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May 24, 2019
State and Local Tax
This Week
Illinois General Assembly
The House and the Senate returned to Springfield on May 20 and were in session through Friday.
The House and Senate are scheduled to be in session next week Monday through Friday. The House is scheduled to be in session this weekend on Sunday afternoon and on Memorial Day Monday and through the end of the month.
The Senate is scheduled to be off Saturday and Sunday, returning to Springfield on Memorial Day through the end of the month.
None of the major tax proposals have surfaced yet this week. We are working to include a number of our legislative initiatives in the final budget package.
I'll send out additional special updates today and over the remainder of the session as warranted.
As I noted last week, I am a part of a group of business organizations in discussions with the Cook County Assessor's office on
SB 1379
- (Davis) - the Assessor's legislation to seek information from property owners with "income producing properties." There were two meetings scheduled this week. The second meeting is scheduled for this afternoon. Those discussions will continue next week.
This week I continues to express our strong opposition to any suggestions to include modification of the Illinois Income Tax Act to move toward any sort of elective world-wide combination and any modification of the current waters-edge system of apportionment.
House Revenue committee
The House Revenue committee met four times this week - Monday afternoon, Wednesday, Thursday and Friday mornings.
SJRCA 0001, the Constitutional amendment authorizing the graduated income tax was considered by the House Revenue committee on Monday and passed out of the committee on a partisan vote. We continue to oppose the constitutional amendment in the House.
SB 687 - the legislation that sets forth a schedule of income tax rates for the tax years beginning January 2021 if the constitutional amendment is enacted was posted for the House Revenue committee meeting on Monday. The bill was not called for committee consideration on Monday and was not called for consideration on Wednesday or Thursday.
SB 687 was not re-posted for the Friday committee hearing, but was called for a committee vote this morning. Chairman Zalewski called the bill even though it wasn't posted for the Friday hearing, because as a technical parliamentary procedural matter, the Chairman never adjourned the Monday hearing. He simply recessed the hearing each day, Monday, Wednesday and Thursday.
The bill was voted out of the committee on a partisan roll call vote. We continue to oppose SB 687 in the House.
A number of bills were considered by the House Revenue committee on Wednesday. The following bills of interest passed out of the committee:
SB 1591 - The Chamber's Data Center initiative. The bill was amended and the Data Center exemption language was replaced. As amended, the bill a
mends the Illinois Income Tax Act and provides that the research and development credit applies for taxable years ending prior to January 1, 2027 (currently, January 1, 2022). Creates an income tax credit for qualified education expenses incurred by an employer on behalf of a qualifying apprentice, subject to certain limitations.
While we were disappointed that our Data Center bill was amended, we are working with the other proponents to include the Data Center initiative in the final budget package.
SB 1595 -
Amends the Film Production Services Tax Credit Act of 2008. Provides that a taxpayer may not take a credit awarded under that Act for tax years beginning on or after January 1, 2027.
HB 833 - Amends the Property Tax Code. Provides that, in a county with 3,000,000 or more inhabitants, for taxable years 2020 through 2024, a taxpayer who has been granted a senior citizens homestead exemption need not reapply (currently, the taxpayer must reapply annually). Provides that, if the property ceases to be qualified for that exemption in any year for which a reapplication is not required, then the owner of record of the property shall notify the chief county assessment officer that the property is no longer qualified. Provides that the chief county assessment officer shall enter into intergovernmental agreements with the county clerk of his or her county and the Department of Public Health, as well as any other appropriate governmental agency, to obtain information that documents the death of a taxpayer who has been granted a senior citizens homestead exemption. Makes conforming changes in provisions concerning erroneous homestead exemptions
One bill was considered by the House Revenue committee on Thursday morning:
SB 527 -
Amends the Property Tax Code. Provides that the amount paid to the Will County Treasurer from the Tax Recovery Fund to compensate taxing districts for the loss of revenue on real property in Will County that is owned by the State of Illinois for the purpose of developing an airport shall be based on the amount of taxes that would have been extended for the current tax year for the exempt parcel if the parcel had been owned by a person whose property is not exempt (currently, the amount of leasehold taxes extended for the 2002 property tax year). Amends the State Finance Act to provide that compensation from the Tax Recovery Fund shall continue through December 31, 2030 (currently, December 31, 2020).
The House Revenue committee met again this morning. As discussed above, SB 687, was voted out of the committee on a partisan roll call.
The House Revenue committee is scheduled to meet again on Monday morning. At this time, the following bills have been posted for committee consideration:
SB 689 -
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 January 1, 2021 or for transfers made on or after January 1, 2021. Effective January 1, 2021, but only if an amendment to the Illinois Constitution permitting the taxation of income at a graduated rate is adopted prior to that date by the voters if Illinois.
SB 690 - Amends the Property Tax Extension Limitation Law in the Property Tax Code. Provides that, beginning in levy year 2022, for taxing districts that are school districts (other than qualified school districts), "extension limitation" means 0% or the rate of increase approved by the voters (currently, (a) the lesser of 5% or the percentage increase in the Consumer Price Index during the 12-month calendar year preceding the levy year or (b) the rate of increase approved by voters). Provides that the term "qualified school district" means a school district that certifies to the county clerk that the district: (i) submitted a claim or claims to the Illinois State Board of Education for reimbursement of certain State mandated categoricals for the school fiscal year immediately preceding the levy year and received reimbursement for those State mandated categoricals that was less than 97% of the district's claims; or (ii) did not receive the minimum funding required for that school district under the evidence-based funding formula. Amends the School Code. Requires the State Board of Education to certify to each school district whether or not the school district is eligible for designation as a qualified school district. Effective January 1, 2021, but does not take effect at all unless Senate Joint Resolution Constitutional Amendment No. 1 of the 101st General Assembly is approved by the voters of the State prior to that date.
Senate Revenue committee
The Senate Revenue committee met on Wednesday Here is a link to the legislation considered by the committee.
Tax-related amendments legislation this week
SB 1456 - (Zalewski) - House amendment
SB 1591 - (Walker - as amended) - House amendment - See House Revenue committee discussion below.
SB 1595 - (Turner) - House amendment - See House Revenue committee discussion below
HB 2079 - (Guzzardi) - House amendment -
Replaces everything after the enacting clause. Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, the Cigarette Tax Act, the Cigarette Use Tax Act, the Hotel Operators' Occupation Tax Act, the Motor Fuel Tax Law, the Telecommunications Excise Tax Act, and the Liquor Control Act of 1934. Provides that the vendor discount amount under those Acts shall be 2%. Provides that the vendor discount may not exceed $10,000 per vendor in any calendar year. Effective immediately.
Tax-related legislation passed both Houses
SB 1041 -
Amends the Property Tax Code. Provides that, in a county with more than 800,000 inhabitants but fewer than 1,000,000 inhabitants, if a lessee is liable for the payment of property taxes extended against property that is owned by a taxing district, the county treasurer shall promptly notify the taxing district that owns the property if the property taxes are delinquent 60 days after the second installment due date. Provides that the taxing district shall promptly notify the county supervisor of assessments upon the execution of a new lease or the termination of a lease. Provides that the State's Attorney of the county in which the property is located may bring an action against the lessee in the circuit court to recover the full amount of delinquent taxes, interest, penalties, and costs.
SB 1217 -
Amends the Illinois Municipal Code. Provides that not less than 75% of the amounts collected by a municipality within DuPage County pursuant to the municipal hotel operators' occupation tax and municipal hotel use tax shall be used to promote tourism within that municipality. Requires that the municipality that belong to a not-for-profit organization headquartered in DuPage County that is recognized by the Department of Commerce and Economic Opportunity as a certified local tourism and convention bureau entitled to receive State tourism grant funds. Provides that the remainder of the amounts collected may be used by the municipality for economic development or capital infrastructure. Repeals the provisions on January 1, 2023.
SB 1614 - Amends the Revised Uniform Unclaimed Property Act. Provides that an heir or agent who files an unclaimed property claim in which the decedent's property does not exceed $100 may submit an affidavit attesting to the heir's or agent's capacity to claim in lieu of submitting a certified copy to verify a claim. Provides that the affidavit shall be accompanied by a copy of other documentary proof that the State Treasurer requests. Provides that the State Treasurer may change the maximum value by administrative rule.
SB 1800 - mends the Illinois Income Tax Act. Provides that taxpayers (other than estates, trusts, partnerships, Subchapter S corporations, and farmers) are required to pay estimated tax if the amount payable can reasonably be expected to be more than $1,000 (currently, $500). Provides that corporations are required to pay estimated tax if the amount payable can reasonably be expected to be more than $400 (which is the same as current law). Effective immediately.
HB 2209 -
Amends the Property Tax Code. Provides that each tax bill shall contain a list of each tax increment financing (TIF) district in which the property is located and the dollar amount of tax due that is allocable to the TIF district. Effective immediately.
Rulemaking
The May 17 edition of the Illinois Register did not have any proposed or adopted rulemakings by the Department of Revenue or the Department of Commerce and Economic Opportunity.
The May 24 edition of the Illinois Register did not contain any proposed or adopted rulemakings by the Department of Revenue or the Department of Commerce and Economic Opportunity.
Court cases
The Cook County Department of Revenue issued and Amusement Tax Assessment against Mercury. Mercury's attorney contacted the County Revenue Department to confirm the deadline to file a protest. The auditor told Mercury it had twenty days from the receipt of the notice - October 1, 2014.
The deadline was actually September 29, but Mercury filed the protest on October 1. The ALJ pointed out the late filing to the parties, but ruled that the County Revenue Department forfeited its timeless argument and proceeded on the merits of the matter and ruled in favor of Mercury.
On administrative review in the trial court, the judge determined that the deadline was jurisdictional, could not be forfeited, and without considering the merits of the final administrative decision reversed the ALJ and ruled for the Department.
The appellate court agreed that the 20 protest period limitation was jurisdictional, but the court ruled that the County DOR violated the procedural due process rights of Mercury by affirmatively, if unintentionally,misleading Mercury on the proper filing deadline. The court ruled that the proper remedy is to allow Mercury a hearing on the merits.
Tax Tribunal
No new decisions were posted this week.
None of the new cases filed at the Tribunal this week raise any novel issues.
The appointment of Michael Pieczonka as the third judge of the Tax Tribunal was withdrawn by Governor Pritzker this week. Mr. Pieczonka was appointed to the Tribunal by former Governor Rauner in November 2018.
Upcoming Event hosted by True Partners
Important Updates in U.S. SALT and Canadian Sales Tax for Cross-Border Operators
June 6, 2019, 1:30 - 5:30pm
True Partners Consulting
225 W. Wacker Drive, 4th Floor
Chicago, IL
(Please present your ID at the security desk in the lobby.)
Approximately half of Canada's small businesses don't sell through their websites, and close to half of all online purchases made by Canadians are through foreign retail sites.
(Source: Avalara)
This means the Canadian market presents an enormous opportunity for ecommerce (and other) businesses in the United States.
Don't miss this panel discussion covering U.S. SALT and Canadian sales tax updates and opportunities for businesses with cross-border operations.
Panelists:
Bobby B. Solhi, Partner
Borden Ladner Gervais LLP - Toronto
Donald Bast, Managing Director
True Partners Consulting - Chicago
Christina Edson, Managing Director
True Partners Consulting - Chicago
AGENDA:
1:30 - 3:30pm - Panel Discussion
3:30 - 5:30pm - Networking
The networking portion of the afternoon will include hors d'oeuvres and cocktails outside on the terrace (weather permitting).
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