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June 15, 2018
State and Local Tax this week
Illinois General Assembly
The General Assembly returns to Springfield for the fall veto session on November 13. The House and Senate are scheduled to be in session November 13 through 15 and November 27 through 29.
I've linked a document that lists tax-related legislation from the spring session that
passed both chambers.
I've also linked the overall Chamber
End of Session Report. This report contains a brief explanation of legislative on a variety of topics that we tracked and weighed in on for our membership. This report not contains legislation passed by the General Assembly, but it also discusses legislation that would have been detrimental to the business client that we successfully opposed.
Rulemaking
The June 15 edition of the Illinois Register did not contain any rulemakings by the Illinois Department of Revenue or the Department of Commerce and Economic Opportunity.
Court cases
Republic Bancorp Company v. Beard is an income tax case that deals with whether an S corporation was entitled to the subtraction from the personal property tax replacement income tax granted for the share of income distributable to shareholders that are subject to the replacement tax.See IITA Section 203(b)(2)(S).
The plaintiff's shareholders were grantor trusts. The plaintiff contended that grantor trusts are "subject to" the replacement tax as trusts and therefore it was entitled to the subtraction modification, even though IITA Section 205(e) provides that grantor trusts are exempted under the Illinois income tax act from "the tax imposed by this Act." A grantor trust is a trust where the grantor has retained certain powers that result in the grantor, and not the trust, being treated as the owner of the assets for tax purposes.
In other words, plaintiff argued that the grantor trusts were subject to the replacement tax as trusts and therefore plaintiff was entitled to the subtraction, even though the grantor trusts themselves don't actually pay replacement tax themselves.
The circuit court rejected the plaintiffs argument and the appellate court upheld the circuit court.
Tax Tribunal
No new decisions were issued by the Tribunal this week. None of the new cases filed with the Tax Tribunal this week raise any unique issues.
We are now in year 5 of the Tax Tribunal. The last reported decision issued by the Tribunal is dated October 13, 2017. It seems like an appropriate time for an assessment of the effectiveness of the Tribunal.
I am hearing mixed reviews of the Tribunal from the membership. It also appears that the volume of filings with the Tribunal is down a bit this year.
I am interested in receiving feedback about the Tribunal from practitioner and industry members of Tax Institute. Your comments will be strictly anonymous. I will compile your thoughts and get back to the membership for discussions about potential changes to the Tribunal.
Nominations are being accepted now until 5 p.m. June 15, 2018. For additional questions, please contact Katie Stonewater at [email protected].
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