the Department identified a mathematical error
which caused an additional $16,000 to be assessed on Corporation A's return with
a consequent reduction of Corporation A's overpayment by that same amount. In
addition to notifying Corporation A of the mathematical error assessment, the
Department notified both Corporation A and Corporation C that the election had
been disapproved. At the time the disapproval notices were issued, Corporation
B still had not received its $40,000 refund.
ii)         QUESTION: The question is whether the tax compliance personnel
of the A-B-C unitary business group have any alternative to simply having
Corporation A file an alternative election assigning $4,000 to Corporation C and
having Corporation C pay whatever Section 804 penalty and interest may accrue
as a result of its $16,000 balance due.
iii)        ANALYSIS AND CONCLUSION: Corporations A and B may make an alternative
election to assign $4,000 and $16,000, respectively, to Corporation C or Corporation
B may make an alternative election to assign $20,000 of its unrefunded
overpayment to Corporation C.
e)         Consequences of the election as between the electing company
and the company receiving the assignment of overpayments
1)         Once an election is approved, the electing company loses all
entitlement to the overpayments assigned and all benefits which would otherwise
have accrued to it under the Act as the actual payor of the overpayments
assigned
ed
overpayment to Corporation C.
e)         Consequences of the election as between the electing company
and the company receiving the assignment of overpayments
1)         Once an election is approved, the electing company loses all
entitlement to the overpayments assigned and all benefits which would otherwise
have accrued to it under the Act as the actual payor of the overpayments
assigned. Conversely, once an election is approved, companies receiving
assignments of overpayments shall be entitled to all of the benefits that would
have accrued to them under the Act had they themselves made the payments
assigned to them at the times specified in the election.
A)        EXAMPLE: Corporation A and Corporation B are part of the same
unitary business group for calendar 1984. Corporation A's total Illinois income
tax liability for 1984 is $20,000 and its total payments, $30,000. Corporation
B's total Illinois income tax liability for 1984 is $12,000 and its total
payments, $2,000. Corporation A makes an election assigning its entire $10,000
overpayment to Corporation B. The election is approved by the Department, and the
companies are so notified. At a later date, Corporation B discovers that an
item of its own nonbusiness (nonapportionable) income, which it had allocated to
Illinois on its original return really should not have been allocated to Illinois
under Section 303 of the Act. Corporation B files an amended return, relating
to this item, claiming that its liability for 1984 should have been $6,000 less
than shown on its original return and that it is consequently entitled to a refund
of $6,000. The Department examines the claim under Section 909(e), determines that
it is meritorious, and issues a notice of refund. Corporation A's legal
officer, having heard of the claim filed by Corporation B and wishing to
collect whatever he can on a large debt owed by Corporation B to Corporation A,
petitions the Department to issue the $6,000 refund to Corporation A
titled to a refund
of $6,000. The Department examines the claim under Section 909(e), determines that
it is meritorious, and issues a notice of refund. Corporation A's legal
officer, having heard of the claim filed by Corporation B and wishing to
collect whatever he can on a large debt owed by Corporation B to Corporation A,
petitions the Department to issue the $6,000 refund to Corporation A.
B)        ANALYSIS AND CONCLUSION: The Department will not grant
Corporation A's petition, and it will refund the $6,000 to Corporation B. By
making the election, Corporation A lost all entitlement to the assigned amount.
2)         A company may not elect to assign an amount in excess of its
overpayment. However, as a result of making an election, a company may subject
itself to penalties for underpayment of estimated tax, and it must agree to be
liable for any such penalties as a condition of making the election.
A)        EXAMPLE: Corporation A and Corporation B are members of the same
unitary business group for 1984; neither has ever been an Illinois income taxpayer
before. On completing their Illinois income tax returns for 1984, Corporation A
and Corporation B arrive at the following conclusions:
i)          Corporation A:
Total Illinois Income Tax
Liability
$2,000,000
1
st
est. tax
installment – April 16, 1984
$400,000
2
nd
est. tax
installment – June 15, 1984
400,000
3
rd
est. tax
installment – September 17, 1984
800,000
4
th
est. tax
installment – December 17, 1984
800,000
$2,400,000
$   400,000
ii)         Corporation B:
Total Illinois Income Tax
Liability
$1,000,000
1
st
est. tax
installment – September 17, 1984
$200,000
2
nd
est. tax
installment – December 17, 1984
600,000
$  800,000
$  200,000
Balance of Tax
Due
installment – June 15, 1984
400,000
3
rd
est. tax
installment – September 17, 1984
800,000
4
th
est. tax
installment – December 17, 1984
800,000
$2,400,000
$   400,000
ii)         Corporation B:
Total Illinois Income Tax
Liability
$1,000,000
1
st
est. tax
installment – September 17, 1984
$200,000
2
nd
est. tax
installment – December 17, 1984
600,000
$  800,000
$  200,000
Balance of Tax
Due. The companies recognize that Corporation B has underpayments of estimated
tax within the meaning of Section 804(b) of the Act of $200,000 as of April 16 and
in the accumulated amount of $400,000 as of June 15 and September 17 and that
these underpayments will generate a penalty under Section 804(a) of $56,547.94.
The companies further recognize that, due to the seasonal nature of Corporation
B's business, an estimated tax payment of $100,000 on or before April 16 would have
qualified Corporation B for the exception of Section 804(d)(3) with respect to
the underpayments mentioned above, with the result that Corporation B would have
incurred no estimated tax penalty whatsoever for 1984. In view of these
circumstances, Corporation A filed a timely election to assign $200,000 of its overpayment
to Corporation B, specifying that the $100,000 should be considered as having been
paid by Corporation B on April 16, 1984, and $100,000 as of September 17, 1984.
Realizing that it has caused its first installment to be reduced below what is
necessary to meet its own estimated tax obligations, Corporation A expects to
incur an estimated tax penalty under Section 804(a) of the Act in the amount of
$10,191.78, that being the penalty generated by a $100,000 underpayment for the
155 day period from April 15, 1984 to September 17, 1984. The election will
have the effect of saving the A-B unitary business group $46,356.16 in
estimated tax penalty
o meet its own estimated tax obligations, Corporation A expects to
incur an estimated tax penalty under Section 804(a) of the Act in the amount of
$10,191.78, that being the penalty generated by a $100,000 underpayment for the
155 day period from April 15, 1984 to September 17, 1984. The election will
have the effect of saving the A-B unitary business group $46,356.16 in
estimated tax penalty.
B)        ANALYSIS AND CONCLUSION: This election will be approved by the Department,
and as a result, Corporation A will be liable for the penalty for underpayment
of estimated tax in the amount of $10,191.78.
f)         Additional
provisions
1)         The regulations are effective for all elections made under
Section 603 of the Illinois Income Tax Act as amended by PA 93-1289. This provision
provides coverage for elections made and processed by the Department prior to the
regulations being adopted.
2)         Overpayments can be divided up and used to offset more than
one underpaid account.
3)         Partnerships and Subchapter S corporations are qualified to participate
in elections made under this Section.
4)         Overpayments can only be assigned to accounts with
liabilities. "Liability" includes penalties such as underpayment of estimated
tax, late filing penalty, and late payment penalty. Movement of payments can cause
penalties of underpaid accounts to be reduced or cancelled altogether.
5)         The purpose of the reference to IITA Section 911 in IITA Section
603 is to preclude the creation of a new claim period outside of Section 911 by
reason of new Section 603
bility" includes penalties such as underpayment of estimated
tax, late filing penalty, and late payment penalty. Movement of payments can cause
penalties of underpaid accounts to be reduced or cancelled altogether.
5)         The purpose of the reference to IITA Section 911 in IITA Section
603 is to preclude the creation of a new claim period outside of Section 911 by
reason of new Section 603.
6)         A company will not be considered a member of the same unitary business
group as another company for purposes of this election unless the assessment
from which the overpayment is derived is supported by a return, amended return,
waiver of restrictions on assessment and collection or executed Form IL-870-AD
or IL-870 premised on the electing company being a member of the same unitary
business group as such other company.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P_S100_9310. Check the current official text before relying on it. Not legal advice.