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May 15, 2020
State and Local Tax
This Week
Illinois General Assembly
The House and Senate were not in session this week.
As you are likely aware, the General Assembly is scheduled to return to Springfield next week on May 20 for three days for a special session to consider a limited number of topics.
The Senate President and the Speaker of the House issued a
Joint Proclamation that outlines the scope of the special session
as follows:
- The COVID-19 pandemic or other disasters;
- The State budget and its implementation;
- Economic recovery, infrastructure projects and funding thereof;
- The explanation, arguments for and against, and the form for constitutional amendments as required under the Illinois Constitutional Amendment Act;
- Laws or authority scheduled to be repealed prior to June 1, 2021;
- The 2020 General Election and the State Board of Elections; and
- The hospital assessment program.
Item #4 deals with the the constitutional amendment on the November ballot dealing with the graduated income tax. The Chamber has submitted language for the arguments against the graduated income tax for inclusion in the explanation of the amendment that will appear on the November ballot.
Amendments
No amendments this week
New legislation
HB 5774 - Mayfield -
Amends the Property Tax Code. Provides that, for taxable year 2019 (payable in 2020), interest penalties shall be waived for the delinquent payment of any property tax installment. Effective immediately.
Rulemaking
The May 8 edition of the was not published by the time I sent out last weeks newsletter. The May 8 Illinois Register contained a proposed rulemaking by the Illinois Department of Revenue. This rulemaking amends the Use Tax to propose permanent rules implementing the statutory amendments enacted last spring to require marketplace platforms to collect and remit the 6.25% Use Tax on sales by certain marketplace sellers.
You will recall that the law was amended to provide that the nexus determination for sales on marketplace platforms, effective January 1, 2020 was changed from a determination for individual sellers on the platform, to a determination of whether the marketplace platform sales in the aggregate hit the nexus standard. Along with this change was a requirement that the platform collect and remit Use Tax for all sellers on the platform, other than sellers who are retailers required to charge and collect Retailers' Occupation Tax. You will also recall that the law will change again effective January 1, 2021 to establish an even more byzantine set of requirements.
The May 8 edition of the Illinois Register did not contain any proposed or adopted rulemakings by the Illinois Department of Commerce and Economic Opportunity.
The May 15 edition of the
Illinois Register contains one adopted rulemaking by the Illinois Department of Revenue amending the County Motor Fuel Tax rules that implements legislation passed to expand the authority to impose the tax to include Lake and will counties.
The May 15 edition of the Illinois Register did not contain any proposed or adopted rulemakings by the Department of Commerce and Economic Opportunity.
Court cases
Dave Dorner of Tax Institute member law firm Reed Smith forwarded a decision he received from the U.S. District Court for the Northern District of Illinois Eastern Division in
Flordora v. Claris International Inc. The decision was a victory for Reed Smith's client Claris dismissing the case.
The plaintiff brought a class action lawsuit again Claris alleging that Claris violated Illinois law by charging it and other class members Illinois tax on software licenses. The plaintiff alleged that the licenses for the software at issue met the 5 part test for an exempt license of software under Section 130.1935 of the Illinois Department of Revenue rules.
Claris moved to dismiss the complaint pointing out that the plaintiff, who is located in the City of Chicago suffered no damages as a result of being charge Illinois tax.
Claris contended that the plaintiff failed to establish that the software sales were subject to the exemption from Illinois taxation. But the court ruled that it didn't have to determine whether the software was subject to the exemption because even if the software was not subject to Illinois tax, the plaintiff could not show that it was harmed.
The court noted that if the software is exempt from Illinois sales taxation, it would be subject to the Chicago lease transaction tax, the Illinois Use tax is 6.25% and the Chicago tax is 9%. Therefore, the plaintiff cannot show harm.
Tax Tribunal
No new decisions were issued this week.
Only one new case was filed this week. The new case did not raise any unique issues.
Publications and Announcements
Tax Institute member law firm HMB (Horwood Marcus & Berk) is hosting a series of state tax webinars. Check out the events portion of the link.
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