The House and Senate are not scheduled to return to Springfield until the veto session.

The July 23 edition of the Illinois Register did not contain any proposed or adopted rulemakings by the Illinois Department of Revenue or or tax-related proposed or adopted rulemakings of the Department of Commerce and Economic Opportunity.

No new tax-related court cases over the past two weeks.

The Tribunal issued an order on a summary judgment motion in an aircraft sales taxation case, Texas Capitalization Resource Group, Inc. v. Department of Revenue. The case is a procedural dispute over whether the Department named the wrong legal entity when issuing a Notice of Tax Liability, whether the petitioner was responsible for the naming of the wrong legal entity, and whether it is now appropriate to dismiss this case in light of the fact that another case involving the aircraft at issue is currently pending with the Department's audit division.

In denying the petitioner's motion for summary judgment, Judge Barov explained:

"In short, the Department has provided facts raising the issue of whether the Corporation is improperly taking inconsistent positions on the question of the aircraft’s ownership or whether the Department reasonably relied on incorrect or incomplete representations by the Corporation in issuing it the Notice. Whether characterized as falling under the label of “duty of consistency,” “quasi-estoppel” or “substance over form,” at this stage of the proceedings, it is not clear and free from doubt that the Corporation can avoid possible use tax liability on the aircraft, simply because the ICB is now reviewing the proposed notice directed to it to the LLC. Summary judgment for the Corporation is thus premature."

The Tribunal also posted an order on a summary judgment motion in Golden Triangle Whitetails, Inc. v. Department of Revenue. At issue in this case is whether a hunting lodge was a hotel subject to the Hotel Operators Occupation Tax for the periods at issue.

The dispute centers around the effect of legislation amending the Hotel Operators Occupation Tax that modified the definition of hotel to specifically include hunting lodges effective August 18, 2017.

The taxpayer filed a motion for summary judgment contending that hunting lodges were not subject to the tax prior the amendment. The Department contended in its motion for summary judgment that hunting lodges had always been contained with the definition of the term "hotel" and pointed to past rulings.

The Tribunal denied the taxpayer's partial motion for summary judgment and granted the Department's partial motion for summary judgment.

A series of new cases may be of interest. Wind Point Partners VI LP, v. Department of Revenue is one of a series of five protests filed with the Tribunal.

According to the petition, "Petitioner is a Delaware limited partnership that raised funds from unrelated investors, pooled such funds, and made passive private equity and debt investments . . . the Department erroneously seeks to impose tax on investors in a passive investment partnership that would not otherwise be subject to such tax had such investors invested directly in the underlying investments. Passive limited partners investing in the Fund which itself passively held investments cannot yield a different result than if the same investors invested directly in the underlying investments. This is without support in the law and respectfully, must be reversed."

Midwest Medical Equipment Solutions v. Department of Revenue is a protest of a Notice of Tax Liability issued by the Department to a retailer of nebulizers and breast pumps, and approximately 70% of its sales are to Medicaid enrolled patients.

Over the past few years, Illinois has modified its Medicaid payment model to utilize "Medicaid HMOs." The Department of Revenue takes the position that purchases of items such as nebulizers and breast pumps that were sales tax-exempt when paid for directly by the State, are no longer tax-exempt when paid for through the Medicaid HMOs. The Department takes the position that this purchases are no longer tax exempt purchases by the government. This case is a challenge to that position.

In my personal opinion, I think the Department's position is incorrect. But, I am unaware of a successful challenge to the Department's position.

The Department posted emergency rules amending the "Leveling the Playing Field" rules. Here is a link to the rules on the Department's website. The Department posted the rules on its website due to the lag between the time when the rules became effective - upon filing with the Secretary of State - and the publication of the rules in the Illinois.

The Department described the emergency rulemaking as follows:

"These rules are being amended in Section 131.107 to clarify the different types of retailers subject to the provisions of the Leveling the Playing Field for IL Retail Act ("Act"). They specifically amend the current regulations to provide that the Metropolitan Pier and Exposition Authority Retailers' Occupation Tax ("MPEA") and the Chicago Home Rule Municipal Soft Drink Tax ("Soft Drink Tax") are required to be collected and remitted by food delivery services that are considered marketplace facilitators meeting a tax remittance threshold. The rules further provide information regarding the manner in which these taxes are imposed under these circumstances. This amendment reverses provisions of Compliance Alert 2021-01 issued by the Department with regard to collection of these taxes. In connection with this change, provisions are added to emphasize, as required elsewhere in the regulations, that food delivery services that are considered marketplace facilitators under the Act must provide food service establishments with a certification that the food delivery service assumes the rights and duties of a retailer under the Retailers' Occupation Tax Act and all applicable local taxes administered by the Department for sales made by the food service establishment on the marketplace, and that it will remit all such taxes for such sales. The rules specify additional requirements for this certification, and clarify that food services establishments that have received this certification are generally relieved of liability for tax on such sales (except as provided in Section 2 of the Retailers' Occupation Tax Act and Section 131.150 (b)-(c) of the rules, or as provided in Section 131.135 (f) of the rules. This section further clarifies those taxes which may be incurred by remote retailers, marketplace sellers and marketplace facilitators that are not subject to the Act, which include both that are and are not administered by the Department. Section 131.110 is being amended to provide that remote retailers exclusively making tax exempt sales (i.e., 100% of their sales are nontaxable) are not subject to the provisions of the Act. In addition, Section 131.120 is being amended to specify that, for remote retailers, occasional sales are excluded from consideration when calculating tax remittance thresholds. However, Section 131.145, governing marketplace facilitators, is amended to provide that occasional sales must be included when calculating tax remittance thresholds. Throughout the regulations, provisions are being amended to specify that retailers incurring Retailers' Occupation Tax based on origin sourcing must consult the provisions of 86 Ill. Adm. Code 270.115 (c) and (d) to determine the location at which selling activities occur, and therefore, which local taxes will be incurred. Section 131.145 is being amended to clarify books and records requirements for marketplace facilitators, including the manner in which sales made by marketplace sellers that possess active exemption identification numbers ("E" numbers) must be documented. Numerous examples related to auctioneers are being removed, due to legislation which may change the applicability of the Act to these types of retailers. Illustration A is being amended to provide additional clarity."

Recent articles in the Tax Advisor, the journal of the AICPA may be of interest: "Accounting Method Planning to Reduce Taxable Income" and Accounting Method Planning to Increase Taxable Income

The Tax Foundation recently issued a report States Respond to Strong Fiscal Health with Income Tax Reform. The report points out that In 2021, 11 states have enacted laws to reduce their income tax rates, with 10 reducing individual income tax rates and five reducing corporate income tax rates. Illinois, of course, went the opposite direction . . . .

The Illinois Chamber is returning to its traditional Annual Luncheon & Reception format with its September 30^th get together at the Palmer House in Chicago. This year’s Keynote Speaker is Holly Sullivan, VP of Worldwide Economic Development, Amazon.