Illinois General Assembly

The House and the Senate returned to Springfield January 29 through January 31.

The House and Senate are in session next week Tuesday through Thursday.

The House Committee assignments have not been posted as of early this morning.

The Senate Revenue committee was scheduled to hold a hearing on January 30, but the hearing was cancelled.

The Senate Revenue committee is scheduled to meet on February 6.  Here is a link to what has been posted for consideration.  Don't forget that not all items posted will actually be considered by the committee next week.

The House Revenue committee is scheduled to meet on February 7.  As of this morning bills posted to House committees are not available on the General Assembly web site.

Illinois Chamber Tax Institute legislation

The Chamber Tax Institute legislative package:

• Data Center sales and excise tax and electricity excise tax exemptions
• Expanded temporary storage exemption reinstatement 
• Expanded temporary storage (Shared Imaging case reversal) 
• Revised Uniform Unclaimed Property Act reform
• Reinstate and extend the sunset date of the Personal Property tax replacement income tax (sunset date was 12/31/2018).
• Small Business Stimulus Savings Plan
• Bonus Investment Credit for Small Business
• Research and Development Credit - base period modification and make the credit permanent,
• Expand manufacturing machinery and equipment exemption to include production-related tangible personal property (MPC)
• Cigar tax cap, amend Tobacco Products Act to tax out-of-state mail order sellers 
• False Claims Act reform
• Uniform Penalty and Interest Act reform
• Streamline the Enterprise zone selection process

I'll provide bill numbers and additional details on our initiatives as the bills are introduced.

New legislation and proposed constitutional amendments

The flood of new legislation introduced by members of the 101st General Assembly continues.  As of this morning, 1651 bills have been introduced in the House and 1105 bills have been introduced in the Senate. A large number of the Senate bills introduced this week were appropriations bills or shell bills.  A number of tax-related bills have been introduced this week:

SJRCA 1 - (Harmon) -  Proposes to amend the Revenue Article of the Illinois Constitution. Removes a provision that provides that a tax on income shall be measured at a non-graduated rate. Provides that there may be one tax on the income of individuals and corporations (currently, there may be no more than one income tax imposed on individuals and one income tax imposed on corporations, and the rate of tax imposed upon corporations shall not exceed the rate imposed on individuals by more than a ratio of 8 to 5). Provides that the income tax may be a fair tax where lower rates apply to lower income levels and higher rates apply to higher income levels. Provides that no government other than the State may impose a tax on or measured by income. Effective upon being declared adopted.

HJRCA 14 - (Skillicorn) -  Proposes to amend the Revenue Article of the Illinois Constitution. Provides that there shall be no tax imposed by the State upon retirement income. Defines "retirement income". Effective upon being declared adopted.

HB 272 - (Harris) - Note:  I neglected to include this bill last week.   Creates the Health Insurer Claims Assessment Act. Imposes an assessment of 1% on claims paid by a health insurance carrier or third-party administrator. Provides that the moneys received and collected under the Act shall be deposited into the Healthcare Provider Relief Fund and used solely for the purpose of funding Medicaid services provided under the medical assistance programs administered by the Department of Healthcare and Family Services

HB 903 - (Walker) -  Amends the Illinois International Port District Act. Authorizes the Port District to apply to United States authorities to establish, operate, maintain, and lease foreign trade zones and sub-zones within a specific area that is located within and extends 30 miles beyond the following described area: Beginning at the point of intersection of the Cook County DuPage County line and York Road, then North along York Road to its intersection with Touhy Avenue, then east along Touhy Avenue to its intersection with the Northwest Tollway, then southeast along the Northwest Tollway to its intersection with Lee Street, then south along Lee Street to Higgins Road, then south and east along Higgins Road to its intersection with Mannheim Road, then south along Mannheim Road to its intersection with Irving Park Road, then west along Irving Park Road to its intersection with the Cook County DuPage County line, then north and west along the county line to the point of beginning.

HB 904 - (Walker) - Amends the Illinois International Port District Act. Authorizes the Port District to apply to United States authorities to establish, operate, maintain, and lease foreign trade zones and sub-zones within a specifically described area within the City of Chicago described as that portion of the City of Chicago located within the following area: Beginning at the point of intersection of the Cook County DuPage County line and York Road, then North along York Road to its intersection with Touhy Avenue, then east along Touhy Avenue to its intersection with the Northwest Tollway, then southeast along the Northwest Tollway to its intersection with Lee Street, then south along Lee Street to Higgins Road, then south and east along Higgins Road to its intersection with Mannheim Road, then south along Mannheim Road to its intersection with Irving Park Road, then west along Irving Park Road to its intersection with the Cook County DuPage County line, then north and west along the county line to the point of beginning. Effective immediately.

HB 906 - (Mussman) - Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the tax on durable medical equipment is imposed at the rate of 1% (currently, 6.25%). 

Staats analysis of HB 906:  

Currently, to the extent these items are directly paid for by Medicare or Medicaid, they are purchased tax-free because they are purchases made by the government.  Similarly, these items are tax-exempt to the extent purchased by a charitable hospital or nursing home  in possession of a sales tax exemption.

 

Under this proposal, these items may be purchased at the low rate of tax when they are purchased for the use of individuals and paid for through Medicare or Medicaid managed care organizations (Note that the Department has taken the position that such purchases do not qualify for the governmental exemption because such purchases are not a direct purchase by the government.  Whether the Department's position is correct, is a discussion for another time although I feel it is incorrect.)  This legislation would also allow purchases at the low rate of tax by individuals who are reimbursed, or not reimbursed, by insurance or have to make the purchases out-of-pocket.

 

This exemption would appear to authorize these purchases at the low rate of tax by for-profit hospitals, nursing homes, physician groups, etc.  I suspect that is not the intent of the sponsor - the intent appears to be designed to limit the burden of tax on individuals, but the scope is broader.

 

HB 924 - (Crespo) - Amends the Property Tax Code. Creates the School District Extension Freeze Law. Provides that, if at the end of any levy year, a school district has reserves of 50% or more in its educational fund, then the school district's extension for educational purposes may not exceed its extension for the previous levy year. Provides that, if the school district has reserves of 60% or more at the end of the immediately preceding levy year, then the district's extension for educational purposes shall be reduced by an amount equal to the difference between the district's educational reserve amount for the immediately preceding levy year and a reserve amount of 60% for that levy year. Effective July 1, 2020.

HB 936 - (McSweeney) -  Amends the Illinois Income Tax Act. Creates a deduction for business entities in an amount equal to 100% of the portion of the taxpayer's Illinois net income for the taxable year that is earned by the taxpayer as a result of a manufacturing process. Provides that the deduction is exempt from the Act's automatic sunset provision. Effective immediately.

HB 1448 - (West) -  Amends the Property Tax Code. Provides for a property tax abatement for property located in a taxing district that: (i) is owner-occupied; (ii) is the owner's primary residence; and (iii) meets the criteria of a residential home ownership incentive program adopted by the taxing district.

HB 1452 - (Bourne) - Amends the Illinois Enterprise Zone Act. Provides that, in calendar year 2019, the Department of Commerce and Economic Opportunity may certify an additional 25 Enterprise Zones. Provides that, for Enterprise Zones scheduled to expire after January 1, 2024, the application process shall begin 5 years prior to the year in which the Zone expires. Provides that the Department of Commerce and Economic Opportunity may award partial points during the application process if the applicant demonstrates job creation and investment levels below the threshold set forth in the statute. Provides that the Department of Commerce and Economic Opportunity may adjust the scoring for applicants that are located entirely within a county with a population of less than 300,000 if the Department finds that the designation will help to alleviate the effects of poverty and unemployment within the proposed Enterprise Zone. Provides for provisional certification of substantially complete Enterprise Zone applications. Effective immediately.

HB 1454 - (Bourne) - Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Provides that no tax shall be imposed under the Act for persons dying on or after the effective date of the amendatory Act or for transfers made on or after the effective date of the amendatory Act. Effective immediately.

HB 1476 - (McCombie) - Amends the State Finance Act, the Motor Fuel Tax Law, the Emergency Telephone System Act, the Riverboat Gambling Act, and the Video Gaming Act. Provides that, in the absence of an appropriation for any State fiscal year, moneys that are required to be distributed to units of local government and other entities from the State and Local Sales Tax Reform Fund, the Motor Fuel Tax Fund, the State Gaming Fund, the Local Government Video Gaming Distributive Fund, and the Statewide 9-1-1 Fund are subject to a continuing appropriation. 

HB 1478 - (McCombie) - Creates the Manufacturing Job Destination Tax Credit Act and amends the Illinois Income Tax Act. Provides for a credit of 25% of the Illinois labor expenditures made by a manufacturing company in order to foster job creation and retention in Illinois. Authorizes the Department of Revenue to award a tax credit to taxpayer-employers who apply for the credit and meet the certain Illinois labor, job training, and apprenticeship requirements. Sets minimum requirements and procedures for certifying a taxpayer as an "accredited manufacturer" and for awarding the credit. Effective January 1, 2020.

HB 1479 - (McCombie) - Amends the Illinois Income Tax Act. Provides that an employer may enter into an agreement with a community college in the State to establish a project. Provides that the term "project" means a program established by the community college to provide certain job training services. Provides that the employer is entitled to a credit against withholding tax payments in an amount equal to 1.5% of the wages paid by the employer to a participating employee during the first year of the employee's participation in the program. Provides that the employer shall remit the amount of the credit to the community college.

HB 1480 - (McCombie) - This bill is an Illinois Chamber Tax Institute initiative - Amends the Use Tax Act and the Service Use Tax Act. Provides that the multistate exemption includes the return of property of an out-of-State lessor or purchaser to this State for storage, repair, or refurbishment, so long as the property is not used by a lessee or purchaser in this State. Effective immediately.

HB 1487 - (McCombie) -  Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Provides that no tax shall be imposed under the Act for persons dying on or after the effective date or for transfers made on or after the effective date.

HB 1573 - (DeLuca) - Amends the State Finance Act, Counties Code, Illinois Municipal Code, Metro-East Park and Recreation District Act, Local Mass Transit District Act, Regional Transportation Authority Act, and Water Commission Act of 1985. Provides that the amounts transferred into the Tax Compliance and Administration Fund shall be reduced from 1.5% to 1%. Effective July 1, 2019.

HB 1589 - (Harper) - Amends the Tax Increment Allocation Redevelopment Act of the Illinois Municipal Code. Provides that surplus tax revenues may be used to pay for costs of special education, social services, and other costs of a public school district. Provides that for municipalities with a population of over 1,000,000, redevelopment project costs include public school district qualified workers, costs of providing special educational facilities and services, school psychological services, and school social work services, and any surplus balance in the special tax allocation fund at the end of the fiscal year shall be used for these workers, facilities, and services. Removes provisions allowing anticipated redevelopment project costs to be deemed surplus funds.

HB 1594 - (Bristow) - Amends the Illinois Income Tax Act. Creates an income tax credit for an Illinois business that increases its average full-time employee head count in the State for the taxable year by more than 20% over its average full-time employee head count in the State for the immediately preceding taxable year. Provides that the amount of the credit is 20% of its tax liability under this Act (other than its withholding tax liability) for the taxable year. Provides that the credit is exempt from the Act's automatic sunset provision. Effective immediately.

HB 1595 - (Bristow) -  Amends the Illinois Income Tax Act. Creates an income tax credit in an amount equal to 20%, but in no event to exceed $2,000, of the gross wages paid by the taxpayer during the taxable year to each creditable employee. Provides that a "creditable employee" is an employee who: (1) was employed by the taxpayer for the first time on or after the effective date of the amendatory Act; (2) completed his or her twenty-fourth consecutive month of employment with the taxpayer during the taxable year; (3) received unemployment benefits in this State for at least 2 months immediately prior to being hired by the taxpayer; and (4) was employed at a location in this State for at least 30 hours per week during the entire 24-month period of his or her employment with the taxpayer. Effective immediately.

HB 1596 - (Bristow) -  Amends the Property Tax Code. In the Senior Citizens Assessment Freeze Homestead Exemption provisions of the Code, provides that "household income" does not include wages paid to a member of the household who is a person with a disability. Effective immediately.

HB 1636 - (Kifowit) - A mends the Illinois Enterprise Zone Act. Provides that businesses that intend to establish a new qualified hydroponics facility or expand production at an existing qualified hydroponics facility to engage in the practice of hydroponics are considered high impact businesses. Define terms. Effective immediately.

SB 119 - (Castro) - Amends the Illinois Income Tax Act. Provides that any person required to file a federal Form 1099-K with respect to a nonresident who performed services within the State during the taxable year shall file a copy of that form with the Department of Revenue. Provides that a third-party settlement organization that is required to file an information return under certain provisions of the Internal Revenue Code shall, within 30 days of the date the filing is due to the Internal Revenue Service, file a duplicate return with the Department of Revenue. Provides that third-party network transactions are subject to the $600 de minimis reporting requirements set forth in the Internal Revenue Code, rather than the de minimis reporting requirements otherwise applicable to third-party settlement organizations under the Internal Revenue Code.

SB 121 - (Morrison) - Amends the State Finance Act to create the Community Mental Health Services Fund as a special fund in the State treasury. Provides that moneys in the Community Mental Health Services Fund shall be used to assist, support, and establish community-based mental health providers and programs. Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Imposes a surcharge of $0.01 per cartridge or shell on firearm ammunition. Provides that moneys from the surcharge shall be deposited into the Community Mental Health Services Fund. Effective immediately.

SB 123 - (Morrison) - Amends the Illinois Income Tax Act. Provides that the research and development credit applies on a permanent basis. Effective immediately.

SB 124 - (McConchie) - Amends the Property Tax Code. Provides that upon establishing the compensation of board of review employees fixed by the county board, the county shall, at all times, ensure that each of the commissioners on the board of review receives equitable resources and staffing. Effective immediately.

SB 140  - (Bertino-Tarrant) - Amends the Property Tax Code. Provides that a person who has been granted a senior citizens homestead exemption need not reapply for the exemption. Effective immediately.

SB 146 - (Tracy) Amends the State Finance Act, Counties Code, Illinois Municipal Code, Metro-East Park and Recreation District Act, Local Mass Transit District Act, Regional Transportation Authority Act, and Water Commission Act of 1985. Provides that the amounts transferred into the Tax Compliance and Administration Fund shall be reduced from 1.5% to 1%. Effective July 1, 2019.

SB 158 - (Barickman) - Amends the Property Tax Code. Provides that, if the property contains a hazardous substance, hazardous waste, or an underground storage tank, the court may order the holder of the certificate of purchase to assign the certificate to the county collector upon request of the county collector. Provides that the county collector may further assign the certificate to the county, acting as trustee for taxing districts, or to a taxing district having an interest in the taxes sold. In a Section that allows a tax purchase be set aside as a sale in error if a county, city, village, or incorporated town has an interest in the property under the police and welfare power by advancements made from public funds, provides that such a sale in error may not be granted if the lien has been released, satisfied, discharged, or waived.

SB 186 - (Murphy) - Amends the Illinois Income Tax Act. Creates an income tax credit in an amount equal to the amount paid by the taxpayer during the taxable year for the purpose of purchasing acoustical materials, other materials, labor, and professional services to soundproof a residential home located at an eligible address against aircraft noise generated by an airport governed by the provisions of the Permanent Noise Monitoring Act. Provides that the credit may not reduce the taxpayer's liability to less than zero; however, the credit may be carried forward. Provides that the credit is exempt from the Act's automatic sunset provisions. Effective immediately.

SB 198 - (Fine) - Amends the Illinois Highway Code. Provides that a county board of any county, any township, or any municipality may use motor fuel tax funds allotted to it for the operation costs of any public transportation service, for capital improvements designed to improve or enhance pedestrian, bicycle, or transit mobility, or for infrastructure used to support publicly or privately owned electric vehicles.

SB 212 - (Koehler) - Amends the Illinois Municipal Code. Removes a requirement that the imposition of certain non-home rule use and occupation taxes is subject to referendum approval. Effective immediately.

SB 214 - (Koehler) - Amends the Illinois Municipal Code. Creates the Municipal Gas Use Tax Law. Provides that beginning January 1, 2020, a municipality may impose a self-assessing purchaser tax rate of the lower of 2.4 cents per therm or 5% of the purchase price for the privilege of using in the municipality gas obtained in a purchase of out-of-state gas. Provides that, in the alternative, a purchaser may elect for a tax of 2.4 cents per therm that a delivering supplier maintaining a place of business in the State collects from the purchaser. Provides for registration requirements for self-assessing purchasers and delivering suppliers. Includes procedures for self-assessing purchasers and delivering suppliers to submit returns and to remit the tax to the Department of Revenue. Effective January 1, 2020.

SB 216 - (Bertino-Tarrant) - Amends the Illinois Income Tax Act. Creates an income tax credit for qualified education expenses incurred by employers on behalf of qualifying apprentices. Effective immediately.

Rulemaking