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January 24, 2020
State and Local Tax
This Week
Illinois General Assembly
The House and Senate will return to Springfield for the beginning of the spring legislative session on January 28.
The Senate was in session on Sunday January 19 and chose Senator Don Harmon as the new Senate President.
New legislation
HB 4135 - Didech - Creates the Library District Cannabis Retailers' Occupation Tax Law in the Public Library District Act of 1991. Provides that, on and after January 1, 2021, the corporate authorities of a library district may, by ordinance, impose a 1% tax upon all persons engaged in the business of selling cannabis, other than cannabis purchased under the Compassionate Use of Medical Cannabis Program Act, at retail in the library district on the gross receipts from these sales made in the course of that business. Amends the County Cannabis Retailers' Occupation Tax Law of the Counties Code. Reduces the tax rate the corporate authorities of a county may impose by 1% within a library district if the library district imposes a Library District Cannabis Retailers' Occupation Tax.
HB 4138 - Morgan -
Creates the Phase Out Corporate Giveaways Interstate Compact. Enters into the compact, which may be entered into by any state and the District of Columbia, in which each member state agrees not to offer or provide any company-specific tax incentive or company-specific grant to any entity for a corporate headquarters, manufacturing facility, office space, or other real estate development located in any other member state as an inducement for the corporate headquarters, manufacturing facility, office space, or other real estate development to relocate to the offering member state. Defines terms. Excludes: (1) workforce development grants that train employees; (2) company-specific tax incentives or company-specific grants from local governments; and (3) specified company-specific tax incentives or company-specific grants related to companies already within the member state. Creates the Phase Out Corporate Giveaways Board and provides for membership and meeting requirements. Provides for withdrawal of a member state with a 6-month written notice to each member state's chief executive officer. Contains construction and severability provisions.
HB 4231 - Mason - Amends the Illinois Income Tax Act. Creates an income tax credit for taxpayers that own and operate a sanitary landfill in the State and incur noise mitigation costs during the taxable year in connection with that sanitary landfill. Provides that the taxpayer shall apply to the Illinois Environmental Protection Agency for the credit. Provides that the amount of the credit may not exceed 5% of the costs incurred during the taxable year for labor and materials in connection with those noise mitigation measures.
HB 4234 - West - Amends the State Finance Act to create the Mental Health Services Fund as a special fund in the State treasury. Provides that moneys in the Mental Health Services Fund shall be distributed each month to the counties of the State for certain specified purposes. Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Imposes a surcharge of 1% of the selling price on firearm ammunition. Provides that moneys from the surcharge shall be deposited into the Mental Health Services Fund. Effective immediately.
HB 4241 - Walker - Amends the Property Tax Extension Limitation Law in the Property Tax Code. Provides that, for levy year 2021 and thereafter, the limiting rate shall include 50% of the value of new property (currently, 100% of the value of new property is excluded). Effective immediately.
SB 2465 - Murphy - Amends the Tax Increment Allocation Redevelopment Act of the Illinois Municipal Code. Provides that all surplus funds in the special tax allocation fund shall be distributed as soon as possible after they are calculated (rather than distributed annually within 180 days after the close of the municipality's fiscal year).
SB 2468 - Gillespie - Creates the Assault Weapon Retailers' Tax Act. Imposes a tax on licensed firearm dealers engaged in the State in the business of making retail sales of assault weapons, large capacity ammunition feeding devices, or both. Provides that the tax shall be imposed at the rate of 10% of the retail selling price each assault weapon or large capacity ammunition feeding device sold in the State. Provides that the proceeds from the tax shall be deposited into the Firearms Tax Fund. Provides that moneys in the Firearms Tax Fund shall be used to prevent gun violence in schools and State-owned buildings. Amends the State Finance Act to create the Firearms Tax Fund.
SB 2481 - Munoz - Amends the Use Tax Act and the Retailers' Occupation Tax Act. Provides that, beginning 30 days after the effective date of the amendatory Act, the term "selling price" no longer includes the value of traded-in motor vehicles. Amends the Illinois Vehicle Code. In a Section concerning the use tax on motor vehicles, makes changes concerning the amount of the tax. Provides that the tax on motorcycles, motor driven cycles, and mopeds shall be the same as for all other motor vehicles. Effective immediately.
SB 2492 - Schimpf - Amends the Use Tax Act, the Service Use Tax Act, and the Retailers' Occupation Tax Act. Provides that, beginning on July 1, 2020, with respect to motor fuel, the term "selling price" does not include any tax or fee imposed by the federal government, the State, or any unit of local government.
Rulemaking
The January 24 edition of the
Illinois Register did not contain any new or adopted rulemakings by the Department of Commerce and Economic Opportunity.
The Illinois Register contains two proposed rulemakings by the Illinois Department of Revenue and one emergency rulemaking.
There is one update to the rules of the Secretary of State dealing with service of process which may be of interest to those who litigate issues before the Secretary of State.
The Department proposed amendment of the income tax rules. According to the Department's description:
"This rulemaking amends Section 100.2430 of the Illinois Income Tax regulations to reflect the repeal by the PA 100-22 of the prohibition on persons who are required to use different apportionment methods from being members of the same unitary business group. After the December 31, 2017, effective date of this repeal, the provisions in the IITA dealing with payments of interest and intangible expenses between taxpayers who would be members of the same unitary business group if not for this prohibition will no longer apply. This rulemaking also amends Section 100.2430 to take into account the limitations on the deduction of business interest expense under Internal Revenue Code Section 163(j) in taxable years beginning after December 31, 2017."
The Department has also proposed permanent rules and emergency amendments to the Retailers' Occupation Tax rules. According to the Department's description:
" PA 101-593 amends Section 2-10 of the Retailers' Occupation Tax Act. The amendments to Section 2-10 clarify that that food consisting of or infused with adult use cannabis is taxed at the general merchandise rate of 6.25%, not the 1% rate imposed on food for human consumption that is to be consumed off the premises where it is sold. "Adult use cannabis" is defined as cannabis subject to tax under the Cannabis Cultivation Privilege Tax Law and the Cannabis Purchaser Excise Tax Law and does not include cannabis subject to tax under the Compassionate Use of Medical Cannabis Program Act."
The Secretary of State adopted amendments to its rules dealing with service of process. The description of the adopted rulemaking is as follows: " Updates addresses at which various services of process shall be made to SOS. Clarifies that SOS has the authority to accept service of process under specific statutes. Any court issued authorization of service of process to SOS will be rejected unless SOS has specific statutory authority to accept that service of process. Makes technical updates."
Court cases
No new decisions this week.
Tax Tribunal
No new decisions were issued this week.
None of the new cases filed with the Tribunal raise unique tax issues.
Save the Date
The next Tax Institute meeting has been scheduled for March 16 at the Illinois Chamber offices, 300 S. Wacker Drive, 8th Floor, Chicago, Illinois.
Our featured guest speaker is Roger Koss the newly appointed Audit Bureau Manager. Roger is a 30+ year veteran of the Illinois Department of Revenue Audit Bureau. Roger will discuss his vision for the Audit Bureau under his direction and has promised to answer our questions.
Publications
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