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January 11, 2019
State and Local Tax this week
Illinois General Assembly
The House returned to Springfield on January 7 and 8th for 2 days of "lame duck" session. The Senate returned to Springfield on January 8 for two days of lame duck session on January 8 and 9.
The new General Assembly was in session on January 9 and 10. After this week, the House and the Senate are not scheduled to return to Springfield until January 29 through January 31.
Governor-elect Pritzker will be sworn into office on January 14.
Last week I alerted you to a couple of bills that could have been considered during the lame duck session:.
SB 3197 passed the Senate last spring. When it passed the Senate, the bill amended the Property Tax Code to create a homestead exemption for police officers and firefighters receiving disability benefits. The bill was amended in the House in the final week of the veto session to turn it into a "shell" bill. On December 30, the final action deadline in the House was extended to January 8. As of yet, no substantive amendment has been filed to the bill, but we will watch to see if it is amended and moved during the lame duck session.
SB 3197 was not considered by the House and is now dead.
SB 3238 - was amended in the House in the latter days of the spring session provide a work around for the federal $10,000 SALT deduction cap. The bill as amended was not considered by the House during the fall veto session.
As amended the bill provides a work around to the federal SALT deduction cap.
SB 3238 was not considered by the House in the lame duck session and is now dead.
New legislation
The flood of new legislation introduced by members of the 101st General Assembly has begun. As of this morning, 326 bills have been introduced in the House and 40 bills have been introduced in the Senate. There are a number of tax-related bills that have been introduced:
SB 29 - (Bush) c
reates the Illinois Energy Transition Zone Act. Provides for the certification by the Department of Commerce and Economic Opportunity of municipal ordinances designating an area as an Energy Transition Zone. Provides that green energy enterprises located in Energy Transition Zones shall be eligible to apply for certain tax incentives. Provides that a green energy enterprise is a company that is engaged in the production of solar energy, wind energy, water energy, geothermal energy, bioenergy, or hydrogen fuel and cells. Contains provisions concerning qualifications and applications. Creates the Energy Transition Tax Credit Act. Provides that the Department of Commerce and Economic Opportunity shall make income tax credit awards under the Act to foster job creation and the development of green energy in Energy Transition Zones. Amends the Illinois Income Tax Act, the Retailers' Occupation Tax Act, and the Public Utilities Act to make conforming changes concerning tax incentives.
SB 39 - (Mulroe) Amends the Property Tax Code and creates a homestead exemption in the amount of a reduction of $5,000 from the equalized assessed value of property of police officers and firefighters with duty-related disabilities.
HB 23 - (Flowers) creates the Financial Transaction Tax Act. This is an annual effortof Representative Flowers. Beginning January 1, 2020, imposes a tax on the privilege of engaging in a financial transaction on any of the following exchanges or boards of trade: the Chicago Stock Exchange; the Chicago Mercantile Exchange; the Chicago Board of Trade; or the Chicago Board Options Exchange. Provides that the tax is imposed at a rate of $1 per transaction for all transactions for which the underlying asset is an agricultural product, a financial instruments contract, or an options contract. Provides that transactions executed via open outcry that are physically filled on the exchange floor are exempt from the tax. Provides that the term "financial transaction" means a transaction involving the purchase or sale of a stock contract, futures contract, swap contract, credit default swap contract, or options contract, but does not include a transaction involving securities held in a retirement account or a transaction involving a mutual fund. Effective January 1, 2020.
HB 34 - (Mayfield) Amends the Property Tax Code and in a Section concerning the homestead exemption for veterans with disabilities, provides that: (1) for taxable years prior to 2015, "surviving spouse" means the surviving spouse of a veteran who obtained the exemption prior to his or her death; (2) for taxable years 2015 through 2018, "surviving spouse" means (A) the surviving spouse of a veteran who obtained the exemption prior to his or her death and (B) the surviving spouse of a veteran who was killed in the line of duty in the current taxable year or any preceding taxable year; and (3) for taxable year 2019 and thereafter, "surviving spouse" means (A) the surviving spouse of a veteran who qualified for the exemption prior to his or her death, (B) the surviving spouse of a veteran who was killed in the line of duty in the current taxable year or any preceding taxable year, (C) the surviving spouse of a veteran who did not obtain the exemption before death, but who would have qualified for the exemption if he or she had survived, and (D) the surviving spouse of a veteran whose death was determined to be service-connected who is a current recipient of Dependency and Indemnity Compensation. Effective immediately.
HB 43 - (DeLuca)
Amends the Property Tax Code. Provides that certain property located in Bloom, Bremen, Calumet, Rich, Thornton, or Worth Township may be certified by the South Suburban Land Bank and Development Authority as a southland reactivation site. Provides that southland reactivation property shall be valued at 33 1/3% of the fair cash value of the land, without regard to buildings, structures, improvements, and other permanent fixtures located on the property. Provides that, for the first 3 tax years after the property is certified as southland reactivation property, the aggregate tax liability for the property shall be no greater than $75,000. Provides that, beginning with the fourth tax year after the property is certified as southland reactivation property and continuing through the twelfth tax year after the property is certified as southland reactivation property, the property's tax liability for each taxing district in which the property is located shall be increased over the tax liability for the preceding year by the percentage increase, if any, in the total equalized assessed value of all property in the taxing district.
HB 155 - (DeLuca) Amends the Illinois Municipal Code. Provides that the rate of tax under the Non-Home Rule Municipal Retailers' Occupation Tax Act, the Non-Home Rule Municipal Service Occupation Tax Act, and the Non-Home Rule Municipal Use Tax Act may not exceed 2% (currently, 1%). Provides that the rate of tax that may be imposed for municipal operations may not exceed 1%. With respect to the Non-Home Rule Municipal Retailers' Occupation Tax Act, the Non-Home Rule Municipal Service Occupation Tax Act, and the Non-Home Rule Municipal Use Tax Act, provides that the term "public infrastructure" includes the acquisition, repair, and maintenance of public safety equipment. Effective immediately.
HB 158 - (DeLuca) Amends the Illinois Income Tax Act. Provides that, from February 1, 2020 through January 31, 2021, the amount transferred from the General Revenue Fund to the Local Government Distributive Fund shall be: (i) 8.5% of the net revenue realized from the tax imposed on individuals, trusts, and estates, and (ii) 9.355% of the net revenue realized from the tax imposed on corporations. Provides that, from February 1, 2021 through January 31, 2022, the amount transferred from the General Revenue Fund to the Local Government Distributive Fund shall be: (i) 9% of the net revenue realized from the tax imposed on individuals, trusts, and estates, and (ii) 9.57% of the net revenue realized from the tax imposed on corporations. Provides that, from February 1, 2022 through January 31, 2023, the amount transferred from the General Revenue Fund to the Local Government Distributive Fund shall be: (i) 9.5% of the net revenue realized from the tax imposed on individuals, trusts, and estates, and (ii) 9.785% of the net revenue realized from the tax imposed on corporations. Provides that, beginning on February 1, 2023, the Treasurer shall transfer each month from the General Revenue Fund to the Local Government Distributive Fund an amount equal to 10% of the net revenue realized from the tax imposed on individuals, trusts, estates, and corporations during the preceding month. Effective immediately.
HB 183 - (Ford) Amends the Property Tax Code. In a Section granting a homestead exemption to veterans with disabilities, provides that property that is used as a qualified residence by a veteran who was a member of the United States Armed Forces during World War II is exempt from taxation regardless of the veteran's level of disability. Provides that a veteran who qualifies as a result of his or her service in World War II need not reapply for the exemption. Effective immediately.
HB 204 - (Ford)
Amends the Senior Citizens and Persons with Disabilities Property Tax Relief Act by reinstituting the pharmaceutical assistance program that was eliminated by Public Act 97-689 and changing the short title to the Senior Citizens and Persons with Disabilities Property Tax Relief and Pharmaceutical Assistance Act. Makes conforming changes in various Acts.
HB 209 - (Flowers) Amends the Stock, Commodity, or Options Transaction Tax Exemption Act. Provides that a home rule municipality with 1,000,000 or more inhabitants may, by ordinance, levy a tax on stock, commodity or options transactions. Effective immediately.
HB 227 - (Bennett) Amends the Illinois Income Tax Act. Creates a credit in an amount equal to 10% of the stipend or salary paid by the taxpayer to up to (i) 5 qualified college interns or (ii) 5 qualified high school interns during the taxable year. Provides that no taxpayer may claim more than $5,000 in total credits under that Section for all taxable years combined. Provides that the credit is exempt from the Act's automatic sunset provision. Effective immediately.
HB 238 - (Bennett) 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 250 - (Walsh) Amends the Property Tax Code and the Mobile Home Local Services Tax Enforcement Act. Provides that tax sales need not be held within the county.
HB 251 - (Walsh) Amends the Property Tax Code. Provides that the notice of application for judgment and sale may be mailed by first-class mail (currently, registered or certified mail). Provides that the envelope containing the notice shall be clearly marked "Notice of Judgment and Sale of Unpaid Property Taxes". Removes a requirement that the county collector must present proof of the mailing to the court along with the application for judgement.
HB 270 - (Murphy and Chapa LaVia) Amends the Retailers' Occupation Tax Act. Provides that if a purchaser makes payment over the phone, in writing, or via the Internet, and the property is delivered to a location in this State, then the sale shall be sourced to the location where the property is delivered. Provides that the sale shall be deemed to have occurred at the customer's address if the property is delivered and the delivery location is unknown. Amends the Counties Code, the Illinois Municipal Code, the Flood Prevention District Act, the Local Mass Transit District Act, and the Regional Transportation Authority Act. Provides that a unit of local government may require a retailer to collect and remit certain use and occupation taxes if the retailer qualifies as a "retailer maintaining a place of business in this State" under certain provisions of the Use Tax Act.
HB 294 - (McSweeney) Amends the Department of Revenue Law of the Civil Administrative Code of Illinois. Provides that the Director of Revenue shall publish a list containing the name of each member of the General Assembly who (i) has been issued a notice of failure to file a return under the Illinois Income Tax Act more than 180 prior to the date the list is published and (ii) has not filed a return as provided in that notice by the date the list is published. Provides that, if a member of the General Assembly whose name appears on the list subsequently brings himself or herself into compliance with the reporting requirements of the Illinois Income Tax Act, or if that member demonstrates that his or her name appeared on the list in error, then the Director shall promptly remove that member's name from the list. Effective immediately.
HB 295 - (McSweeney) Creates the Truth in Legislative Taxation Act. Provides that every new Act that creates a new tax or fee or increases an existing tax or fee shall include the words "Tax Increase", "Fee Increase", or "Tax and Fee Increase" in its short title. Requires the sponsor of the new Act to inform the Legislative Reference Bureau that the new Act creates a new tax or fee or increases an existing tax or fee each time a drafting request is made related to that new Act. Requires the sponsor to provide a statement of legislative intent to the Legislative Reference Bureau that describes each new or increased tax or fee in the new Act and that sets forth the reason for each new or increased tax or fee. Directs the Legislative Reference Bureau to: ensure that the short title of the new Act conforms to the naming requirements of this Act; include the statement of legislative intent provided by the sponsor in the Section of the new Act immediately following the short title; and in its synopsis of the bill or amendment, state that the new Act creates a new tax or fee or increases an existing tax or fee. Where the new Act is drafted in the form of bill, directs the Legislative Reference Bureau to affix to the first page of the bill a stamp or words indicating that the new Act is one to which this Act applies. Provides corresponding requirements for amendatory Acts. Effective immediately.
HB 304 - (McSweeney) Amends the Tax Increment Allocation Redevelopment Act in the Illinois Municipal Code. Provides that all obligations issued by a non-home rule municipality in connection with the Tax Increment Allocation Redevelopment Act (instead of TIF obligations secured by the full faith and credit of the municipality) are subject to a backdoor referendum. Provides that a petition calling for a referendum on the issuance of those bonds shall be filed within 45 (instead of 30) days after the publication of the ordinance. Makes changes concerning the signature requirement for those petitions. Effective immediately.
HB 316 - (McSweeney) Amends the Illinois Income Tax Act. For taxable years beginning on or after January 1, 2019, reduces the rate of tax to 3% for individuals, trusts, and estates and 4.8% for corporations. Makes corresponding changes concerning the distribution of tax proceeds. Effective immediately.
HB 317 - (McSweeney) Amends the Property Tax Code. Provides that, beginning with the 2019 levy year, the Property Tax Extension Limitation Law applies to all taxing districts, including home rule units. Provides that, beginning with the 2019 levy year, the extension limitation under the Property Tax Extension Limitation Law is 0% or the rate of increase approved by the voters. Preempts home rule. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.
HB 318 - (McSweeney) Amends the Illinois Income Tax Act. Creates a credit in an amount equal to the investment made by the taxpayer during the taxable year in a Qualified Opportunity Fund. Provides that no such credit may be taken for any taxable year that begins prior to January 1, 2020. Provides that excess credits may be carried forward or back. Provides that the aggregate amount of the Qualified Opportunity Fund tax credit shall be limited to $100,000,000 per calendar year. Provides that the credit is exempt from the Act's automatic sunset provision. Effective immediately.
HB 319 - (McSweeney) Amends the Illinois Income Tax Act. Reduces the income tax rate for corporations to 2.625% for taxable years beginning on or after January 1, 2019. Effective immediately.
HB 320 - (McSweeney) Amends the Property Tax Code. Provides that, beginning with the 2019 levy year, the Property Tax Extension Limitation Law applies to all taxing districts, including home rule units. Provides that, for the 2019 levy year, the limiting rate under the Property Tax Extension Limitation Law shall be calculated by reducing the district's 2016 aggregate extension by 5%. Provides that, for the 2020 levy year, the limiting rate under the Property Tax Extension Limitation Law shall be calculated by reducing the district's 2018 aggregate extension by 10%. Provides that, beginning with the 2021 levy year, the extension limitation is 0%. Preempts home rule. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.
HB 321 - (McSweeney) Repeals the State Tax Lien Registration Act and the Revised Uniform Unclaimed Property Act. Reenacts the Uniform Disposition of Unclaimed Property Act. Changes various Acts by restoring language deleted by Public Act 100-22 and deleting language added by Public Act 100-22. Effective immediately.
HJRCA 0002 - (McSweeney) Proposes to amend the Legislature Article of the Illinois Constitution. Provides that a bill passed on or after the date of a general election but on or before the second Wednesday of January following the general election that would result in the increase of revenue to the State by an increase of a tax on or measured by income or the selling price of any item of tangible personal property or any service may become law only with the concurrence of three-fifths of the members elected to each house of the General Assembly.
City of Chicago news
Chicago Mayoral candidate and current Illinois Comptroller Mendoza issued her
Future Now plan for the City of Chicago. The plan included a proposal for a graduated property tax. It was explained as a taxation system by which more expensive homes would be taxed at a higher rate. The Comptroller received immediate and substantial criticism for the proposal for a graduated property tax and has backed off of this proposal.
Rulemaking
The January 4 edition of the
Illinois Register did not contain any new rulemakings by the Illinois Department of Revenue or the Illinois Department of Commerce and Economic Opportunity.
The January 4 Illinois Register has one adopted rulemaking by the Illinois Department of Revenue. The Department adopted income tax rules for determining the amount of the subtraction allowed to partnerships under IITA Section 203(d)(2)(H) for personal service income or for a reasonable allowance for compensation for services rendered by partners.
The January 11 edition of the
Illinois Register contains a new rulemaking by the Illinois Department of Revenue amending the rules of the Board of Appeals. The Department describes the amendments as follows:
"This rulemaking amends Section 210.126 to reflect changes in procedures regarding the filing of applications for voluntary disclosure. The rules state that applications for voluntary disclosure must be filed with the Problems Resolution Division (PRD) of the Department, rather than with the Board of Appeals and updates the rule to reflect this procedural change. In addition, statutory citations have been updated throughout the regulation, along with updates reflecting the current organizational structure of the Department. The name of the Part is being changed to emphasize that the voluntary disclosure program is no longer administered by the Board of Appeals."
The January 11 Illinois Register did not contain any rulemaking by the Department of Commerce and Economic Opportunity.
Court cases
No new tax-related cases this week.
Tax Tribunal
No new decisions were issued this week by the Tribunal. No
new cases of note were filed with the Tribunal this week.
154 new cases were filed with the Tribunal during calendar year 2018. This was the lowest number of new cases filed in the history of the Tribunal and continued the decline in the number of cases filed each year since the inception of the Tribunal.
Publications
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