August 16, 2019

 

State and Local Tax  

This Week 

The August 16 edition of the Illinois Register did not contain any proposed or adopted rulemakings by the Department of Commerce and Economic Opportunity. 

Today's edition of the Illinois Register contains one rulemaking by the Illinois Department of Revenue proposing rules for the tax amnesty established by P.A. 101-0009.  The rulemaking is an update of the rules adopted by the Department for the prior amnesty.  

The rules for the proposed amnesty are basically the same as the rules for the prior amnesty, with the exception of the elimination of provisions dealing with the doubling of penalties and interest for not participating in the prior amnesty, or paying the full amount of tax due for periods covered by the amnesty.  The rulemaking eliminates references to the doubling of penalties and interest for not paying all taxes owed for the periods covered by the amnesty during the amnesty period, because upcoming amnesty established by P.A. 101-0009, unlike prior amnesties does not contain this sanction.

The Illinois Register also contains 5 adopted rulemakings by the Illinois Department of Revenue. The adopted rulemakings amend the rules for the Retailers' Occupation Tax, the Service Occupation Tax, the Cigarette Tax Act, the Cigarette Use Tax Act and the Tobacco Products Tax of 1995.

The amendments implement PA 100-940.  Pursuant to that Public Act enacted in 2018, any person who fails to keep books and records or fails to produce books and records for examination, as required by Section 7 of the Retailers' Occupation Tax Act, is liable to pay to the Department, for deposit into the Tax Compliance and Administration Fund, a penalty of $1,000 for the first failure to keep books and records or produce books and records for examination and a penalty of $3,000 for each subsequent failure to keep books and records or produce books and records for examination.  The penalty will not apply if the taxpayer shows that he or she acted with ordinary business care and prudence. 

The amendments to the Tobacco Products rules also make the following changes:   Section 660.20 is amended to remove obsolete language.  Section 660.24 is amended to add invoice requirements enacted by PA 100940 that are imposed on retailers for tobacco products purchased by the retailers from distributors, add a requirement for invoices to state the weight of tobacco contained in little cigars, and remove obsolete language.  Section 660.25 is amended to add invoice requirements enacted by PA 100-940 and imposed on distributors for tobacco products purchased or sold by distributors, add a requirement for invoices to state the weight of tobacco contained in little cigars, and removes obsolete language. 

Court cases

No new decisions..   

Tax Tribunal 

No new decisions were posted this week.  One new case may be of interest:

Mars Inc. v. Illinois Department of Revenue is a corporate income tax case involving a return filed for 2016.  Mars is represented by Tax Institute member law firm Horwood Marcus & Berk.

The matter was triggered by the issuance of a "Return Correction Notice" by the Illinois Department of Revenue.  The return collection notice disallowed the taxpayer's Illinois net loss deduction for the tax year at issue.  The Department advised that Mars had claimed more loss than the Department's records indicated were available.

From the protest, it appears that the Department "adjusted" the taxpayer's unitary business group for the 2009 and 2010 tax years by adding certain companies to the group that the Department claimed were not 80/20 companies.  This adjustment had the effect of reducing the amount of Illinois net loss in those tax years, but not shifting the year to a year with taxable income.  As a result, the Department did not issue a notice of deficiency for those tax years.

It is not clear from the petition what notification, if any was issued by the Department to the taxpayer contemporaneously with the reduction of the Illinois net losses for 2009 and 2010.

This issue has been a problem for taxpayers for a number of years.  Adjustments to Illinois net losses by virtue of Department actions that do not trigger a notice of deficiency are often not addressed until they trigger a notice of deficiency, sometimes years later.  It becomes difficult to address such adjustments years after the fact.

Publications

The Illinois General Assembly Commission on Government Forecasting and Accountability issued

The Illinois Department of Revenue issued a  Compliance Alert that deals with procedures for reporting the selling price on transaction returns for leases for motor vehicles.

The Illinois Department of Revenue has established a web page for information on the  Property Tax Relief Task Force.  The Task Force was established by  P.A. 101-191 - SB 1932.  By law, the Task Force is made up of members of the General Assembly and two representatives of the Governor's office. By my count there are 55 members of the House of Representatives on the Task Force, along with 31 members of the Senate. The Task Force is required by law to issue a preliminary report with 90 day of the date the law was effective, August 2, and then a final report by the end of the calendar year. I will keep you posted on the activities of the Task Force.

The Institute for Illinois' Fiscal Sustainability at the Civic Federation recently posted a blog post on  The Rebuild Illinois Capital Plan.  There is an interested graphic that breaks down capital plan spending by categories.