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December 13, 2019
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.
New legislation
No new legislation was filed this week.
Property Tax Relief Task Force
The Task Force missed its preliminary report deadline. The final report of the Task Force is due to be submitted to the Governor and the General Assembly on December 31.
The Assessments and Exemptions subcommittee continues to meet. Last Friday the subcommittee took testimony from John Horbas, a representative of the Illinois Property Assessment Institute.
The Assessments and Exemptions subcommittee is scheduled to meet this afternoon. The agenda includes testimony from 3 property tax attorneys, including Whitney Carlisle of Tax Institute member law firm O'Keefe Lyons & Hynes, LLC
Rulemaking
The December 13 edition of the Illinois Register did not contain any proposed rulemaking by the Illinois Department of Revenue or the Department of Commerce and Economic Opportunity.
The Illinois Department of Revenue adopted amendments to the Uniform Penalty and Interest Act rule in today's edition of the Illinois Register. The rulemaking updates the UPIA rules to reflect statutory changes to UPIA since 1999.
Court cases
The appellate court issued issued a franchise tax case Global Mail, Inc. v. White. The court held that a foreign corporation that merges with another foreign corporation must file articles of merger with the Secretary of State and apply for authority to transact business in the state, but the corporation that ceases to exist following the merger does not continue to accrue Illinois franchise taxes.
The court also held that a misstatement by a corporation as to its state of incorporation on an annual report is a factual erro that can be amended by a statement of correction.
The court ruled that the Business Corporation Act does not provide for an interest charge on a late initial franchise tax payment made by a foreign corporation.
Please note that this case is a "Rule 23" case and may not be cited as precedent.
Tribunal
No new decisions were posted this week.
Two of the new cases filed with the Tribunal may be of interest.
Panera LLC v. Department of Revenue is the protest of a sales tax notice of tax liability. At issue is a dispute over the particular sampling methodology demanded by the Department's Audit Division.
According to the petition, the taxpayer operates 82 retail locations in the State of Illinois. Of that number 4 of the locations are "Regional Fulfillment Locations" that serve as retail kitchens without front a counter point of sale and without customer seating, unlike the other retail locations in Illinois.
In the course of the audit, the Department requested point of sale transaction records from one of the taxpayer's locations for one day during the audit period. The location picked by the Department was a Regional Fulfillment Location. The taxpayer declined to provide the requested information because it would not be representative of the taxpayer's retail locations.
According to the petition, there was no agreement between the taxpayer and the Department on an alternative retail location for the sample. The particular type of retail location is essential because one of the issues in the audit is the extent to which sales by the taxpayer should be taxed at the high rate of tax sales tax imposed on food prepared for immediate consumption or at the low tax rate for food not prepared for immediate consumption.
According the petition, because there was no agreement on a sampling methodology, the Department assessed all food and beverage transactions at the high rate of tax resulting in an additional assessment of tax of over $8 million for the audit period.
Panera is represented by David Kupiec of Illinois Chamber Tax Institute member law firm Kupiec & Martin.
Smoky Jennings Chevrolet v. Department of Revenue is interesting as a procedural matter. The taxpayer is an automobile dealer. The taxpayer received a form EDA-556 Sales Transaction Audit Report from the Department. The taxpayer then paid the disputed amount to take advantage of the recently concluded tax amnesty. Because all of the disputed tax was paid, the Department did not issue a final Notice of Tax Liability.
The taxpayer filed a petition with the Tribunal to dispute the additional taxes determined to be due by the on the EDA-556. The Tribunal dismissed the petition. The Tribunal determined it lacks jurisdiction over the matter because no Notice of Tax Liability was every issued.
Publications
The Illinois Department of Revenue has issued Informational Bulletin
FY 2020-16 which announces that as a result of
P.A. 101-593, passed during the veto session, municipalities and counties will be authorized to impose a local Cannabis Retailers' Occupation Tax beginning on July 1, 2020. Under the original cannabis legalization legislation passed during the spring legislative session, municipalities and counties were not authorized to impose local taxes until September 1, 2020.
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