The House and Senate were scheduled to return to Springfield on February 1 through Thursday February 3. However, weather conditions led to the cancellation of legislative session days this week.

The Senate is scheduled to return to Springfield next Tuesday through Thursday. The House is not scheduled to be in Springfield next week. Both chambers will continue to hold committee hearings virtually next week.

The Governor gave his State of the State/Budget address on Wednesday February 2. The Governor announced three tax-related proposals. The speech has been reported on in the press so I will focus on the tax-related aspects of his speech.

The Governor proposed suspending the automatic inflation adjustment of the motor fuel tax scheduled to take effect on July 1. This year's adjustment is scheduled to be 2.2 cents per gallon. The motor fuel tax is used to fund road construction and maintenance. The taxes in the road fund are used to make payments on the bonds used to pay for road construction and maintenance.

The Governor's speech did not make clear whether the 2.2 cents increase will go into effect next July 1, 2023 along with any regularly additional inflation adjustment for next year, or whether it will be permanently "suspended" and never be a portion of the motor fuel tax base. The answer to that question makes a material difference in long term funding of the road fund.

The Governor also proposed suspending the 1% state level tax imposed on groceries. You may recall that many years ago Illinois eliminated the state sales tax on groceries except for 1%. All of that 1% tax imposed at the state level is distributed to local governments. The Governor advised that local governments will be reimbursed by the state for the suspension of the 1% tax.

Those of you located in the City of Chicago, Cook County, and the collar counties know that in addition to the 1% state tax, groceries are also subject to the 1.25% Regional Transportation Authority sales tax in the City of Chicago or the .75% RTA tax in the collar counties. Certain areas around St. Louis are subject to a .75% Metro East Mass Transit District tax. I am advised by the Department of Revenue that these additional mass transit-related taxes will not be suspended - only the state 1% tax.

The Governor's third tax-related proposal is to give a one time property tax rebate of 5% of the property taxes paid on a personal residence up to a maximum amount of $300. I have been advised that eligibility for the rebate will track eligibility for the property tax credit against the individual income tax - if you are eligible for that credit, you will be eligible for the rebate.

I have been advised by the Department of Revenue that eligibility for the property tax rebate and the amount of the rebate will be based on information provided by taxpayers on their 2021 Illinois income tax returns by two deadlines - July 15 and October 17.

The Senate Revenue committee met on February 2 at 4:00. There were a number of items posted for the committee, but only considered and passed 4 bills that were on an "agreed bill list." Included on the agreed bill list was SB 2951 which would extend the sunset date of the charitable hospital property tax exemption and the charitable hospital sales tax exemption. We support this sunset date extension. The other bills on the agreed bill list were:

SB 3065 that extends the sunset date for the sales tax exemption for coal and aggregate exploration, mining, off-highway hauling, processing, maintenance, and reclamation equipment to July 1, 2028 (currently July 1, 2023)

SB 3097 that amends the Property Tax Code. Provides that, after filing a petition to obtain a tax deed, the owner of a certificate of purchase must file with the clerk of the circuit court (currently, the county clerk) the names and addresses of persons who are entitled to service of notice. Effective January 1, 2022.

SB 3189 and initiative of the Illinois Department of Revenue that amends the Use Tax Act and the Retailers' Occupation Tax Act. Provides that, on and after January 1, 2023, returns for motor vehicles, watercraft, aircraft, and trailers that are required to be registered with an agency of the State are required to be filed electronically.

The Senate Revenue committee announcement also indicated that the committee would hold a subject matter hearing on SB 3020 - Connor. Senate bill 3020 amends the Property Tax Code and provides that each chief county assessment officer shall provide the information contained in the assessment list to the Department of Revenue. The bill provides that the Department of Revenue shall establish and maintain an interactive, publicly accessible map containing the assessed value of property located in the State, as well as current sales data for that property. However, no subject matter hearing was held on the bill this week.

The Senate Revenue committee is scheduled to meet next Wednesday. At this time, it remains unclear as to which bills posted for the committee may be considered next Wednesday.

The House Revenue committee met on Thursday, No substantive action was taken on any legislation. The Chairman moved some additional House bills to subcommittee. The committee held subject matter hearings on the following two bills (no votes were taken on the bills):

HB 436 - Walker - The bill amends the Property Tax Extension Limitation Law in the Property Tax Code. Provides that, for levy year 2021 and thereafter, the limiting rate shall include 50% of the value of new property (currently, 100% of the value of new property is excluded). 

HB 4214 - Vella - The bill amends the Illinois Income Tax Act. Creates an income tax credit for hospitality employers, for taxable years that begin on or after January 1, 2022 and begin prior to January 1, 2023, in an amount equal to 100% of the amount paid by the taxpayer to provide vision and dental benefits, life insurance, and short term disability coverage for its employees during the taxable year. Effective immediately.

The House Revenue committee is scheduled to meet next Thursday. At this time, I don't anticipate that the committee will take action on any bills. Next week will likely be another week of subject matter hearings.

The following new tax-related legislation was introduced in the House since my last newsletter. No new Senate bills were filed this week.

HB 5320 - Croke - Amends the Illinois Income Tax Act. Provides that, for the purposes of calculating a credit against withholding taxes for employers with 50 or fewer full-time equivalent employees, for reporting periods beginning on or after January 1, 2022 and ending on or before December 31, 2024, the maximum credit is 25% of the difference between the amount of compensation paid in Illinois to employees who are paid not more than the required minimum wage reduced by the amount of compensation paid in Illinois to employees who were paid less than the current required minimum wage during the reporting period prior to each increase in the required minimum wage on January 1 (currently: 17% in calendar year 2022; 13% in calendar year 2023; and 9% in calendar year 2024). Effective immediately.

HB 5353 - Wilhour - Amends the Invest in Kids Act. Provides that the credit shall be equal to 100% (currently, 75%) of the total amount of qualified contributions made by the taxpayer during a taxable year, not to exceed a credit of $1,333,333 (currently, $1,000,000) per taxpayer. Provides that the aggregate credit cap per year may not exceed $100,000,000 (currently, $75,000,000). Provides that the cap shall be increased by 20% beginning on the first day of a calendar year if, in at least 2 of the previous 3 calendar years, the cap was reached. Provides that the credit applies on a permanent basis. Effective immediately.

HB 5389 - Gonzalez - Amends the Illinois Income Tax Act. Creates a credit for taxpayers who have at least one eligible dependent and whose income does not exceed certain specified guidelines. Effective immediately.

HB 5391 - Zalewski - Amends the Invest in Kids Act. Provides that non-public pre-kindergarten schools are considered qualified schools. Provides that contributions made by individuals may be directed to a particular subset of schools or a particular school. Allows qualified schools to set a maximum scholarship amount, which may not exceed the necessary costs and fees for attendance at the qualified school. Effective immediately.

HB 5398 - McCombie - Amends the Property Tax Code. In provisions concerning the homestead exemption for veterans with disabilities, provides that an otherwise qualified residence that is located upon 2 adjacent parcels in 2 different townships is entitled to the exemption. Provides that, upon election by the property owner, a portion of the maximum exemption amount shall be applied to each parcel according to each parcel's share of the total assessed value of the property. Effective immediately.

HB 5401 - Hammond - Creates the Endow Illinois Tax Credit Act and amends the Illinois Income Tax Act. Requires the Department of Revenue to authorize an income tax credit to taxpayers who provide an endowment gift to a permanent endowment fund. Sets forth procedures and criteria for authorizing the credits. Provides that the aggregate amount of all credits that the Department of Revenue may authorize may not exceed $10,000,000 in 2022, $25,000,000 in 2023, or $50,000,000 in 2024 and each calendar year thereafter. Provides conditions for eligibility. Requires the Department of Revenue to make an annual report concerning the credits. Provides that the credit may be carried forward for 5 years. Exempts the credit from the Act's sunset provisions. Further amends the Illinois Income Tax Act to provide that provisions concerning the unrelated business taxable income of an exempt organization apply for taxable years beginning on or after January 1, 2021 (currently, January 1, 2019). Effective immediately.

HB 5433 - Mazzochi - Amends the Property Tax Code. Provides that, if there is a revision or correction affecting the assessed value of property that is used as a comparable property for the purposes of determining the assessed value of the taxpayer's property, then an assessment complaint may be filed with respect to the taxpayer's property within one year after the assessment for the comparable property is revised or corrected. Requires the chief county assessment officer and each township or multi-township assessor to post certain information on the assessor's Internet website. Provides that the chief county assessment officer is responsible for the accuracy of any information posted on the website. Provides that, if the information posted on the website contains an error with respect to the assessed value of comparable property, then an assessment complaint may be filed within one year after the taxpayer discovers, or through the use of reasonable diligence should have discovered, the error.

HB 5434 - Mazzochi - Amends the Illinois Income Tax Act. Creates an income tax credit for qualified landlords. Provides that the term "qualified landlord" means an individual, partnership, trust, or corporation that incurred rental income losses from residential rental property as a result of the COVID-19 eviction moratorium and (1) owns fewer than 7 residential rental units in the State; or (2) actively maintains at least 25% of its rental units as affordable housing. Effective immediately.

HB 5435 - Mazzochi - Amends the Property Tax Code. Provides that municipalities and counties may establish manufacturing zones. Provides that, with respect to property that is owned or controlled by the owner or operator of a manufacturing facility that is located within a manufacturing zone, the assessed valuation of any capital investment in the property made by the owner or operator for the purpose of carrying out a manufacturing process for any taxable year in which the manufacturing zone is in effect shall be $0. Effective immediately.

HB 5443 - Zalewski - Amends the Property Tax Code. Provides that a county collector in a county with 275,000 or more inhabitants shall adopt a bidder rule (currently, a single bidder rule) to prohibit a tax purchaser from registering more than 8 (currently, one) related bidding entities at a tax sale. Effective immediately.

HB 5460 - Spain - Creates the Illinois Biomanufacturing Act. Provides for the creation of the Illinois Biomanufacturing Institute. Provides for the Board of Directors of the Institute. Provides for the duties of the Institute. Provides for funding of the Institute. Provides Institute reporting requirements. Creates the Biomanufacturing Initiative Task Force. Provides purpose and duties of the Task Force. Provides for Task Force membership. Provides for meetings of the Task Force. Provides for administrative support for the Task Force. Provides Task Force reporting requirements. Creates the Biomanufacturing Equity Investment Fund, the Biomanufacturing Loan Fund, and the Biomanufacturing Grant Fund as special funds in the State treasury for specified purposes concerning investment in and funding of biomanufacturing centers. Amends the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois. Provides for tax credits for qualifying biomanufacturing centers. Provides further requirements concerning the issuance of the tax credit. Amends the State Finance Act to provide for specified special funds. Amends the Illinois Income Tax Act to provide for the biomanufacturing center tax credit. Defines terms.

HB 5461 - Guerrero-Cuellar - Amends the Invest in Kids Act. Provides that non-public pre-kindergarten schools are considered qualified schools. Provides that the credit shall be in the amount of 100% (currently, 75%) of the contribution. Provides that the credit may not exceed $1,333,333 per taxpayer (currently, $1,000,000). Establishes priority groups for the awarding of scholarships. Makes other changes. Effective immediately.

HB 5475 - Elik - Amends the Illinois Vehicle Code. Provides that, from July 1, 2022 through June 30, 2023, the registration fees imposed under this Article shall be reduced by 50%. Provides for transfers from the General Revenue Fund to the Road Fund. Provides that the vehicle use tax shall be suspended from July 1, 2022 through June 30, 2023. Effective immediately.

HB 5476 - Jacobs -Amends the Illinois Income Tax Act. Creates an income tax credit for taxpayers who own and operate a grocery store in a county with a population of 150,000 or fewer inhabitants and are liable for the payment of real property taxes at the location where that grocery store is located. Provides that the credit is in an amount equal to the property taxes paid by the taxpayer during the taxable year on the real property that contains that grocery store. Effective immediately.

HB 5477 - Jacobs - Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the general rate of tax under the Acts is 6% (currently, 6.25%). Effective immediately.

HB 5478 - Severin - Amends the Illinois Income Tax Act. Provides that the rate of tax on individuals, trusts, and estates is 4.85% (currently, 4.95%). Makes a conforming change concerning the pass-through entity tax. Effective immediately.

HB 5479 - Welter- Creates the Grocery Store New Construction Tax Credit Act. Creates a tax credit for taxpayers who undertake a project to construct a new grocery store in the State, subject to certain capital investment and employment requirements. Amends the Illinois Income Tax Act to make conforming changes. Effective immediately.

HB 5480 - Welter - Amends the Gas Revenue Tax Act. Provides that no tax shall be imposed under the Act from July 1, 2022 through June 30, 2023. Effective immediately.

HB 5481 - Windhorst - Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the tax on motor fuel, gasohol, majority blended ethanol fuel, biodiesel, and biodiesel blends shall be suspended if the percentage increase in the Consumer Price Index is more than 3% over the previous 12-month period. Provides for certain amounts to be transferred from the General Revenue Fund to the Road Fund if the suspension is in effect. Effective immediately

HB 5493 - Weber - Amends the Illinois Income Tax Act. Provides that a taxpayer is entitled to an income tax credit for each person who is (i) 62 years of age or older during the taxable year and (ii) employed by the taxpayer at a location in this State for not less than 185 days during the taxable year. Provides that the credit may be carried forward. Provides that the credit is exempt from the Act's automatic sunset provision. Effective immediately.

HB 5495 - Weber - Amends the Motor Fuel Tax Law. Provides that the proceeds from taxes imposed on the sale of motor fuel sold on an Illinois waterway shall be remitted back to the local waterway agency where the sale of the motor fuel took place or to the Department of Natural Resources and must be utilized by the local waterway agency or the Department of Natural Resources for waterway purposes. Effective immediately.

HB 5510 - Walker - Amends the Economic Development for a Growing Economy Tax Credit Act. Extends the date after which the Department shall not enter into new Agreements under certain provisions of the Act until June 30, 2027 (currently, June 30, 2022). Effective immediately.

HB 5521 - Stephens - Amends the Economic Development for a Growing Economy Tax Credit Act. With respect to credits that are taken against the Taxpayer's withholding tax payments, provides that certain amounts shall be returned to the Department of Commerce and Economic Opportunity and reallocated to the local workforce investment area in which the project was located if, during the term of the Agreement or at any time within 20 years after the expiration of the Agreement, the Taxpayer sells its operations or the principal part of the portion of its operations that is located in the State. Provides that the provisions do not apply if the sale is at a loss to the Taxpayer.

HB 5532 - Collins - Amends the Property Tax Code. Provides that with the exception of a county or taxing district acquiring tax certificates to property, all purchasers or assignees of a property at a tax sale shall pay the clerk postage plus the sum of $10 dollars (currently, the purchaser or assignee). Provides that not less than 1 month (currently, 3 months) nor more than 6 months prior to the expiration of the period of redemption, the purchaser or his or her assignee shall prepare and deliver to the clerk of the Circuit Court of the county in which the property is located, the notice provided for, together with the statutory costs for mailing the notice by certified mail, return receipt requested. Provides that notwithstanding any provision to the contrary, all properties owned and held for future development by specified entities are exempt from property taxes. Provides requirements to claim the exemption. Specifies the County of Cook d/b/a Cook County Land Bank as an entity exempt from property taxes. Provides that when property is owned and held by a specified entity, then excludes them from needing to file an application with the county board of review or board of appeals. Provides that the decision of the board of review is final with regards to exemptions to the specified entities. Effective immediately.

HB 5569 - West - Amends the Illinois Income Tax Act. Creates a credit for taxpayers that make an eligible donation to a certified home improvement provider in an amount equal to 75% of the amount donated to that certified home improvement provider. Provides that a certified home improvement provider is a local agency, community organization, or community development corporation that (i) specializes in the area of housing improvement, (ii) targets underserved communities that meet the definition of a qualified census tract under Section 42 of the Internal Revenue Code, and (iii) has been approved to issue certificates of receipt for credits by the Illinois Housing Development Authority. Effective immediately.

HB 4326 - Bennett As introduced the bill amends the Counties Code. Provides that 1% of the school facility occupation taxes collected shall be distributed to the regional superintendent of schools (currently, these moneys are deposited into the Tax Compliance and Administration Fund) to cover the costs in administering and enforcing the provisions of the school facility occupation taxes Section of the Code. Effective July 1, 2022. The bill was amended as follows: Provides that 50% (rather than 1%) of the 2% deducted from the amounts collected under the provisions shall be deposited into the Tax Compliance and Administration Fund and 50% (rather than 1%) shall be distributed to the regional superintendent of schools to cover the costs in administering and enforcing the provisions of this Section.

The Department of Revenue has updated information on their website describing their administration of the Local Government Revenue Recapture Act. Included in the information is the list of practitioners eligible under the Local Government Revenue Recapture Certified Audit Program. Tax Institute member Joe Bigane is one of the two practitioners currently eligible to represent taxpayers under the certified audit program under this Act.

The February 4 edition of the Illinois Register contains one proposed rulemaking by the Department of Revenue. Today's Illinois Register does not contain any proposed or adopted rules by the Department of Commerce and Economic Opportunity or adopted rules by the Illinois Department of Revenue.

The Department of Revenue describes the new proposed amendments to the income tax rules as follows:

No new cases this week.

No new decisions have been posted by the Tribunal this week.

One new case was filed this week and it does not raise any unique issues. Only 7 cases have been filed with the Tribunal this year.