The House and Senate return to Springfield for the spring legislative session on January 4.

New tax-related legislation was introduced this week:

HB4266 - Hernandez - Amends the Illinois Income Tax Act. Provides that a taxpayer who makes a donation to a qualified charitable entity of: (i) disposable diapers; (ii) other hygiene products for infants or children; (iii) menstrual hygiene products; or (iv) cash that is specifically designated for the purchase of the those products is entitled to an income tax credit in an amount equal to the cost of the donation, but not to exceed $1,000 per taxpayer in any taxable year. Provides that the credit is exempt from the Act's automatic sunset provision. Effective immediately.

HB 4278 - Kifowit - Amends the Revised Uniform Unclaimed Property Act. Provides that an heir or agent who files an unclaimed property claim in which the decedent's property does not exceed $250 (rather than $100) may submit an affidavit attesting to the heir's or agent's capacity to claim in lieu of submitting a certified copy to verify a claim. Provides that, in response to the filing of an unclaimed property claim for a decedent's property not exceeding $250, the administrator shall not require that the affidavit be accompanied by a copy of the decedent's death certificate. Effective immediately.

HB 4284 - Stava-Murray - Amends the Illinois Vehicle Code. In provisions concerning a motor vehicle transfer tax when the transfer is pursuant to the administration of an estate and the beneficiary is not a surviving spouse, provides that those provisions also apply to the administration of an inter vivos trust that became irrevocable upon the death of the grantor. Effective immediately.

SB 2964 - Murphy - Amends the Property Tax Code. Provides that, for the purposes of the senior citizens assessment freeze homestead exemption, "income" does not include any required minimum distribution from an individual retirement annuity. Effective immediately.

Sb 2965 - Murphy - Amends the Tax Increment Allocation Redevelopment Act of the Illinois Municipal Code. Provides that all surplus funds in the special tax allocation fund shall be distributed as soon as possible after they are calculated (rather than distributed annually within 180 days after the close of the municipality's fiscal year).

SB 2968 - Joyce - Amends the Illinois Municipal Code. Provides that the corporate authorities of a municipality may by ordinance declare that the municipality will have a projected surplus of revenues in a fiscal year from any source. Allows the corporate authorities to abate the property tax levied by the municipality by the projected surplus amount. Provides that any amounts abated shall be considered as part of the municipality's aggregate extension for the fiscal year in question. Amends the Property Tax Code making conforming changes.

The Department of Revenue has advised that by the end of the year, they plan to publish an FAQ concerning implementation of the SALT cap work around legislation.

The December 17 edition of the Illinois Register did not contain any proposed rules or adopted rulemakings by the Department of Commerce and Economic Opportunity.

Today's Illinois Register contained one proposed rulemaking by the Department of Revenue and one adopted rulemaking. The proposed rulemaking amends the Tobacco Products Act rules. The Department described the rulemaking as follows:

"This rulemaking implements the amendments made by P.A. 102-0040 to the definition of “electronic cigarette” contained in the Tobacco Products Tax Act of 1995 (“Act”). Prior to the enactment of P.A. 100-0040, devices, cartridges or container intended for use in devices, and solutions or substances intended for use in devices or in cartridges or containers to be used in devices, whether or not the substances or solutions contained nicotine, were defined as “electronic cigarettes,” included in the definition of “tobacco products,” and subject to Tobacco Products Tax. Distributors of these products were subject to tax under the Act at the rate of 15% of the wholesale price. The definition was broad enough to cover devices, cartridges and containers, and solutions containing cannabis sold in cannabis dispensaries. After the definition of “electronic cigarette” was included in the Act, on and after June 28, 2019, cannabis cultivators were required to obtain a distributor’s license and pay the Tobacco Products Tax on these items. Retailers of these items were required to obtain a retailer’s license under the Act. P.A. 102-0040 removes devices, cartridges and containers, and substances and solutions, that contain cannabis subject to tax under the Compassionate Use of Medical Cannabis Program Act or the Cannabis Regulation and Tax Act from the definition of “electronic cigarette” contained in the Act. P.A. 102-0040 includes language to address the period between the enactment of the original definition of “electronic cigarette” (June 28, 2019) and the effective date of P.A. 102-0040 (June 25, 2021). The changes made to the definition of "electronic cigarette" by P.A. 102-0040 apply on and after June 28, 2019, but no claim for credit or refund is allowed on or after the effective date of P.A. 102-0040 for taxes paid during the period beginning June 28, 2019 and the effective date of P.A. 102-0040."

The Department explained the amendment to the Retailers' Occupation Tax rules as follows:

"This amended regulation increases the presumed average cost of free meals provided to employees for purposes of establishing employers’ Use Tax liability from $0.75 to $3.50 to more accurately reflect true costs. This amended regulation also specifies tax is to be paid at the rate that would have been imposed when the employer acquired the goods from the supplier (generally low rate for groceries as the food was not initially purchased as food for immediate consumption), as this would be the taxable moment for these transactions. The presumed average cost of free meals has not been increased since 1977. The new amount was determined by adjusting the old amount for inflation." 

No new tax-related cases this week.

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

None of the new cases filed since my last newsletter raise unique issues.

The Tax Foundation issued its 2022 State Business Tax Climate Index yesterday. According to their ranking, Illinois is neither among the 10 best states nor the 10 worst, although at 36th we aren't far from the bottom.

The National Taxpayers Union Foundation recently issued a report entitled "Who Pays Income Taxes: Tax Year 2019". According to the report, "[t]his latest release of IRS data shows that the top 25 percent of earners paid nearly 87 percent of all income taxes in 2019. Lower income earners are largely spared from income taxes with the bottom 50 percent of earners owing just three percent of the national share."