June 22, 2018

This Week in Illinois 
Yesterday the U.S. Supreme Court issued its anticipated decision in  South Dakota v. Wayfair, Inc.   The court overruled the physical presence standard in  Quill v. North Dakota . The court upheld a South Dakota law that requires out-of-state sellers to collect and remit sales tax a seller, on an annual basis, delivers more than $100,000 of goods or services into the State or engages in 200 or more separate transactions for the delivery of goods or services into the State.
As explained by the court, the South Dakota law forecloses the retroactive application of the requirement and provided for the law to be stayed until the constitutionality of the law was clearly established.
So what does this mean for Illinois?  In anticipation of the Supreme Court's decision in  Wayfair , as part of the budget implementation bill, the Illinois General Assembly amended the Illinois Use Tax and the Service Use Tax to include language that mirrors the nexus standard established by South Dakota.  P.A. 100-587  (The pertinent amendment begins on Page 457 of the public act.) 
The Illinois law amends the nexus standards of the Use Tax Act and the Service Use Tax Act.  It provides that beginning October 1, 2018, a retailer making sales of tangible personal property to purchasers in Illinois from outside of Illinois will fall within the definition of "retailer maintaining a place of business in this State" and will be required to charge Illinois Use Tax (or service use tax) to its customers if: "(A) the cumulative gross receipts from sales of tangible personal property to purchasers  in Illinois are $100,000 or more, or (B) the retailer enters into 200 or more separate transactions for the sale of tangible personal property to purchasers in Illinois."
The law requires the retailer to determine on a quarterly basis whether he or she meets the criteria of either test for the preceding 12-month period. If so, the retailer is required to collect and remit the tax imposed under the Act and file returns for one year.
At the end of the one-year period, the retailer is to determine whether he or she continued to meet either test.  If he or she met either test, the retailer continues filing returns and charging and remitting tax.  If the retailer didn't meet either test for the one year period, the retailer is not required to continue to file returns and charge and remit tax, but remains required each quarter to make the determine again.
The Wayfair decision doesn't bring complete tax parity in Illinois between Internet sellers and bricks and mortar sellers because of the manner in which Illinois law deals with locally-imposed sales taxes.  Locally-imposed sales taxes are, with certain exceptions, are retailers' occupation taxes. Those taxes are required to be charged and collected by Illinois retailers.  There are no corresponding locally-imposed use taxes. The local taxes are paid by purchasers in normal retail transactions because the locally-imposed taxes allow retailers to have a right of reimbursement for the local taxes from purchasers.
After the Wayfair decision, internet retailers like Wayfair will be required to charge and collect the 6.25% Illinois Use Tax on sales to Illinois customers. If, as a resident of Springfield, you decide to buy a sofa from Wayfair, you will pay 6.25% tax.  For example, if you buy the same sofa from a local retailer, you will pay either 8.5% or 9.5% depending on the location of the retailer in Springfield.  That is still a rather large differential on big-ticket purchases.
Another, and related, issue involves the current Illinois statutory system for distributing a portion of sales tax revenues to local governments. Local governments are not going to see a sudden influx of additional sales tax dollars as a result of Wayfair
The locally-imposed retailers' occupation taxes go to the local jurisdiction imposing the tax. In addition, 1.25% of the 6.25% Illinois Use Tax is distributed to local governments, but is distributed on the basis of population. There remains a common misconception many members of the public that the local share of use tax dollars is distributed to location of the purchaser. Some local governments will expect an influx of sales tax dollars and there will be consternation when that doesn't materialize.
Bottom line - we now know the answer to the physical presence requirement of  Quill  - it has been eliminated.  It is still unclear precisely how much additional revenues the state will bring in from the decision.  In the most recent budget signed into law, the General Assembly included $150 million in new revenues from this new source.   

This week, Governor Rauner issued an executive order mandating that steps be taken to eliminate the backlog of over 1,000 cases at the Illinois Human Rights Commission (IHRC) dealing with anti-discrimination and equal opportunity complaints. Executive Order 18-0 will streamline government services to provide due process for Illinois residents. 

In 2016, Rauner directed the creation of a Bureau of Administrative Hearings at Central Management Services (CMS) to study the efficiencies the state could realize though consolidation of administrative hearing caseloads. Recognizing that the IHRC has one of the most egregious hearing backlogs in state government, and knowing these hearings affect the state's most vulnerable populations, in 2017, the governor proposed Executive Order 17-02, the reorganization of IHRC into the Illinois Department of Human Rights (IDHR) to expedite anti-discrimination cases brought by Illinois citizens. The General Assembly rejected the governor's reorganization executive order later that year. 

Nearly every year since 2008, the backlog of cases waiting final decision at IHRC has grown. On average, parties wait more than four years from the time of filing a charge of discrimination until a final decision is reached. EO18-08 mandates coordination between the Bureau of Administrative Hearings, IHRC, and IDHR to eliminate backlog and improve due process. Coordination includes: 
  • Within 60 days, creating a plan to eliminate IHRC's backlog within 18 months. 
  • Drafting or amending legislation, administrative rules, and internal policies to streamline the transfer and administration of cases between IDHR and IHRC. 
  • Tracking and transparently reporting on backlogs. 
  • Developing a shared case management system with the Illinois Department of Innovation and Technology (DoIT). 
  • Surveying parties appearing before IDHR and IHRC. 
  • Participating in training, including Rapid Results training. 
  • An annual report from the Bureau on the success of coordination and other process improvements, to be filed with the governor and the General Assembly. 
Our review of EO 18-08 finds that it is compatible with SB 20. However, this may be a signal that a signing of SB 20 may be in jeopardy.

Illinois Chamber President and CEO Todd Maisch joined Mark Maxwell this week on Capitol Connections this week, you can catch it here. Maisch Appears at the 8:38 mark.

The Illinois Chamber and the Chamber's Business Services division has several events and webinars scheduled for this summer.  Check out or events calendar for more information or see below for some of the featured events this summer!

July 24th: 3rd Annual Cybersecurity Conference 
Cybersecurity is an issue that impacts all of us, regardless of who we or what we do. Collaboration and communication between government entities and the private sector is essential to our success combating cyber threats. This event brings together public and private entities to discuss policy and best practice in cybersecurity to help businesses be prepared for whatever the future brings for both small and large businesses. Registration is available now!

September 20th: Annual Luncheon 
Mark September 20, 2018 in your calendar to join us at the Hilton Chicago for the 2018 Illinois Chamber of Commerce Annual Meeting. This fall Lance Fritz, the chairman, president, and chief executive officer of Union Pacific Railroad will keynote this exciting event.
Union Pacific Railroad is one of two western-U.S. railroads that connects Illinois agriculture and industry to the West Coast and international markets. In addition, their heritage traces back to Abraham Lincoln, who signed the Pacific Railway Act of 1862, setting the wheels in motion that eventually connected the Pacific to the Mississippi River by rail-a fitting story for Illinois' bicentennial celebration!
Sponsorship opportunities are available and we look forward to seeing you there!

The Illinois Chamber of Commerce is now accepting nominations for the 10th Annual Economic Development in Illinois Awards - the Edies. The Edies honor outstanding economic development projects completed in the calendar year of 2017 that imagine, design, invest, build and bring jobs, growth and prosperity to Illinois communities. More information can be found at the Edie homepage.
Nominations are being accepted now until 5 p.m. June 29, 2018. For additional questions, please contact Katie Stonewater at

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Illinois Chamber of Commerce

2017 Government Affairs Report | Tyler Diers, Editor