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February 9, 2018
State and Local Tax this week
Illinois General Assembly
The House and Senate returned to Springfield on February 6. The House and Senate were in session February 6 and 7 and the Senate was in session February 8. The House cancelled the previously scheduled February 8 session day.
The House and Senate are both scheduled to be in session next week Tuesday through Thursday.
The House Revenue committee held a hearing on Tuesday February 6. The committee did not vote on any bills this week.
The Senate Revenue committee held a hearing on February 7. The committee didn't take action on any matters of consequence this week.
The House Revenue committee is scheduled to hold its next hearing on February 14 at 8:30. The linked
bills have been posted for committee consideration next week. It is unclear as of today which of the posted bills will actually be considered by the committee next week.
The Senate Revenue committee is scheduled meet on February 14 at 4:00. The linked
bills are scheduled for committee consideration next week. It is unclear as of today which of the posted bills will actually be considered by the committee next week.
A number of new tax-related bills were filed this week. The bill filing deadline in both the House and Senate is next Friday. I expect to see a flood of new legislation over the next two weeks.
New Legislation:
HB 4509 - Sauer
Amends the Property Tax Code. In a Section providing that in counties with a population of under 3,000,000, certain reduced assessments shall remain in place unless there is substantial cause shown why the reduced assessment should not remain in effect, provides a non-exclusive list of substantial causes.
HB 4527 - Davidsmeyer
Amends the Illinois Income Tax Act. Creates an income tax checkoff for donations to the Pediatric and Rare Disease in Children Research Fund. Amends the State Finance Act to create the Pediatric and Rare Disease in Children Research Fund. Provides that moneys deposited into the Pediatric and Rare Disease in Children Research Fund shall be used by the Department of Public Health for the purpose of making grants to organizations in Illinois that conduct research, investigation, and experimentation that results in a better understanding of pediatric and rare diseases in children and an ultimate cure or treatment option.
HB 4535 - Chapa LaVia
Amends the Illinois Income Tax Act and the Illinois Insurance Code. Provides that all or a portion of the income tax credit awarded for the restoration and preservation of a qualified historic structure located in a River Edge Redevelopment Zone may instead be taken as a credit against privilege and retaliatory taxes paid under the Illinois Insurance Code. Provides that the Historic Preservation Agency may issue a certification to the taxpayer stating that, if the project is completed as proposed, the project will qualify for the credits. Contains provisions concerning transfers of credits. Provides that the credit may be carried forward. Provides that the credit shall be based on qualified expenditures incurred by a qualified taxpayer (currently, qualified expenditures incurred by a qualified taxpayer during the taxable year). Provides that the qualified expenditures must exceed the adjusted basis of the qualified historic structure on the first day the qualified rehabilitation plan begins (currently, 50% of the purchase price of the property). Provides that the rehabilitation must be approved by the Historic Preservation Agency and the National Park Service (currently, the Historic Preservation Agency only). Provides that the credit sunsets on December 31, 2022 (currently, December 31, 2021).
HB 4538 - Hays
Amends the Property Tax Code. In a Section granting a natural disaster homestead exemption, removes language providing that the square footage of the rebuilt residential structure may not be more than 110% of the square footage of the original residential structure as it existed immediately prior to the natural disaster. Removes provisions providing that the taxpayer's initial application for a natural disaster homestead exemption must be made no later than the first taxable year after the residential structure is rebuilt. Provides that, if the square footage of the rebuilt structure exceeds 110% of the square footage of the original residential structure as it existed immediately prior to the natural disaster, then the amount of the natural disaster homestead exemption is the equalized assessed value per square foot of the rebuilt structure multiplied by 110% of the square footage of the original residential structure as it existed immediately prior to the natural disaster minus the base amount. Provides that the amendatory Act is retroactive to the 2012 taxable year. Sets forth provisions concerning the valuation of farm improvements that have been rebuilt following a natural disaster.
HB 4563 - Breen
Amends the Invest in Kids Act. Provides that contributions to a school district foundation are also qualified contributions under the Act. Provides that taxpayers who make contributions to a school district foundation are also eligible for a property tax credit. Provides that the term "contribution" means a donation made by the taxpayer during the taxable year for providing scholarships or support (currently, scholarships only). Contains provisions concerning the calculation of the credit or abatement for contributions to school district foundations and the aggregate amount of the credit and abatement available for those contributions. Amends the School Code. Provides that payments under the evidence-based funding formula shall be reduced by the amount of qualified contributions received by the applicable school district foundation under the Invest in Kids Act.
HB 4582 - Halbrook
Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the exemption for farm machinery and equipment also includes: bailing wire; twine (including sisal and polypropylene baler twine); bale wrap (also known as silage wrap or bale film); bunker covers (also known as silage film); silage bags; underlayments and oxygen barriers; gravel and sand bags; secure covers; bale bags, sleeves, and elastic tubes; baler wire; and netwrap.
HB 4584 - McCombie
Amends the State Finance Act, the Motor Fuel Tax Law, the Emergency Telephone System Act, the Riverboat Gambling Act, and the Video Gaming Act. Provides that, in the absence of an appropriation for any State fiscal year, moneys that are required to be distributed to units of local government and other entities from the State and Local Sales Tax Reform Fund, the Motor Fuel Tax Fund, the State Gaming Fund, the Local Government Video Gaming Distributive Fund, and the Statewide 9-1-1 Fund are subject to a continuing appropriation.
HB 4655 - Manley
Amends the Illinois Income Tax Act to amend the foreign tax credit for individuals. Makes changes concerning the allocation of compensation paid to nonresidents to provide that the allocation is based on the number of working days spent in this State. Makes corresponding changes concerning employer withholding requirements. Creates a credit in an amount equal to the amount of the investment made by the taxpayer during the taxable year in qualified property and qualified expenses that are used for tracking and reporting the location of resident and non-resident employees for purposes of compliance with the tracking, reporting, and income tax withholding requirements of the amendatory Act.
HB 4680 - Welch
Amends the Illinois Municipal Code. Creates the Municipal Gas Use Tax Law. Provides that beginning January 1, 2019, a municipality may impose a self-assessing purchaser tax rate of the lower of 2.4 cents per therm or 5% of the purchase price for the privilege of using in the municipality gas obtained in a purchase of out-of-state gas. Provides that, in the alternative, a purchaser may elect for a tax of 2.4 cents per therm that a delivering supplier maintaining a place of business in the State collects from the purchaser. Provides for registration requirements for self-assessing purchasers and delivering suppliers. Includes procedures for self-assessing purchasers and delivering suppliers to submit returns and to remit the tax to the Department of Revenue.
HB 4695 - Olsen
Amends the Property Tax Code. Provides that, for taxable years 2018 and thereafter: (1) the maximum reduction under the senior citizens homestead exemption is $8,000 in all counties (currently, $8,000 in counties with 3,000,000 or more inhabitants and $5,000 in all other counties); and (2) the maximum reduction under the general homestead exemption is $10,000 in all counties (currently, $10,000 in counties with 3,000,000 or more inhabitants and $6,000 in all other counties).
HB 4696 - Olsen
Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that, beginning on January 1, 2019, the tax is not imposed on prescription medicines or prescription drugs.
HB 4703 - Halpin
Creates the Historic Preservation Tax Credit Supplemental Pilot Program Act. Provides that an income tax credit is granted to an eligible taxpayer who makes expenditures pursuant to a qualified rehabilitation plan for the rehabilitation of a historic structure located in Rock Island County. Provides that the credit is available for taxable years beginning on or after January 1, 2019 and ending on or before December 31, 2029. Provides that the credit is equal to 25% of the amount of the eligible expenditure. Contains provisions concerning eligible expenditures. Provides that eligible taxpayers must apply with the Department of Commerce and Economic Opportunity within 6 months after the effective date of the Act. Provides that the credit may be carried forward for up to 10 years and may be carried back for up to 3 years. Amends the Illinois Income Tax Act to make conforming changes.
HB 4723 - Phelps Finnie
Amends the Property Tax Code. Provides that the homestead exemption for veterans with disabilities carries over to the benefit of the veteran's surviving spouse if the veteran resided outside of the State but otherwise qualified for the exemption at the time of his or her death and the surviving spouse relocates to Illinois after the death of the veteran.
HB 4724 - Phelps Finnie
Amends the Illinois Hydraulic Fracturing Tax Act. Removes provisions concerning first purchaser exemption certificates.
SB 2501 - Bertino-Tarrant
Amends the Illinois Income Tax Act. Creates an income tax credit for qualified education expenses incurred by employers on behalf of qualifying apprentices.
SB 2502 - Bertino-Tarrant
mends the Use Tax Act and the Service Use Tax Act. Provides that retailers and servicemen that do not collect the taxes under those Acts shall make the following reports and notifications: (1) a notification with each purchase made to an Illinois purchaser that use tax is due on certain purchases at retail made from the retailer and that the State requires the purchaser to file a use tax return; and (2) an annual notification to each Illinois purchaser detailing the total amount paid by the purchaser for Illinois purchases at retail during the previous calendar year. Provides that, if a purchaser has otherwise failed to file a return with the Department of Revenue and remit the proper amount of tax due, and if the purchaser receives a notification from a retailer under the provisions of the amendatory Act, then that purchaser must file a return and pay the tax by April 15 of the year in which the notification is received.
SB 2523 - Stadelman
Amends the Illinois Income Tax Act. Provides that each taxpayer who is employed by a business that would qualify as a federal HUBZone small business concern but for the fact that fewer than 35% of its employees reside within a federal HUBZone is eligible for an income tax credit in the amount of $500 if the employee first moves into a federal HUBZone during the taxable year.
SB 2539 - Bennett
Amends the Property Tax Code. In a Section requiring a receipt for payment of certain fees and costs incurred by a certificate holder, provides that the county clerk shall write or stamp the date of receiving upon the receipt. In a Section concerning notice of an extended period of redemption, provides that the county clerk shall write or stamp the date of receipt upon the notice, and provides that the county clerk is not required to extend the period of redemption unless the purchaser or his or her assignee obtains that acknowledgement of delivery.
SB 2563 - Morrison
Amends the Illinois Income Tax Act. Provides for a credit against withholding taxes in an amount equal to 25% of the wages or salary paid by a private employer to an Illinois employee while the employee is on organ donation leave if the employer grants all of its employees the option of taking a paid leave of absence of at least 30 days for the purpose of serving as an organ donor or bone marrow donor. Provides that the credit may not exceed $20,833.33 for each employee who takes organ donation leave. Provides that such a leave of absence must be taken without loss of pay, vacation time, compensatory time, personal days, or sick time for at least the first 30 days of the leave of absence.
SB 2577 - Castro and Althoff
Amends the Use Tax Act and the Service Use Tax Act. 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 $150,000 or more; or (2) the retailer or serviceman enters into 200 or more separate transactions for sales of service to purchasers in Illinois. Provides that the amendatory Act may be referred to as the Marketplace Fairness Act.
SB 2604 - Althoff
This is an Illinois Chamber initiative. Amends the Uniform Penalty and Interest Act. 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. 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 2605 - Althoff
This is an Illinois Chamber initiative. Amends the Illinois False Claims Act. Provides that no court has jurisdiction over a civil action relating to or involving a false claim regarding certain tax acts administered by the Department of Revenue unless the action is brought by the Attorney General. Provides that the Department of Revenue has the sole authority to bring an administrative action and that the Attorney General has the sole authority to bring a judicial action under the Act for a false claim, statement, or record pertaining to certain taxes administered by the Department of Revenue. Contains provisions concerning reporting, investigative, and enforcement procedures for allegations of false claims pertaining to certain taxes. Contains provisions governing the payment of rewards to persons who provide information that leads to recovery of funds under the new provisions. Provides that the appeal of a determination regarding an award may be appealed exclusively to the Court of Claims and must be filed within 30 days of the determination of the award. Makes other changes, including a corresponding change in the Court of Claims Act.
SB 2644 - Tracy
Amends the Illinois Administrative Procedure Act. Provides that notice to parties in a contested case under the Act shall be served, among other forms of service, by email. Provides that parties in a contested case under the Act shall be notified, among other forms of notification, by email of any decision or order in that case. Provides for specified requirements for the consent of service by email. Provides that an agency may request, but not require, unless otherwise required by law, an unrepresented party to designate an email address to which specified documents may be transmitted. Provides that no document described in specified provisions may be served by email to the extent the documents contains certain specified information. Provides that service by email is deemed complete on the day of transmission. Provides that agencies that use email to service documents shall adopt rules that specify the standard for confirming delivery, and in failure to confirm delivery, what steps the agency will take to ensure that service by email or other means is accomplished.
SB 2645 - Bertino-Tarrant
Amends the State Finance Act, the Motor Fuel Tax Law, the Emergency Telephone System Act, the Riverboat Gambling Act, and the Video Gaming Act. Provides that, in the absence of an appropriation for any State fiscal year, moneys that are required to be distributed to units of local government and other entities from the State and Local Sales Tax Reform Fund, the Motor Fuel Tax Fund, the State Gaming Fund, the Local Government Video Gaming Distributive Fund, and the Statewide 9-1-1 Fund are subject to a continuing appropriation.
Rulemaking
The February 9 edition of the Illinois Register did not contain any new rulemakings by the Illinois Department of Revenue or the Department of Commerce and Economic Opportunity.
One adopted rulemaking of the Illinois Department of Revenue appears in this week's edition of the Illinois Register. This adopted rulemaking combines three proposed rulemakings initiated by the Department last summer. The rulemakings consist of various "clean up" amendments by the Department designed to align the rules with statutory changes enacted over the past few years.
There is one change of note in the adopted rulemaking that will be helpful to tax practitioners and taxpayers. This rulemaking amends the Department's regulation at 86 Ill. Adm. Code 130.120 entitled Nontaxable Transactions. Specifically, this rulemaking deletes several of the exemptions that sunset and adds text to several of the exemptions to indicate whether the exemption is subject to the sunset provisions of Section 2-70 of the Retailers' Occupation Tax Act. Attempting to determine whether and when a particular exemption is scheduled to sunset has been a difficult endeavor. Section 130.120 will be a handy reference.
Court cases
Aasen v. Rickert - The plaintiffs and 665 other tax objectors appealed a trial court denial of their motion for summary judgement and dismissal of of their tax objection complaints against the Kane county collector. The plaintiff objectors argued that the Kane County clerk lacked the authority to use the Illinois Department of Revenue's amended apportionments (division of the amounts to be raised by taxation on property in a district that overlaps multiple counties) for tax year 2012 to collect taxes in tax year 2014. The appellate court affirmed the dismissal.
Tax Tribunal
No new decisions were issued by the Tribunal this week.
Publications
The Illinois General Assembly's Commission on Government Forecasting and Accountability ("COGFA") issued two reports of interest this week. COGFA issued the
Monthly Briefing for the Month Ended: January 2018. This reports includes an evaluation of the impact of the economy on tax collections as well as data on state tax collections for the month and the current fiscal year.
This week, COGFA also issued a
State of Illinois Economic Forecast prepared for COGFA by Moody's Analytics.
This morning the Civic Federation released its
State of Illinois FY 2019 Budget Roadmap.
I recommend reviewing each of these publications if you are interested in expanding your knowledge of the details of state spending and the Illinois budget.
We recently launched a new
Website. There is a new home page for the Tax Institute. The Tax Institute page is a work in progress. I plan to include links to resources of interest to the members, including links to web pages and publications by members. Please send me links to your articles and publications and your firm's web pages that may be of interest to the membership. As the website develops I will add a password protected area for members only.
Save the Dates - Tax Institute Quarterly Meeting Dates for 2018
First Quarter meeting of the Tax Institute has been scheduled for March 12 from 2:00 - 4:00 p.m. at the office of True Partners Consulting LLC - Featured speaker: IDOR Director Connie Beard
The remaining quarterly meetings have been tentatively scheduled for the following dates: June 12, September 19 and November 13. We plan to hold the meetings in Chicago from 2:00 - 4:00 pm.
Let me know if you would like to host any of the other meetings.
Don't forget that one of the benefits of membership in the Tax Institute is that attendance at Tax Institute quarterly meetings will qualify for Illinois CPE (certified public accountants) and CLE (attorneys).
This year for the first time, we will offer one hour of ethics training credit. Tax Institute member law firm Horwood Marcus & Berk has volunteered to present ethics training at our June 12 meeting.
Illinois Chamber of Commerce CEO to address City Club Of Chicago - February 13
Todd Maisch, President and CEO of the Illinois Chamber of Commerce, will speak to the City Club of Chicago on February 13, 2018 at 11:30 a.m. at Maggiano's Banquets in Chicago. As the leader of Illinois' premier business organization, Todd will provide insights on what we can do to ensure Illinois succeeds, policy issues that require resolution, and what makes Illinois the envy of the Midwest.
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