Illinois General Assembly
The House and Senate returned to Springfield on Tuesday, April 17. The House was in session through Friday April 20. The Senate was in session through Thursday April 19.
The House and Senate return to Springfield on Monday April 23 and are scheduled to be in session through Friday April 27.
The Senate passed SB 2577 on Tuesday. This bill amends the Use Tax Act and the Service Use Tax Act and provides that, if a retailer or serviceman makes a sale to purchaser in Illinois from outside of Illinois, then that retailer or serviceman is considered to be "maintaining a place of business in this State" if (1) the cumulative gross receipts from sales of service to purchasers in Illinois are $100,000 or more; or (2) the retailer or serviceman enters into 200 or more separate transactions for sales of service to purchasers in Illinois. The bill provides that the amendatory Act may be referred to as the Marketplace Fairness Act.
Also on Tuesday, SB 2604, and initiative of the Illinois Chamber of Commerce Tax Institute passed the Senate unanimously. The bill amends the Uniform Penalty and Interest Act and provides that the penalty for failure to pay the tax shown due or required to be shown due on a return shall be 15% (instead of 20%) of any amount that is paid after the date the Department of Revenue has initiated an audit or investigation of the taxpayer. The legislation provides that the penalty shall be abated if the taxpayer paid to the Department at least 95% of the total tax liability (including any additional liability resulting from the audit or investigation) prior to the initiation of the audit or investigation. SB arrived in the House and is sponsored in the House by Representative Batinick
On Wednesday, SB 2958, an initiative of the Illinois Department of Revenue, passed the Senate. This bill is "clean up" legislation for the State Tax Lien Registration Act, and provides that the notice of tax lien shall also include the county or counties where the real property of the debtor to which the lien will attach is located. The legislation provides that a tax lien that is filed in the registry shall be attached to all of the existing and after-acquired real and personal property of the debtor.
On Wednesday, the House passed HB 4237. The bill is a work around to the $10,000 federal SALT deduction cap. It creates an income tax credit in an amount equal to the contributions made by the taxpayer to the Illinois Excellence Fund during the taxable year. The bill, (1) provides that the Fund shall be known as the Illinois Education Excellence Fund; (2) provides that the Illinois Education Excellence Fund may accept contributions for exclusively public education purposes; (3) provides that the tax credits for contributions to the Illinois Education Excellence Fund and the county fund for charitable purposes apply to individual taxpayers only; (4) provides that the State Treasurer shall provide a copy of the certification to the taxpayer and the Department of Revenue as soon as possible after the contribution is certified; (5) provides that the income tax credit applies for taxable years ending after December 31, 2017 and before January 1, 2026; and (6) provides that provisions amending the Counties Code apply for taxable years 2018 through 2025.
The House Revenue committee held a hearing on April 19. No substantive legislation was considered on April 19.
The House Revenue committee has scheduled a hearing next week for April 24. Here is a link to the bills that have been posted for committee consideration thus far.
The Senate Revenue committee did not hold a hearing this week.
The Senate Revenue committee has scheduled a hearing for April 25.
Court cases
The Illinois appellate court issued a decision dealing with the scope of the Illinois False Claims Act. People of the State of Illinois ex rel. Richard Lindblom and Ralph Lindblom v. Sears Branks, LLC et al. is an appeal of a dismissal by the circuit court. Relators-appellants, Richard Lindblom and Ralph Lindblom, brought an under the Illinois False Claims Act (Act) against defendants Sears Brands, LLC (Sears); Home Depot U.S.A., Inc. (Home Depot); Lowe's Home Centers, LLC (Lowe's); Best Buy Stores, L.P. (Best Buy); and Gregg Appliances, Inc. (Gregg Appliances). Best Buy moved to be dismissed from the case and the trial court dismissed Best Buy from the relators' qui tam action. The appellate court reversed the circuit court and remanded the case back to the circuit court.
Relators alleged that Best Buy knowingly engaged in a scheme to avoid payment of retailers' occupation tax (sales tax) and use tax by treating the sale and installation of dishwashers and over-the-range microwave ovens as a construction contract, which is not subject to the collection of sales tax from purchasers. At the time relators added Best Buy as a defendant, the Illinois Department of Revenue (Department) was in the process of auditing Best Buy's sales tax calculation practices and had issued a proposed tax liability. Best Buy requested review of the proposed tax liability by the Department's Informal Conference Board (Board). Best Buy moved to dismiss relators' qui tam complaint under section 2-619(a)(9) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(9) (West 2014)), asserting that the "government action bar" set forth in section 4(e)(3) of the Act (740 ILCS 175/4(e)(3) (West 2014)) barred relators' qui tam action because it was the subject of an administrative civil money penalty proceeding (the audit combined with the Board's review) and the State was already a party in that proceeding.
Relators appealed the dismissal, asserting that the audit and the Board's review were not
adversarial and, thus, could not be an administrative civil money penalty proceeding. Relators also contended that the subject of the audit and the Board's review were different from the qui tam suit that focused on fraud and Best Buy's knowing misclassification of sales of over-the-range microwaves and dishwashers as a construction contract in order to avoid remittance of sales tax to the Department. The appellate court reversed and remanded the case.
