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September 11, 2020
State and Local Tax
This Week
Illinois General Assembly
The General Assembly is adjourned until the fall veto session.
New legislation
HB 5834 - Mazzochi - Amends the Illinois Income Tax Act. Creates an income tax credit for custodians of qualifying pupils for eligible education expenses related to online learning, including computers, printers, internet access, textbooks, tutors, and educational facilitators. Provides for an additional credit if the custodian is also an eligible teacher. Creates an income tax credit for employers of custodians of qualifying pupils for eligible expenditures paid by the employer on behalf of the custodian. Provides that the credit is exempt from the Act's automatic sunset provision. Amends the Illinois Administrative Procedure Act to provide for emergency rulemaking. Effective immediately.
Illinois Department of Revenue
The Department posted two Income Tax letter rulings issued during 2020. One ruling is a general information letter in which the Department declined to grant a petition for alternative apportionment. The Department advised that the petition did not meet the taxpayer's burden of proof for granting a request for alternative apportion under Section 100.3390(c) of the Department's rules.
The second income tax ruling was a private letter ruling in which the Department concluded that the taxpayer at issue was not a captive real estate investment trust.
The Department also posted sales tax letter rulings. The Department posted 12 general information letters and 4 private letter rulings issued during 2020. ST 20-0004-PLR is a computer software private letter ruling that deals with whether a company's provision of web-based fleet management services via a SaaS model are subject to sales taxation.
Rulemaking
The September 11 edition of the Illinois Register did not contain any proposed or adopted rulemakings by the Illinois Department of Commerce and Economic Opportunity.
The Illinois Department proposed two new rulemakings in today's edition of the Illinois Register and one adopted rulemaking.
The first proposed rulemaking consists of rules for the so-called "Leveling the Playing Field for Illinois Retail Act. I plan on submitting comments on the rulemaking. Please send me your comments on the rulemaking. Keep in mind that comments should be directed to whether and how the the Department's rulemaking implements the statutory language upon which the rules are based, whatever you think of the underlying statute - which in my estimation is fatally flawed.
The second proposed rulemaking by the Department of Revenue is a new Part 696 which implements the provisions of P.A. 101-604 which authorizes municipalities in Cook County to impose a tax on sellers of motor fuel. Note that the statutory authority upon which this rule is based became effective July 1, 2020.
The Department adopted rules amending the Use Tax rules. This regulation implements the provisions of PA 101-9, which added provisions governing collection of the 6.25%. Use Tax by a marketplace facilitator for sales made through its marketplace on behalf of marketplace sellers. Beginning January 1, 2020 and through December 31, 2020, a marketplace facilitator that meets specific selling thresholds (i.e., the Wayfair thresholds of either 200 transactions or $100,000 of gross receipts) is considered to be the retailer for all sales made through its marketplace on behalf of marketplace sellers, provided that the resulting liability for the marketplace seller would be a Use Tax collection liability. For all such sales, the marketplace facilitator must collect Use Tax and remit it to the Department. The regulations provide key definitions; clarify the scope and nature of the new tax remittance obligation; provide examples of the types of activities that make a person a marketplace facilitator; clarify the responsibilities of marketplace facilitators, as well as of marketplace sellers selling through a marketplace; and reference the new act's act harmless provisions.
The Illinois Department of Revenue filed the Second Notice of Proposed Rulemaking with the Illinois General Assembly's Joint Committee on Administrative Rules ("JCAR") for the rulemaking implementing the State Tax Lien Registry Rules. The rulemaking provides that information appearing in the State Tax Lien Registry is available for purchase by subscription. The Department has established a 45 day comment for this rulemaking. I anticipate that the Department will move through the rulemaking process expeditiously in light of the fact that the underlying statute is effective January 1, 2021.
Court cases
No new tax-related cases this week.
Tax Tribunal
No new decisions were issued by the Tribunal this week.
Illinois Chamber of Commerce Annual Meeting
Please see the attached flier for our annual meeting on September 24. We are doing a virtual meeting this year. I would like to give special recognition to Tax Institute accounting firm member FGMK who is a Bronze level sponsor.
We have a great speaker lineup - Tim Crane, President of Wintrust Financial Corporation, Tom Ricketts, Chair of the (soon to be 2020 World Champions) Chicago Cubs, and Charles Evans, the President and CEO of the Federal Reserve Bank of Chicago.
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