September 7, 2018

State and Local Tax this week

The September 7 edition of the  Illinois Register  did not contain any new rulemakings by t he Illinois Department of Revenue or the Department of Commerce and Economic Opportunity. 

The Department of Commerce and Economic Opportunity adopted amendments to the Angel Investment Credit rules.  The Department described the amendments as follows:  "The Department amended this rule to implement PA 100-328 and clarify application and compliance provisions."

P.A. 100-328 made the following changes to the credit: (1) provides that the credit applies for taxable years ending on or before December 31, 2021 (currently, December 31, 2016); (2) defines "investment" as money (or its equivalent) given to a qualified new business venture, at a risk of loss, in consideration for an equity interest of the qualified new business venture; (3) provides that the Department of Commerce and Economic Opportunity may adopt rules to permit certain forms of contingent equity investments to be considered eligible for a tax credit under the program; (4) provides that the minimum amount an applicant must invest in any single qualified new business venture is $10,000; (5) provides that qualified business ventures must maintain a minimum employment threshold in the State through the date which is 3 years from the issue date of the last tax credit certificate issued with respect to that business; (6) provides that, of the aggregate amount of credits that may be awarded under the program, a certain amount shall be reserved for investments made in minority owned businesses, female owned businesses, or businesses owned by a person with a disability; (7) makes changes concerning applications for qualified business ventures.

Court cases

Gateway-Walden, LLC v. Pappas is a property tax valuation case.  Cook County valued the property at $10.4 million.  Plaintiff disagreed with the valuation and filed suit.  The circuit court entered judgment in favor of the plaintiff and found the property's fair cash value was $7.3 million.  The Cook County Treasurer appealed and the appellate court affirmed the judgment of the circuit court.  

The case provides a summary of Illinois law on the valuation of real property for taxation purposes.

Publications

The Illinois General Assembly bipartisan Commission of Government Forecasting and Accountability issued its Monthly Briefing for the Month Ended  August 2018,

If you haven't already, I would recommend bookmarking the Horwood Marcus & Berk SALT  Blog.  The blog regularly features interesting state and local tax discussions.  The most recent post is a review by Christoper Lutz of the Illinois  constitution's general structure and the impact it has on Illinois taxes.

The Department of Commerce and Economic Opportunity has posted information about Illinois Opportunity Zones.  The DCEO site has a list of all Illinois Opportunity zones and also  includes an interactive map that will allow you to plug in an address to determine whether the location is within a designated Opportunity Zone.

Opportunity Zones were created by the 2017 federal Tax Cuts and Jobs Act.  An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation authority to the Internal Revenue Service.

Here is a link to Opportunity Zone Resources which, among other things includes a list of all Opportunity Zones designated throughout the country.

Please send me links to your publications for inclusion in the newsletter. The Illinois Chamber also maintains the  Chamber Dispatch Blog on our website.  This blog is is open to the general public.  We are happy to receive short submissions from members for inclusion on the blog.  We can also include short summaries with links to articles or publications. Contact me for additional details on how to participate.

Tax Tribunal 

No new decisions were issued by the Tribunal this week. One new protest may be of interest.

Crestwood Services, LLC v. Department of Revenue is a protest of 18 notices issued by the Department.  At issue is whether "natural gasoline" is a taxable motor fuel.  The Motor Fuel Tax law defines the term "gasoline" subject to the tax as "all products commonly or commercially know or sold as gasoline (including casing-head and absorption or natural gasoline . . . ."

The taxpayer contends that "natural gasoline" is not commercially known as gasoline.  The taxpayer further contends that "given that the only three 'products' listed as being included in the definition of gasoline are 'casinghead, absorption and natural gasoline,' and give that at least one of these is not a product but a process, the only logical conclusion is that the definition was drafted as such to ensure that all motor vehicle grade gasoline from all sources and processes in use at the time of enactment was specifically included."

It is an interesting argument by the taxpayer, but the Department is relying on what it concluded is the plain language of the definition of "gasoline" which specifically references "natural gasoline."