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January 25, 2019
State and Local Tax this week
Illinois General Assembly
The House and the Senate are scheduled to return to Springfield January 29 through January 31.
The Senate Republicans have named the following members to the Senate Revenue committee:
As of last night, I haven't seen the House Committee assignments.
The Senate Revenue committee has scheduled a hearing for January 30. The following bills have been posted for consideration:
SB 29 - (Bush) Creates the Illinois Energy Transition Zone Act, and
SB 68, SB 70 and SB 71 - see below for a link and details of each of these last three bills.
Illinois Chamber Tax Institute legislation
We are finalizing the Chamber Tax Institute legislative package and I will include the package in next week's newsletter. One element of the package is legislation to provide tax incentives to locate data centers in Illinois.
Today, we are releasing a report commissioned by the Illinois Chamber of Commerce Foundation that compares the disparity of data center capital investment growth and jobs created between Illinois and neighboring and competitive states and examines the state tax policies used to attract and grow the industry. I have linked a copy of the
report,
New legislation
The flood of new legislation introduced by members of the 101st General Assembly has begun. As of this morning, 901 bills have been introduced in the House and 115 bills have been introduced in the Senate. A number of tax-related bills have been introduced this week:
SB 68 - (Morrison) -
Amends the Illinois Income Tax Act. Provides for a credit against withholding taxes in an amount equal to 25% of the wages or salary paid by a private employer to an Illinois employee while the employee is on organ donation leave if the employer grants all of its employees the option of taking a paid leave of absence of at least 30 days for the purpose of serving as an organ donor or bone marrow donor. Provides that the credit may not exceed $20,833.33 for each employee who takes organ donation leave. Provides that such a leave of absence must be taken without loss of pay, vacation time, compensatory time, personal days, or sick time for at least the first 30 days of the leave of absence. Effective immediately.
SB 70 - (Manar) - Amends the Illinois Income Tax Act. Provides a tax credit to each taxpayer who owns qualified real property located in a county in Illinois that was declared a State disaster area by the Governor due to tornadoes in 2018. Effective immediately. (This bill establishes a credit for taxable years that began in 2018.)
SB 71 - (Manar) - Amends the Illinois Income Tax Act. Provides a tax credit to each taxpayer who owns qualified real property located in a county in Illinois that was declared a State disaster area by the Governor due to tornadoes in 2018. Effective immediately. (This bill establishes a credit for taxable years that began in 2019.)
SB 81 - (Morrison) - Amends the Property Tax Code. Provides that, for assessment years following the next general assessment after the effective date of the amendatory Act, no increase in assessment may exceed 20% per year. Provides exceptions if: (1) the property is sold, transferred, or conveyed during the taxable year; (2) significant improvements were made to the property; (3) a homestead exemption or other preferential method of assessment was removed with respect to that property during the taxable year; or (4) the increase was due to an equalization factor imposed by the township, county, or Department of Revenue. Effective immediately.
SB 84 - (Bertino-Tarrant) - 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. Effective immediately.
SB 105 - (Sandoval) - Amends the Illinois Vehicle Code. Repeals a provision providing for the collection of an annual commercial distribution fee on vehicles of the second division weighing more than 8,000 pounds. Makes conforming changes. Effective July 1, 2020.
SB 110 - (Link) - Amends the Property Tax Code. Provides that, for the 2015 taxable year and thereafter, the exemption for veterans with disabilities also carries over to the surviving spouse of a veteran who was killed in the line of duty in the current taxable year or any preceding taxable year. Provides that, for the 2019 taxable year and thereafter, the exemption for veterans with disabilities also carries over to (i) the surviving spouse of a veteran who did not obtain the exemption before death, but who would have qualified for the exemption in the current taxable year if he or she had survived and (ii) the surviving spouse of a veteran whose death was determined to be service-connected and who is certified by the United States Department of Veterans Affairs as being a current recipient of Dependency and Indemnity Compensation. Provides that, in the case of a surviving spouse who is certified by the United States Department of Veterans Affairs as being a current recipient of Dependency and Indemnity Compensation, the property is exempt. Effective immediately.
SB 113 - (Manar) - Amends the Disaster Relief Act. Provides that as soon as practical after the effective date of this amendatory Act, the State Comptroller shall direct and the State Treasurer shall transfer $250,000 from the General Revenue Fund to the Disaster Response and Recovery Fund to be paid to the City of Taylorville for the purpose of providing disaster relief in relation to damage resulting from a tornado occurring in Taylorville on December 1, 2018. Amends the Illinois Income Tax Act. Provides a tax credit to each taxpayer who owns qualified real property located in a county in Illinois that was declared a State disaster area by the Governor due to tornadoes in 2018. Effective immediately. (Senator Manar also filed SB 114, which appears to be the same as SB 113 without the income tax credit.)
HB 810 - (Harper) -
Amends the State Property Control Act. Provides that the Director of Central Management Services as Administrator may convey any surplus real property covered by the State Property Control Act, by sale or lease, to a duly incorporated, charitable, non-profit organization or association for the cultivation and sale of fresh fruits and vegetables on a tract of land of less than 5 acres within any local governmental unit, provided that the non-profit organization or association is not controlled, directly or indirectly, by any agricultural, commercial, or other business. Provides that the non-profit organization or association shall be authorized to sell fresh fruits and vegetables either on the land that was conveyed, off that land, or both, provided, that the sales are related or incidental to the non-profit purposes of the organization or association, and the net proceeds received by the non-profit organization or association are used to further the non-profit purposes of the organization or association. Provides that the lease of any real property to any duly incorporated non-profit organization or association shall be in accordance with the Illinois Procurement Code. Amends the Property Tax Code to provide a property tax exemption for non-profit organizations using land for the cultivation and sale of fresh fruits and vegetables.
HB 813 - (Mayfield)
Amends the Illinois Vehicle Code. Repeals a provision providing for the collection of an annual commercial distribution fee on vehicles of the second division weighing more than 8,000 pounds. Makes conforming changes. Effective July 1, 2020.
HB 820 - (Murphy) - Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Provides that, for persons dying on or after January 1, 2020, the exclusion amount shall be the applicable exclusion amount calculated under Section 2010 of the Internal Revenue Code, including any deceased spousal unused exclusion amount (currently, the exclusion amount for Illinois estate tax purposes is $4,000,000). Effective immediately.
HB 821 - (McDermed) - Amends the Property Tax Extension Limitation Law in the Property Tax Code. Provides that, for levy years 2019 and later, for school districts, the "aggregate extension base" is the greater of (A) the district's last preceding aggregate extension limit or (B) the district's last preceding aggregate extension, subject to certain adjustments. Provides that the term "aggregate extension limit" means the district's last preceding aggregate extension if the taxing district had utilized the maximum limiting rate permitted without referendum for each of the 3 immediately preceding levy years. Effective immediately.
HB 824 - (Burke) - 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.
HB 826 - (Burke) - 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.
HB 832 - (Martwick) - Creates the Vacancy Fraud Act. Allows a taxing body or representative of a taxing body to file a vacancy fraud complaint with the county board of review if property is receiving vacancy relief and the property owner is not actively attempting to lease, sell, or alter the property. Sets forth factors in determining whether or not vacancy fraud has occurred. Sets forth penalties. Effective immediately.
HB 833 - (Crespo) - 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.
HB 838 - (Halpin) - Creates the Keep Illinois Business Act. Provides that any recipient business that chooses to move all or part of its business operations and the jobs created by its business out-of-State shall be deemed to no longer qualify for State economic development assistance, and shall be required to pay to the relevant State granting agency the full amount of any economic development assistance it received. Provides for procedures for the recovery of economic development assistance, including required notice to the recipient business and an opportunity for a hearing. Defines terms.
HB 872 - (Greenwood) - Amends the Property Tax Code. With respect to the Senior Citizens Assessment Freeze Homestead Exemption, provides that, beginning in assessment year 2019, the taxpayer's household income shall be reduced by any amounts paid as Medicare premiums. Effective immediately.
HB 880 - (McDermed) - Amends the State Finance Act. Provides that, beginning on January 1, 2028 (currently, January 1, 2021), moneys received from the rental of land, buildings, or improvements on property held for the development of an airport in Will County by the Department of Transportation shall be paid into the General Revenue Fund instead of the Tax Recovery Fund. Amends the Property Tax Code. Provides that, with respect to real property in Will County owned by the State for the purpose of developing an airport, payments made to compensate taxing districts for leasehold taxes shall be calculated based on the 2019 property tax year (currently, 2002). Effective immediately.
HB 882 - (Sosnowski) -
Amends the Illinois Income Tax Act. Creates an income tax credit in an amount equal to 10% of the qualified costs incurred by the taxpayer during the taxable year for the purposes of purchasing and planting qualified trees in the State. Provides that the credit is exempt from the Act's automatic sunset provision. Effective immediately.
Rulemaking
did not contain any new rulemakings by the Illinois Department of Commerce and Economic Opportunity.
The Department of Revenue has proposed new regulations to establish a settlement bureau. According to the proposed regulations the settlement bureau is to be established "for the purpose of settling proposed adjustments to tax returns generated by auditors of the Department of Revenue's Audit Bureau prior to the issuance of a Notice of Tax Liability, Notice of Deficiency or Notice of Claim Denial.
At least initially, the settlement bureau would be available in parallel with the Department's Informal Conference Board. There are significant differences between the Informal Conference Board and proposed new settlement bureau. Please let me know your questions and comments about the proposed regulations. I'm in the process of reviewing the proposed rules with the goal of submitting comments on the proposal as appropriate.
Court cases
No new tax-related cases this week.
Tax Tribunal
No new decisions were issued this week by the Tribunal. None of the new cases raise unique issues. There are the usual cases involving audits of small businesses, a residency case filed pro se, and yet another case under the Motor Fuel Tax in which the Department has asserted that "natural gasoline" is a taxable motor fuel
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Publications
The Illinois Department of Revenue issued a press release advising that they will begin accepting 2018 individual income tax returns for filing beginning on January 28.
The Illinois Department of Revenue issued Informational Bulletin FY 2019-18 entitled "What's New for Illinois Taxes."
The Institute on Taxation and Economic Policy ("ITEP"), an organization that I would characterize as "left of center" from a policy standpoint, has issued a new report in the last week that may be of interest. I reference this report because there are persons in Springfield who share the view of ITEP that the business community is engaged in rampant tax avoidance/evasion that can be corrected through legislation. As you know, there has been tax haven legislation proposed in Springfield in prior years. I wouldn't be surprise to see new efforts, based on this report.
The ITEP report, A Simple Fix for a $17 Billion Loophole: How States Can Reclaim Revenue Lost to Tax Havens, argues for world-wide combined reporting, and adoption of state-level tax haven legislation. The authors of the report contend that the State of Illinois would reap an additional $1.38 billion per year by the adoption of world-wide combined reporting. The report also contends that tax haven legislation in Illinois could generate from $130 to over $300 million, depending on whether the state enacts "weak" or "strong" tax haven lists.
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